[Colin McC]

This is going to be a long one, sorry! I will try to be as succinct as possible. Myself and my partner moved from UK 13 years ago, selling up our home and putting the cash into our home in Barcelona, we didn’t have mortgage and spent the extra cash on refurbishing, doing it ourselves. I am an artist and my partner has been the main bread winner so she managed to get jobs on and off, mostly without contract as this is how it is here, but over the years has probably had around 6 years in work and a couple officially unemployed, other than that we have used our own savings to survive plus renting our flat on the likes of AirBnb due the huge tourist business here and our very central location. However, my partner was recently without work for 9 months and neither of us had any income so used up all our savings, she was forced to take a very low paying job (admittedly with contract) 8 months ago and we are effectively 500 euros short of living costs each month so it is no sustainable. We now realise we HAVE to sell our flat and leave back to London. We did try a couple of times before but the market was so bad we go no offer. The market is now rising and we put the price up and put it on the market just before Xmas and the first client came to see it last week and made an offer for virtually the asking price! However, now we are really looking into our tax status having been badly advised or naive and realise that neither of us are tax residents despite being residents and on the electoral register. We understand we will be withheld the 3% plus have Plus Valia of around 4k to pay and the agency fee of around 7,500k. The selling price is 200k. The value on the deeds is around 98k from 2002. Once we take off the fees to buy and fees to sell the CGT is around 80k and the agency tells us that the rate of CGT is around 23% (had thought it was 19% but both are unbelievably high for our only property in all the world!). Anyway, we cannot afford to be “honest” and pay the CGT so have been told we can simply let them take the 3% which they will automatically do without a tax resident certs, then when it comes to complete the forms for the balance, around 12k, we will be back in London. However, we do not want to feel like fugitives and wonder what the reality is of being traced by Hacienda for the balance, do they really do this? We would have loved to stay here, my partner is half Spanish and still has her family here, but neither of us reaslied how dire the employment market was nor how money grabbing the tax system is towards property owners. We would have loved to have used the proceeds for another property her but having to pay huge CGT makes it impossible, plus we would be on the radar for other taxes we hadn’t realised we had to pay so we need to make a clean break. In a nutshell my question is, if we sell up now and leave will be caught for the balance CGT, if not, would we be able to return for visits without fear of being caught and after 4 years of no notice to pay, would we be able to return to buy again or rent and be properly in the tax system (we would have to do it properly next time round). We are thinking if it is too risky to sell now to wait for a year or two and rent out whilst we go back to London to check out how we can survive there again, not sure if property is going to keep going up in centre of Barcelona or the Euro will improve against the pound so we make some gains there, I suspect that the chances are that things will be the same or perhaps even worse and the UK will be way out of our reach by then. Appreciate assistance from anyone out there!!

[Mark Stücklin]

Hi Colin,

The reason the taxman withholds 3% when the vendor is a non-resident is precisely because some people skip the country without paying CGT. I’ve never heard of the tax authorities pursuing people back home, but you never know. I’ll ask around.

However, in your case you should be declared as fiscal residents, and if you have family ties here that’s even more complicated. Be careful.

I’ll let you know if I turn up any info that helps.

[Colin McC]

Hi Mark, many thanks for the speedy reply! I understand what you say about us being fiscal residents, although I have never worked here but my partner has and is paying tax now but we’d read that unless you earn more than 22k there is no need to do a declaration so we innocently thought that was the case.  Even if we want to be fiscal residents now, it would mean opening a can of worms as Hacienda would want to know why we’ve not done so in all these years and as property owners we have not paid the imputed property tax (form 210 I believe) as we only have one home and it is here, we have no ties to the UK, except my bank account where we’d move over the proceeds from the sale if we go ahead. When you say be careful, can you elaborate on that, do you mean that the authorities can trace my partners family or something else? Surely 15k isn’t much money in the scheme of things when there is so much fraud here? If we did skip we wouldn’t come back to live after the 4 years, when they are not able to request owed monies, coming back for holidays should not be an issue I would have thought.

What if we bite the bullet and go ahead and give this greedy taxman his CGT in full, does that mean we are fair and square or would there still be the issue of us having not been fiscal residents when we should have been, despite it being due to misinformation? If we put the money into a property in the UK surely we shouldn’t have to pay CGT anyway, the money came from the UK in first place which makes it very hard to suffer! If there were a way we could easily become fiscal residents we would but I read that you need to have put in tax declarations for years.

The buyer wants us to confirm sale within 2 weeks so we don’t have long to make this life changing decision. If we don’t go now, it is just staving off going at some point, whether next  year or in 5 years, only then the CGT will be higher and the UK totally out of reach.

