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@GarySFBCN wrote:
It is irrelevant. “Saving” the real estate industry, getting rid of the huge inventory of empty flats, will NOT have significant impact on Spain’s employment problem.
So what is the goverment thinking is going to have a impact?
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So what is the goverment thinking is going to have a impact?
That’s the problem. While many expected PP to have a plan or at least good fiscal principles from which to work, the truth is that they have nothing. Investment in job-creating industries is what is needed. If there are more jobs, the housing market will improve.
For example, the State of California was battling Amazon over sales taxes andAmazon was about to lose in court. California’s executives instead struck a deal with Amazon: If Amazon builds a new facility in California, the taxes due will be canceled and Amazon can have an additional tax-free year of business. The facility is being built now and will be open next year. It will bring jobs to 1,000 people in a city that was hit especially hard by the economic downturn.
PP blames the unions, the backwards contracts and other issues. But the real problem is a lack of leadership.
As for Jake’s problems, again they do not belong in this forum. ‘Other Subjects’ is a better place for them.
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The issue here is the absence of pragmatism in Spanish politics. The Spanish people will never accept the tax right off irrespective of there short or long term benefits..
They will accept corruption & not think anything about it, lack of justice, appluad correupt practise etc. Besides how are the unproductive, work shy civil servents be paid ???
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I agree inventive pragmatism not tax. Loading a 10% burden on property purchases will only prevent the market from moving further. There are now so many reasons why buying a property in Spain is a poor idea and one which will only end up very expensive.
This property market has had it’s day, it’s clapped out and over burdened with tax, bureaucratic restrictions with a hopeless future from an investment perspective.
I have just received a letter from my tax advisers on the new Spanish laws related to overseas investment and assets. Declarations of foreign bank accounts and securities, including life policies, foreign property assets and investment income. The inference is if a Spanish national has them they have been bought with black money. The penalties for none declaration are draconian. €10k first offence! 😥
I can see an exodus of wealthy Spanish and foreigners coming soon. Villas in Marbella will be going very cheaply.
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I have just received a letter from my tax advisers on the new Spanish laws related to overseas investment and assets. Declarations of foreign bank accounts and securities, including life policies, foreign property assets and investment income. The inference is if a Spanish national has them they have been bought with black money. The penalties for none declaration are draconian. €10k first offence!
I’m assuming this is for fiscal residents, no?
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The new anti fraud laws applies to anyone who lives in Spain more than three months of the year or is registered in business.
Fiscal residency obliges you to declare your world wide income. These heavy fines provided for in these new laws apply also if it can be proved you live in Spain but do not register for residency.The fact is Spain is tightening up on previously relaxed attitude to foreigners who don’t abide by the rules. It’s driven by the need to rake in more taxation.
State Secretary for the Treasury Miguel Ferre has been quoted as saying ‘these new laws are the most ambitious legislation in this field since the 1970’s.’
The law also makes it illegal to make or receive payments of more that €2.5k in cash.
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I’ve spent some time trying to digest the latest Spanish anti-fraud laws, and as a resident they will affect me. The need to declare foreign (non-Spanish) bank accounts and assets like property valued over 50K, along with other financial interests abroad will affect most expats who have retained a UK property and UK interests.
I intend to comply with the law, of course I do, but will take as much advice as I can from my Spanish Gestor. He is pretty relaxed about all the changes at this stage and doesn’t volunteer to go to the front of the queue when dealing with Hacienda and all the others.
And with Catalunya and other things to worry about the new boys in Madrid may take some time in getting things into place, I mean they’re giving the recent ‘bad’ bank 15 years to work and that sort of time span seems pretty average for Spain.
If it gets too onerous, a lot of us might start packing in a few years time and my Spanish neighbours wouldn’t care if a family of Russians moved into my house.
Nor would I.
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The relevant question for forum users is how these new tax laws will effect the Spanish property market and the future performance of the Spanish economy.
As I see it all these tax impositions can only have one result. That is a negative one. The 10% tax in January on all property purchase and now the intention to tax foreigners on all overseas assets and income will hurt. Anyone considering retiring to Spain in the future needs to consider the tax implications very seriously.
There is a €5k fine for each overseas bank account that you don’t declare. Ignorance of the law is not an excuse.
The financial risk of avoidance is no longer acceptable or sensible. The simple way to avoid becoming a fiscal resident is spend no longer than three months annually in Spain. That is not consecutively, it’s total time. However make sure you can prove you don’t to the Hacienda. Their assumption will always be that you do.
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It seems to me that the government is shooting itself in the foot with these changes. The theory is to raise more tax revenue for the governments coffers, but these measures may well reduce revenue.
If the maximum duration in Spain is 90 days to avoid becoming a fiscal resident, then I assume there will be lots of lost revenue from people who no longer spend 4/5/6 months a year in the country. During that time people are eating/drinking/paying utilities/driving(paying tolls and fuel). Additionally there will be benefits to the local economy and employment for people in the service industry.
As for increasing taxation on new property, that should make sure the housing/banking crisis continues for a while longer.
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I’ve long ago ceased to wonder at Spanish laws and their enforcement. They tend to make fancy laws with a fancy Royal decree and then promptly forget all about them for a few years. Then someone else resurrects them and they are passed to the functionarios for enforcement.
That’s when chaos always ensues. That’s why Spain has Gestors, to fight the daft bureaucracy that nobody understands.
But now they’re passing more daft laws and have at last sacked at least a quarter of their back room boys, those surly people in their various government offices, with more sackings on a daily basis.
They want to sell their empty houses, they have to, so they allow residency to all and sundry who come to buy those godforsaken places on unfinished urbanisations. And at the same time they expect those foreigners with their newly acquired rights of residency to declare their financial affairs back in their own countries.
It can’t work, even the dimmest Russian or Chinaman will not want to disclose his financial affairs back in his own country to the Spanish authorities.
It seems to me that Spain, Greece and the others dotted around the Mediterranean cannot get their own people to pay their taxes and now want foreigners to pay them for them. Those foreigners, the Brits, the Germans, the Dutch, the Danes and the others won’t fall for it, not any more.
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Hi, just to comment on a few points.
First, taxes. No wealthy foreigners are being targeted, nor are owners of second homes in Spain. What is happening now is fiscal residents are coming under more scrutiny. Considering the amount of people that bemoan the black economy, the lax enforcement of rules along the med, etc… should be happy, no?
Your are a tax resident if you spend over half of the year in Spain. Some have mentioned 3 month periods though?Second, 10% IVA. The government has raised tax on a range of goods, they do not see newly built properties as any different. This does not affect re-sales. Interestingly, looking at the level a newly built property sales during the reduced tax period, demand has not been that elastic in regards to the lower cost of buying.
In regards to the economy, this will affect the primary, secondary and tertiary industries involved in property. But then again, spain was far to dependent on this industry. Also, in the long term it offers little real economic benefit, being reliant on low skilled workers, destroying land for resources and paving more land under concrete. I think they hope to move a ‘reduced’ industry towards being more sustainable in their projects (revitalization,renovations,etc…).
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If you intend to spend 3 months or more in Spain in any 12 months annually, then you must register on the EU citizens register. It is not six months. Although Residencia (and the ID card) do not exist, in practical terms registering and getting a residence certificate means you are immediately resident with all the privileges and responsibilities that entails, including making an income tax returns in Spain.
ALSO.
If your principal residence is in Spain then you are deemed ‘fiscally resident’ regardless of the time you spend in the country. -
If you intend to spend 3 months or more in Spain in any 12 months annually, then you must register on the EU citizens register. It is not six months. Although Residencia (and the ID card) do not exist, in practical terms registering and getting a residence certificate means you are immediately resident with all the privileges and responsibilities that entails, including making an income tax returns in Spain.
ALSO.
If your principal residence is in Spain then you are deemed ‘fiscally resident’ regardless of the time you spend in the country.Don’t forget the double-taxation treaties.
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Gary.
Double taxation treaties between UK and Spain apply where UK tax is deducted at source and cannot be changed. For instance in the case of government service pensions. The treaty is designed to prevent being taxed twice.Spanish fiscal residents, unless they fall into this category have to declare their worldwide income and be taxed on it in Spain. They will also have to comply with the new laws or face these massive fines. You do not unfortunately have the choice to decide which country you want to be taxed in.
Actually taxation in Spain is not that harsh and conparative to UK and other EU states except France where it’s now draconian. 😥
http://www.spainaccountants.com/rates.html -
I’ve been a legal resident of Spain for many years, starting off in business a long time ago. I started off in a pretty lawless place, the infamous Costa del Sol, and soon realised that my Britishness did not allow me to compete with Spanish businessmen.
I got myself a Spanish partner and brilliant Gestor and slowly turned Spanish myself, as far as business and other practises were concerned. It worked well although there were some fearful times along the way.
I have a different Gestor now and live in another part of Spain, but still follow the ways of my Spanish neighbours. To the letter. I know all about black money, we all do, and we all know the country is in deep trouble because of it, mostly because of it.
I was in the waiting area of a large, modern Spanish hospital earlier today. I was sitting near to a posh memorial sign on the wall, proudly displaying the names of the province’s president and the local mayor who inaugurated it.
Both are now before the courts on corruption charges awaiting prison sentences. In a nutshell, that’s Spain for you.
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I love your honest assessment Rocker, if only Spain’s officials were as honest and as transparent as the rather sunny and pleasant countryside, not forgetting the delicious Riojas, Navarras and Serrano hams etc 😀 Also, as property prices have and in some cases are still falling, Spain needs to seriously think about lowering it’s property completion costs, I didn’t think I’d say this for a while yet, but of late I have seen some reasonable value for money but the costs of completion are off-putting still. 🙄
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@angie wrote:
I love your honest assessment Rocker, if only Spain’s officials were as honest and as transparent as the rather sunny and pleasant countryside, not forgetting the delicious Riojas, Navarras and Serrano hams etc 😀 Also, as property prices have and in some cases are still falling, Spain needs to seriously think about lowering it’s property completion costs, I didn’t think I’d say this for a while yet, but of late I have seen some reasonable value for money but the costs of completion are off-putting still. 🙄
Strangely enough, I was going to post something along the same lines, but my courage failed me. I haven’t seen any green shoots for years, but I’ve seen a definite reduction in the Reduced signs.
Maybe I’m clutching at straws because there may come a time for me to consider selling if the taxman writes me any more threatening letters.
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It could be that the government is half hoping that the proposed 160k residency measure, will entice various Russians and Chinese to buy properties. Thus killing two birds with one stone – the property market picks up (and various people in that sector from estate agents to building workers find work again), and the govt reaps the VAT proceeds…
Of course this ignores the fact the govt is wavering on the 160k measure (can Sr Rajoy ever make a bold decision?). I think the reason they are wavering because they still see Spain as a traditional Catholic country (or a good proportion of their backers do). Their reluctance to encourage orthodox Russians, atheists and even Muslims, may override their willingness to welcome more “settlers”. Unless of course, the Opus Dei vanguard, decide that the new arrivals will make good conversion targets!