Appreciate all your help on this, thanks again!

[Mark Stücklin]

Colin, when I say be careful I don’t mean you are putting family members at risk, just that you need to take care as your situation is complicated and you are exposed on various fronts (not properly declared as fiscal residents, not up to date with imputed tax, and thinking of doing a runner on your CGT). If I were you I would spend a few bob on some specialist advice from a qualified expert.

I’ve been asking around and haven’t yet heard of an example of the Spanish taxman going after people back home for unpaid CGT. I guess they just keep the full 3% retention and leave it at that. But it’s important to realise they do have the right to chase you back home, if they can be bothered.

[Colin McC]

Hi Mark, thanks again! We are going to see our estate agent’s accountant tomorrow night as he has been recommended, admittedly he would want to help the agency sell the flat, but we have known the estate for a long time and are very friendly with him. He seemed to think the sale is simple in that you say you are non tax residents, show the deeds, the IBI payments, other necessary certs and the buyer retains the 3%. What we don’t know is when the CGT has to be paid, I read that non residents have two months to complete the form, by which case most would have left the country. I know you own property in Barcelona, maybe you have heard of lawyers called Strong Abogados who advertise widely in the expat media, we would be willing to pay something but we have very little money, hence we have to sell so we are caught in a terrible situation. My partner took an awful call centre job as she had nothing for 9 months and this after years of bad jobs and illegal employers, none of it her fault. She earns barely 1000k and that is for us both, we took out a bank loan last year, first since we lived here, so owe 10k to the bank when we leave, we are short 500 euro each month just to live, we have no choice but to leave and go to London where I can sell my art, we have tried to hard to make it work here but it is impossible. If we didn’t pay the CGT we’d still only take back a little over what we made on our house sale back in 2001, so nothing at all to show for 14 years in Barcelona. My partner is suffering with her health and now suicidal due to extreme worry. We don’t see a way out of this, if we had to stay we will run out of money in a few months, if we sell we will lose all our profit and possibly everything due to back taxes, if we do a runner we will always be living in fear back in London where we are desperate to be.  We will see this accountant tomorrow anyway and then see if we can get a lawyer but of course they can be very expensive and we paid 200 euros for 1 hours advice a few years ago and he told us it was easy, just go to Hacienda and get a tax certificate, clearly not the case!It seems nobody really knows how things work here. I will update you after we get some “professional” advice, if we lose this sale we may not get another chance to leave, not much we can do! Appreciate your time!

[Colin McC]

Hi Mark

Further to our recent thread and my last reply, wanted to update you. We saw the accountant/ advisor of our estate agent on Friday eve, he deals with foreign and local business taxes etc and was very helpful. We showed him our residence certificates and empadronimiento docs and he said that we are most definitely residents and my partner definitely fiscal resident, he said Hacienda would know about us and even though we’ve not done declarations, we would already be on their radar if they wanted to get back taxes, if any were owed. In his opinion he said we should be considered as tax residents and no withholding CGT/ taxes should take place, we would be given the full selling price, less plus valia and agency fees, then we would have to complete a tax return next year, in May I think, in which we declare the capital gains, after that time we would have 3 years to re-invest either here or another EU country, if we don’t invest all in our first residence we’d have to pay the difference. He said we could even return back to live here and re-invest, always paying any difference in the profit back. Based on figures presented, our capital gains are around 18k. I asked him to make absolutely sure on this as we didn’t want a nasty shock on completing the sale if a tax certificate was needed, he said he’d never known this to be asked for with the kind of documents we have. He is speaking to his notary who will confirm what they ask for at the completion, if he says we will not be retained the 3% and can re-invest, we will go ahead and sell to this buyer as no idea when another may come along. The plan would be to get enough money in the UK in the next couple of years to either pay back the CGT or invest all of it and come back to rent, if not buy in a few years. We have decided that staying here on this ticking time bomb will only prolong what we have to do, there are no opportunities here, only tourism and that is becoming harder to make money out of due to the new mayoress who is so against the industry. Aside from this, the taxes involved in being self employed or buying and selling property are so outrageously high, it is impossible to do things by the book. Very sad that this country cannot see this and it’s why a quarter of the economy is in the black. I will update you on what the notary says, if he is not sure, we will have to think again, seems like nobody here knows what the rules and regulations are! Thanks again for your time.

[Mark Stücklin]

Hi Colin,

Sounds like that accountant is well informed, I hope you are in good hands. Do let me know what the notary says.

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