Interestingly, Spain is speeding up the naturalisation process for sephardi Jews (although there can’t be too many of them wanting to return to Spain now).
http://www.charlotteobserver.com/2012/11/22/3682018/spain-speeding-up-naturalization.html#storylink=rss -
Actually taxation in Spain is not that harsh and conparative to UK and other EU states except France where it’s now draconian.
Thanks Logan for providing perspective. The IBI seems very low to me too. Regarding the link in your post, are you familiar with that company? If so, are they competent and reliable? I have an attorney, but he may be limited in his capacity right now.
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@logan wrote:
If you intend to spend 3 months or more in Spain in any 12 months annually, then you must register on the EU citizens register. It is not six months. Although Residencia (and the ID card) do not exist, in practical terms registering and getting a residence certificate means you are immediately resident with all the privileges and responsibilities that entails, including making an income tax returns in Spain.
ALSO.
If your principal residence is in Spain then you are deemed ‘fiscally resident’ regardless of the time you spend in the country.This is interesting – so if you say spend 3 months in Spain and 9 months in the UK over the year then you are obliged by their respective systems to be resident in both countries? I always assumed you could only be (fiscally) resident in one country at a time.
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The general rule is 183 days or more. Hence the Government wants the 183 days plus one day for the buyers who wish to obtain a residency in Spain.
I feel the issue of 90 days comes into play where the person’s residency has to be established & they should not have spent on average 90 days in a Tax year. This is very complex area and I will be happy to be corrected.
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It’s a little complicated and I seem to have got into a thread of constant explanation. No matter
Basically if you live in Spain for 3 months or more in any 12 there is a legal requirement to register as a resident and on the Padron. That then follows if you are a ‘resident ‘ by virtue of this you become liable for Spanish income tax. Period.
Also if your principal residency is in Spain they same applies. That’s Spanish law.
If your principal activity and residence is in the UK then that where you pay your tax regardless if you spend 3 months in Spain. HMRC will give you a certificate to produce to the Spanish Hacienda and the double taxation treaty prevents you being charged tax twice.
In short you have to prove to both which country your principal activity is in. The Spanish assume after three months it’s Spain.
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Thanks Logan – yes it does seem rather complicated, but I see where it comes from. These days it is common for people to spend lots of time in Spain while paying their income taxes in another country so I’m not surprised the Spanish want their cut. Which is probably why property taxes and VAT are on the increase – it’s much harder to avoid those than income tax.
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Whether in Spain or the UK. there are many legal schemes to limit your taxes if you’re a high earner. The tax authorities in both countries are constantly trying to maximise their take, while clever accountants are constantly trying to minimise their clients’ contributions.
Another wave of legislation is currently planned in both countries and the tax accountants will find new ways to protect their clients. When my tax affairs became less complicated, I tried doing my own returns and failed miserably, so I scuttled back to my Spanish tax advisor.
The planned new laws, on the surface, don’t look too complicated, if you don’t scratch the surface, but underneath are the usual complications to be resolved by various tax appeals and the courts over the next few years.
I admire and feel envious of people like Sir Philip Green, the Monaco based billionaire. He effectively limits his tax exposure legally, and I’m sure on a strict comparison basis with my meagre income, I pay proportionally more than he does.
That’s the way of the world and it was always thus.
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The more money you have the better accountants you can afford, and the more opportunities there’ll be to reduce your tax bill. There’s nothing clever about hiding away in Monaco for several months each year – most people would do the same if they could afford to. The simple solution is to replace income tax with land tax to a large extent, and then have a flat rate of income tax of say 10%, which most people would be prepared to pay without resorting to various offshore scemes.
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I agree with a flat rate of income tax as then it would be clear how much everyone has to pay. If someone becomes lucky enough to be a high earner I can see it would be very galling to then have to hand over a major chunck of it to the Gov. If it was as Chopera says, a flat 10% for everyone, then there would be more money coming in as mostly everyone would pay? And there would be far fewer civil servants with paperwork to do.
Make VAT/IVA less as well and stop all ‘VAT free’ sales. You pay this price and that’s the price and that’s the set % the Gov. gets.
It’s so complicated to keep paper shufflers in jobs?
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All these new tax laws do is bring Spain into line with any other EU state. Previously and for a very long time expatriates had the best of all worlds. Not declaring their world wide assets and paying a megre amount on their declared income in Spain.
The times have changed. Ignoring these laws in the belief the Spanish tax man is basically a dunce is now very unwise.I realise ex-pats are not the principal target here, it’s the black economy which thrives very well in Spain and in these current times increasing. However ‘Bugins Law’ rules here and everyone is being treated equally and caught in the same net. That’s fair n’est-il pas. 🙂
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I wonder what will happen to many of my friends. Husband has had to go back to the UK to work whilst the wife and kids stay out in Spain. They probably claim child benefit (didn’t ever want to ‘ask’) but I assume. They always said that they would go back to the UK if they needed a doctor or dentist. The kids were registered in school.
If they pay IBI, basura and have current account bank accounts and a mortgage over there what will they do. Admit that they live in Spain and register there? Are they gaining so much more for not declaring that they live in Spain? I don’t think so as you can claim child benefit for children living outside of the state can’t you, as do so many Poles etc.? Is it best for their children to register over there as resident?
I bet a few are going to be worried that they’ll be fined if they don’t do it? How much does it all cost to register as well as it’s all so difficult with gestors etc. that i’m sure lots haven’t bothered due to not wanting the stress of it all?
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itsme – I’m not sure of the answer to your question(s), but if the husband is working and paying tax in the UK then they might be entitled to child benefit -since it’s basically the UK government giving his money back to him (after they’ve taken their cut for admin costs, etc)
You need to have a NIE to function in Spain for any length of time (take out bank account, mortgage, etc) so I assume they must have registered as Spanish residents at some point.
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I’ve got an NIE from when I started work in Spain when I first arrived there. I never registered as an official resident though…lived in such a backwater that most officials thought that because I lived there I was ‘resident’ as that’s what I thought that thing was with Europe, freedom to go wherever? I think that many of my friends out there still are like me, they have NIE’s which they bought their houses with, got mortgages etc. but they don’t have a piece of paper or whatever to say they are an actual resident. There are some people who say that Spain can’t force you to declare as a resident? is that true? I guess there are lots of ‘floating’ people in Europe who come from one country but deal with another officially?
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@itsme wrote:
I’ve got an NIE from when I started work in Spain when I first arrived there. I never registered as an official resident though…lived in such a backwater that most officials thought that because I lived there I was ‘resident’ as that’s what I thought that thing was with Europe, freedom to go wherever? I think that many of my friends out there still are like me, they have NIE’s which they bought their houses with, got mortgages etc. but they don’t have a piece of paper or whatever to say they are an actual resident. There are some people who say that Spain can’t force you to declare as a resident? is that true? I guess there are lots of ‘floating’ people in Europe who come from one country but deal with another officially?
You can certainly go and live/work anywhere within the EU but you still have a responsibility to declare where you are resident. If you didn’t declare yourself resident in Spain then you would have remained a resident of Ireland I guess (unless you told them you were living elsewhere).
I guess people who don’t work (or don’t work legally) in Spain can get away without being resident if they can get hold of a NIE. But you’ll need to be resident to get onto the social security, get a medical card, etc. If I was living in Spain with kids (which I am) then I really wouldn’t mess around with things like that. Flying back to the UK to see a doctor ain’t much good if your child is seriously ill – they might not be let on the plane for a start.
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@itsme wrote:
I wonder what will happen to many of my friends. Husband has had to go back to the UK to work whilst the wife and kids stay out in Spain. They probably claim child benefit (didn’t ever want to ‘ask’) but I assume. They always said that they would go back to the UK if they needed a doctor or dentist. The kids were registered in school.
If they pay IBI, basura and have current account bank accounts and a mortgage over there what will they do. Admit that they live in Spain and register there? Are they gaining so much more for not declaring that they live in Spain? I don’t think so as you can claim child benefit for children living outside of the state can’t you, as do so many Poles etc.? Is it best for their children to register over there as resident?
I bet a few are going to be worried that they’ll be fined if they don’t do it? How much does it all cost to register as well as it’s all so difficult with gestors etc. that i’m sure lots haven’t bothered due to not wanting the stress of it all?
easy, he can be a tax resident in the UK, and still reside most of the year in Spain. If I remember correctly you are a tax resident in the UK if you spend over 3 months there? Mark probably has an article on it if you look
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I guess then because I married a Spanish man I was added to the health system due to his payments? Our eldest was born there and the youngest in the UK (where I am originally from). Now i’m registering with a doctor in Ireland but here we’ll have to get health insurance I think.
So, I wonder how many Brits out in Spain are actually not official residents but believe that they are?
ps, I guess a lot of Brits out there are using the european medical card for any emergency use but then fly back for a doctor? I guess it’s more difficult to ‘pretend’ to be living in the UK for a long time? BUT, what about as I said, those who have husbands working in the UK. They will have an address, usually the parents or family. I bet there are a lot of them. Will Spain suddenly jump out of recession when all these previously unknowns start to pay tax?
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Rocker, ol Phil Green might be super rich whether the way it’s structured is termed legal avoidance, to me it seems like evasion though (from UK coffers but just my opinion there), however with all that money he is no looker and he can’t change that, I would bet money that you beat him on that score as many normal earners probably do to:wink:
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Back to the subject. It seems to me that from 1st of Jan 13. The taxes on a new built or a second hand property will equalise to 10% call it VAT or what ever.
I felt it was grossly unfair that owners had to compete against the lower taxes of new built and at the same time Banks will not offer a mortgage to the prospective buyers. As they wanted to shift their own properties. It has to be in Spain where they set one Citizen against another.
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From my dealings with Hacienda, I suspect that many members of this forum are more knowledgeable about the tax laws than they are, but they won’t admit it and the official you come face to face with, like any other Spanish bureaucrat, will think he’s God.
The inquisitorial system is mostly still in place, though people are no longer put to death, but you are mostly still presumed guilty and have to prove yourself innocent. That can be quite hard when Hacienda get it wrong.
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Yes you are totally correct on that Rocker. When you are dealing with the tax authorities in most european countries it’s usually up to the defendant to actually prove their innocence and not the other way around. The problem with Spain though is that many of bureaucrats do whatever they want with no reprucushions.
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@itsme wrote:
I guess then because I married a Spanish man I was added to the health system due to his payments? Our eldest was born there and the youngest in the UK (where I am originally from). Now i’m registering with a doctor in Ireland but here we’ll have to get health insurance I think.
So, I wonder how many Brits out in Spain are actually not official residents but believe that they are?
ps, I guess a lot of Brits out there are using the european medical card for any emergency use but then fly back for a doctor? I guess it’s more difficult to ‘pretend’ to be living in the UK for a long time? BUT, what about as I said, those who have husbands working in the UK. They will have an address, usually the parents or family. I bet there are a lot of them. Will Spain suddenly jump out of recession when all these previously unknowns start to pay tax?
You usually need to register with a medical centre/doctor and have a “tarjeta sanitaria” to get regular medical treatment. It’s a while since I did it but you probably have to show you are “empadronado” somewhere as well. If you’re married to a Spaniard then I’m pretty sure he would have sorted it out for you. However your friends you mentioned who might not be registered at all in Spain, and relying on flying their kids to the UK for medical treatment would be taking a risk. However if their kids are in a state school then I guess they must have residency. To be honest I don’t know how it works on the costas – they might turn a blind eye to it as making life “complicated” for expats is somewhat biting the hand that feeds.
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@shakeel wrote:
Back to the subject. It seems to me that from 1st of Jan 13. The taxes on a new built or a second hand property will equalise to 10% call it VAT or what ever.
I felt it was grossly unfair that owners had to compete against the lower taxes of new built and at the same time Banks will not offer a mortgage to the prospective buyers. As they wanted to shift their own properties. It has to be in Spain where they set one Citizen against another.
well actually as i understand it, new builds will work out more expensive than resales.
Example for andalucia
resales:
purchase at 200,000€
16.000€, 8% tax
650 land registry
550 notary
300 extras
= 217,500€new build:
purchase at 200.000€
20.000€ 10% IVA
650 land registry
550 notary
2.400€ 1.2% IAJD
300€ extras
= 223.900€of course these a rough examples, so it could be several hundred euros either way, and I added 300€ for extras.
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Chopera, I sorted it myself for us all, as i said i’m married to a Spaniard… 😉
I used to go to the medical centre and just say my name and NIE and then a few years ago they started asking for the medical card, which I didn’t have, so I applied for one with a photocopy of my NIE. The children had their names in the medical centre system so just needed their birth certs (one spanish and other translated english one).
I’m also on the padron, which I think you only need to have an address and NIE for.
Maybe it’s just because it’s a small town and in a city it might be much more strict??
So, I don’t believe that i was ever an official ‘resident’ as I never applied for it. How many others are in the same situation. They will all have NIE numbers from buying property but I bet thousands aren’t actually resident? If they are living there in Spain and are retired, get their pensions into their spanish accounts, use the receprical (sp?) medical for Brits over in Spain and just use an NIE are they now going to be ‘fined’ if they have say 300 euros in their BBVA account? I guess that is a major worry for lots over there?
Anyway, sorry for changing subject again.
Why can’t the tax on all properties be about 3%, the same as the estate agent should be (or even less for the amount of work they don’t do…). Then there might be more sales?
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@itsme wrote:
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Why can’t the tax on all properties be about 3%, the same as the estate agent should be (or even less for the amount of work they don’t do…). Then there might be more sales?
I asked the same question when I first came to Spain and got dragged into Spanish property by my wife 😉
The reply I got was that when they decided to implement the tax they hadn’t got a clue what level to set it at so they just copied the French. At the time no one complained because this was back when you could buy a villa with the change from buying a packet of crisps. Also there was desgravación – a generous yearly tax rebate that roughly meant you got the money back within say 10 years (provided you declared your income and took out a mortgage). As prices crept up and people found they needed over a year’s salary just to pay the tax on buying a property then people simply reduced it more by paying more in black money.
Now purchasers are really going to be hit by a double whammy – high purchase taxes and no desgravación. If you add in the fact that the government does seem to be making an effort to crack down on the use of black money, the only conclusion you can come to is that this is the final kick in the nuts for the Spanish property market. It’ll knock another 20% off prices that have already fallen by 50%.
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I copied this from another forum: The aggressive tax policy has begun. Beware.
The Spanish Tax Authority is now taking
unpaid taxes direct from bank accounts2011 – Warning Letters
The tax authorities sent 300.000 letters to non resident property owners, informing them that there is no record of them paying their Non Resident taxes.2012 – Final Tax Demands
Now being sent. Tax bills from 2006 onwards with hefty fines to follow. One bill per person, per property, per year, to Spanish holiday home addresses and with limited time to respond.2013 – Consequences
If you ignore your tax obligations or these letters, your bank account will be frozen until your tax debt is cleared.Remember: Non Resident Tax is not optional
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@logan wrote:
I copied this from another forum: The aggressive tax policy has begun. Beware.
The Spanish Tax Authority is now taking
unpaid taxes direct from bank accounts2011 – Warning Letters
The tax authorities sent 300.000 letters to non resident property owners, informing them that there is no record of them paying their Non Resident taxes.2012 – Final Tax Demands
Now being sent. Tax bills from 2006 onwards with hefty fines to follow. One bill per person, per property, per year, to Spanish holiday home addresses and with limited time to respond.2013 – Consequences
If you ignore your tax obligations or these letters, your bank account will be frozen until your tax debt is cleared.Remember: Non Resident Tax is not optional
And thus starts the next bank run in Spain
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That is very aggressive of them logan.
A few questions for you or anyone who knows:
When it mentions taking tax direct from bank accounts for non residents does this mean from their accounts in Spain which I assume, or am I reading it wrong? Can they take that tax from Bank accounts abroad?
What would happen if those non residents ran their Spanish accounts down to peanuts so to speak so no tax could be collected, would the authorities then impose a charge on those properties for unpaid taxes and fines? If so, suppose the property was mortgaged to the hilt, how would they collect the tax then? 🙄
Going back to 2006 will be quite a hit for some I imagine 🙄
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@angie wrote:
That is very aggressive of them logan.
A few questions for you or anyone who knows:
When it mentions taking tax direct from bank accounts for non residents does this mean from their accounts in Spain which I assume, or am I reading it wrong? Can they take that tax from Bank accounts abroad?
Angie last year the Spanish government said something about making it obligatory for all residents to declare overseas bank accounts (which I’m sure everyone ignored in the customary way) so I suspect they do indeed intend to raid foreign bank accounts. Merkel (and Rajoy) also want to push through a banking union, so even if they can’t actually do it now, they probably soon will be able to.
@angie wrote:
What would happen if those non residents ran their Spanish accounts down to peanuts so to speak so no tax could be collected, would the authorities then impose a charge on those properties for unpaid taxes and fines? If so, suppose the property was mortgaged to the hilt, how would they collect the tax then? 🙄
that’s exactly what they will do (and thus starts the next Spanish bank run)
Spain has got itself into this position by turning a blind eye to foreign money when it was pouring into the country, so there’s little it can do about it pouring out again. What amazes me is that they’re offering residency to foreigners who buy (still overpriced) properties – it’s as if they just don’t get it. A Russian or Chinese can disappear in the blink of an eye, leaving all unpaid debts behind.
@angie wrote:
Going back to 2006 will be quite a hit for some I imagine 🙄
If they owe the money then they owe the money. The problem is that Spain has been so useless at collecting taxes, and the system so opaque, that it is at times impossible to pay taxes. Some people have gamed the system of course, but I suspect there are a few out there who have made the effort to pay what they think are their dues, only to find that the government are arbitrarily deciding to enforce further tax collection retrospectively (sounds familiar).
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Thanks guys, it seems that whilst it is aggressive they can do little about it if there’s next to nothing in the Spanish bank account and a mortgage up to the hilt. One could walk away if they have no idea of assets abroad, and address abroad methinks. Agree with Chopera too, it will likely start the next run on the Spanish Banks. 🙄
BTW Mark has just posted separate topic on this so will post there as it will keep it up to date rather than the 10% VAT topic 😉
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I wouldn’t worry too much about any of this. They have now delayed practically all repossessions for the next two years and most mayors have instructed ‘their’ police not to assist in their executions, thus making it impossible anyway.
All sorts of people can embargo your Spanish bank account, and most residents only use their accounts in Spain for day-to day business, and holiday home owners would be crazy to move their main accounts to Spain. There are many ways round an embargo, a lot of which are frivolous anyway.
However, the continuing bad publicity will not help the Spanish property market.
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I used to think that the most corrupt country on Earth was Britain, that was until I found out about the shenanigans that go on in Spain. My top ten list of the most corrupt countries on Earth are (Number 1 being the most corrupt):
1. Spain
2. Britain
3. Ireland
4. United States
5. Portugal
6. Greece
7. Italy
8. Bulgaria
9. Romania
10. MexicoTo think that nearly twenty years ago now I was trying to persuade my father to sell his house in London and move to Spain for a better lifestyle, climate etc. Just as well it never happened. Spain is such an evil cesspit it makes me wonder why anybody on this forum is even in the slightest bit interested in wanting to buy property there particuarly when everybody in Spain is trying to sell their property and trying to get out of Spain. God help anybody who has a home, business or family in Spain.
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@Rocker wrote:
I wouldn’t worry too much about any of this. They have now delayed practically all repossessions for the next two years and most mayors have instructed ‘their’ police not to assist in their executions, thus making it impossible anyway.
All sorts of people can embargo your Spanish bank account, and most residents only use their accounts in Spain for day-to day business, and holiday home owners would be crazy to move their main accounts to Spain. There are many ways round an embargo, a lot of which are frivolous anyway.
However, the continuing bad publicity will not help the Spanish property market.
I believe they have only delayed repossessions for extreme cases, e.g. “familias numerosas” (usually with 3 kids or more) where both parents are unemployed.
If one parent happens to be working, paying tax (and therefore contributing towards the benefits of unemployed parents) then they can still be evicted if they can’t meet their payments. Of course rather than losing their house the working person would probably “arrange” to be made unemployed instead (and therefore add even more to the tax burden of those left working). Dominoes anyone? It’s a great way to run an economy.
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mmm, if the tax man wants your money, he will get it. ANY money that goes into the account will be taken, which will make it problematical for owners to pay water/electricity rates, mortgages, etc… Even if the property owner finds away around this, they would simply place an embargo on the property, which would have to be cleared prior to selling the property.
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It defeats me understanding why property owners think they can get away with not complying with their obligations. Community fees are another problem. There is a great deal of bad debt in communities as well.
If owners are strapped for cash they should sell at whatever price they can get, take the loss, wipe their mouths, move on and get their finances in order. Burying the head, ostrich like simply makes everything a whole lot worse.
If a property is cheap enough someone will buy it. Then get on with life.
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Again….lots of people can’t sell for whatever price they could sell for because they have mortgages on the property.
Tell me how we can sell our flat for four times the amount the banks are selling next door ones and i’ll be eternally grateful!
That or how we can get just over 100k in cash to pay off the mortgage to then sell the property for the going rate of about 20k just to get shot of the place.
ps, when we lived in Spain we did our tax return (renta) and the previous years outstanding IBI was automatically deducted by the town hall. So, they can dip in to your money when they want to.
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You have my sympathies with your plight Itsme. Would it not be better for you to simply hand the property back to the bank. There is legal structure to do it which costs around €1500. Your lawyer could advise you. Doing that legally will stop them pursuing you. You have probably considered all your options already. However consider the property is unlikely to regain any of it’s mortgaged value for at least 10 years.
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@logan wrote:
You have my sympathies with your plight Itsme. Would it not be better for you to simply hand the property back to the bank. There is legal structure to do it which costs around €1500. Your lawyer could advise you. Doing that legally will stop them pursuing you. You have probably considered all your options already. However consider the property is unlikely to regain any of it’s mortgaged value for at least 10 years.
The bank would sell the property for peanuts and go after itsme’s other assets to make up the shortfall. Or more likely they’ll go after her husband’s (as he is Spanish) and any member of his family who might have been used as a guarantor. This has been happening in Spain – first the kids lose their house to the bank, they move back in with their parents, and then the bank goes after the parents as well. Whole families are ending up on the streets – living between blocks of empty flats.
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Many, mostly Spanish property owners are affected by negative equity because of the shocking falls in property values over the past five years. Sending the keys back is not an option, the Spanish laws don’t allow it and Banks will only agree to it if they can recover their loans without losses.
The government is pushing through legislation aimed at restructuring debt to avert a national disaster, and repossessions have virtually stopped for various reasons, they have to, people are already taking to the streets to stop them.
I know expats who have chosen to send their keys back, simply because they can no longer afford the mortgage payments. The banks will pursue them back in the UK if they can, but are not always prepared to pay for the services of the British ‘debt’ collectors, whose services don’t come cheap; the old saying ‘you can’t get blood out of a stone’ may apply.
A significant rise in property values is the only solution, along with much less unemployment, but I think it will take a while.
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It’s true, we have my father in law as guarantor. If it was only 1500 euros worth of fees to hand it back we’d get on a plane this afternoon to do it!
It’s a no go but I live in hope 🙂 It’s difficult as I can’t see how we can get even back to property values being worth the mortgage amount, maybe in 5/10 years? In that time we’ve had to pay 500 euros or more per month. We are throwing money into a money pit which we may, one day, be able to sell for the grand profit of zero….
One day I hope, one day….. It’s hard though seeing the prices so low as they are.. ..great for buyers so they don’t get stung like we did, but hard when we could have four flats for the one mortgage 🙁
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@Rocker wrote:
Many, mostly Spanish property owners are affected by negative equity because of the shocking falls in property values over the past five years. Sending the keys back is not an option, the Spanish laws don’t allow it and Banks will only agree to it if they can recover their loans without losses.
Even if you can’t actually “send the keys back” you can stop payments and wait for them to take the keys from you – which they have been doing, regardless of whether they can sell the property for the value of the mortgage (they will try to get the outstanding balance in other ways)
@Rocker wrote:
The government is pushing through legislation aimed at restructuring debt to avert a national disaster, and repossessions have virtually stopped for various reasons, they have to, people are already taking to the streets to stop them.
It was the suicide of a woman in Valencia that prompted the government to place a two year halt on repossessions in “extreme cases”. If you are not an “extreme case” but at risk of repossession anyway then you have to become an “extreme case” to be protected 😕 .
@Rocker wrote:
I know expats who have chosen to send their keys back, simply because they can no longer afford the mortgage payments. The banks will pursue them back in the UK if they can, but are not always prepared to pay for the services of the British ‘debt’ collectors, whose services don’t come cheap; the old saying ‘you can’t get blood out of a stone’ may apply.
A significant rise in property values is the only solution, along with much less unemployment, but I think it will take a while.
The solution is to allow people to hand the keys back and walk away from the debt as well as the property. The lender must take the loss on any outstanding debt – after all it was the lender who valued the property when the purchase was made. There must also be a clear mechanism for allowing lenders to go bust without bringing down the entire financial system. Rising property prices never solved anything in the long run.
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If Itsme’s debt was sold on to a UK/Irish debt collector presumably the ‘Guarantor’ part is also sold on, it might be worth checking in case this is not the case 😕 . Itsme, there are UK websites where you can ask a legal question for free, or free advice from a lawyer at Citizens Advice, ask a property lawyer or contract lawyer about the ‘guarantor’ part.
Now with UK debt collectors, they generally buy debts say at 10p in the £, sometimes 20p in the pound but generally they won’t risk buying the debt for more, so say the debt is 100k euros they pay 10,000 euros and will try to recover as much as possible above this. However, if it becomes hard going for the debt collector and they are not allowed to harass nor chuck people out of their homes, (a judge would frown on such a move) maybe in this case the ‘Guarantor’, they have to come to a solution. At the end of the day, the debt collectors will cease chucking good money after bad if it’s protracted, and will in many case be prepared to do a deal or sometimes recover what they paid for the debt. If the debt collector agreed to recover his costs plus a bit more for his time, you will probably then be able to pay a smallish amount per month. They also don’t like bad publicity. With a large amount though, the debt might be sold for much less than you think, you need to find out this amount if possible.
Once the debt is sold on, the Bank don’t have a say in it which means they may be prepared to sell the debt cheaply, or for what the property is now worth. Perhaps worth asking someone in Spain who might know roughly how much they’d sell it on as this must be happening to others right now. Knowledge is good, then you will know what amount you are really dealing with. 🙄
I have dealt with several debt collectors on other matters on behalf of friends/family and always seen them off, they can be reported for any miss-demeanour, in one recent case I harassed the CEO (asked how he liked being disturbed at the weekend on his mobile phone) of a debt collector who’d made a mistake against someone, you can usually find their personal contact details on line, and made him pay for my time albeit with lots of M and S vouchers. 🙄
I wish you well Itsme 😉
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Thanks Angie. The flat is in my husbands name and his Dad as the now only surviving guarantor after my mother in law died. So it’s Spanish nationals. They, being Spanish, say we just have to pay. I am trying to fight it as it’s grossly unfair and hate the head in the sand ‘we can’t change the system’ mentality. It was wrong what the bank did but to be honest it just makes me stressed and upset. My husband pays in 400 euros per month so I guess the bank are just going to let us do that and keep racking up the interest owed.
Renting it is far too risky…who pays rent nowadays? There is even a Guardia Civil who doesn’t pay.
If we could find some well behaved Brits maybe paying 200 euros per month it would help, but how to find them…? We could ask a Brit agency who would take most of the rent in fees but at least it would be lived in and the electricity, water, rubbish, community fees etc. paid for. But my husband prefers it to be locked up and his sister checks on it every now and again.
Chopera for President….! Let people hand the keys back and the banks take responsibility of their dodgy deeds. I do think that in cases where the banks have conned people (as they sadly did to us) there should be a way to put forward the case for handing back the keys and walking away debt free.
Jorge from CajaMurcia held my 6 month old baby whilst his friend over-valued the property. He knew he was conning us and planning on adding my parents in law to the re-mortgage (as my husband bought first by himself with no guarantor when they took all his savings to hand him a 100% mortgage). He and bank manager Fernando knew that they had planned on two cheques of 7k each being made out to themselves in the guarantors name. They added 3k commission to it all afterwards on the bank system.
They did a runner from the bank and the latest bank manager says ‘we have a file of what they got up to but they didn’t steal from the bank, they stole from the customers’ oh, that makes it all ok then…
I don’t think that someone who bought in the boom, who can afford the mortgage and just wants to hand the keys back to buy a similar place for half the price in their savings is right. I know a few who managed it, how ?? They handed the keys for the flat back and their parents paid cash for them to have a duplex. Lucky for them but not right for the whole system.
By the way, the banks don’t wait for you to literally hand your keys back. They take a lock smith and change the locks as that is what happened to a British guy who hadn’t paid and asked me to check up on the place. I couldn’t get in with his keys and asked at his bank and they said that they had taken it back. I guess that’s easier than evicting people actually living in the place. That being the case there should be a lot of cheap rentals out there for people with holiday homes who don’t want their place repossessed just yet?
Those who are protected from eviction are probably very few…you have to all be unemployed and not receiving benefits and have young children or someone disabled. Most people probably miss out by a few years for having older children and probably receive very little in family help but maybe it’s too much to then stop being evicted. Then not being evicted for 2 years doesn’t stop the debt mounting up so it’s just holding back the sad stories for a while longer…..?
Someone on the Eye on Spain forum asked why people couldn’t live on the 400 euros benefit per month. What planet are they on…. it’s not difficult work out the cost of a 100k mortgage so it is either mortgage or food for hundreds of thousands of households in Spain. Who with children would pay all their money to the bank rather than feed their children??
The drama in Spain continues and it’s a very difficult situation. They need to try to encourage sales but there have been so many terrible cases that who can trust buying at the moment?
Whilst i’m on a typing roll…. can anyone tell me why the college of notaries can’t be sued for so many of the property problems in Spain? They are the ones reading out the law aren’t they, what happens when it was a con, why isn’t it their fault?
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I do know personally of at least one case where a debtor managed to get the bank to agree a legal transfer back to the bank with guarantees of no further action. The process has a legal title which I’m afraid I don’t know.
In this case the market value of the property was much less than the level of debt. The debt was €120 and value of €80k. I happen to know this because the bank offered it to me. Even at €80k it was too expensive about 2 years ago. -
I know the Spanish system quite well and have lived it for many years. I’ve had bank accounts and small investments with Banco de Valencia and CAM bank until I finally realised what was happening with the appalling way they were run and the ridiculous lending, mainly to property developers, that was taking place. I got out five years ago, relatively but not quite unscathed.
It gives me no satisfaction to say that I saw the disaster coming and I still live in Spain and see the consequences on a daily basis.
But who do you blame? Negligent banks, greedy property developers, foolish buyers? The list is much longer and goes much higher, but what is the point of it now?
If the bad bank take on the empty houses and don’t throw them on to the market, the market will have a chance to recover; the demand for properties in the sun will always be there, whichever cold country the buyers come from.
Outside right now, the sun is shining brightly, but there is a cold wind blowing. A similar cold wind has hit the Spanish property market, but like the wind now blowing leaves into my swimming pool, it won’t last forever.
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@Rocker wrote:
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But who do you blame? Negligent banks, greedy property developers, foolish buyers? The list is much longer and goes much higher, but what is the point of it now?You left out the politicians who made sure the system was so corrupt, profited from it, failed to regulate the banks and the property markets, and who profited from that as well.
The point in blaming people is so the system can be overhauled, and this sort of thing prevented from happening again.
@Rocker wrote:
If the bad bank take on the empty houses and don’t throw them on to the market, the market will have a chance to recover; the demand for properties in the sun will always be there, whichever cold country the buyers come from.
Outside right now, the sun is shining brightly, but there is a cold wind blowing. A similar cold wind has hit the Spanish property market, but like the wind now blowing leaves into my swimming pool, it won’t last forever.
With a bit of luck prices won’t recover but transaction volumes will. I agree that at some point the Spanish economy will start to pick up, but not for a few years yet, however when it does the Spanish youth who have had it so tough recently will suddenly find they have jobs and access to cheap property. Let’s hope it stays that way.
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@Chopera wrote:
With a bit of luck prices won’t recover but transaction volumes will. I agree that at some point the Spanish economy will start to pick up, but not for a few years yet, however when it does the Spanish youth who have had it so tough recently will suddenly find they have jobs and access to cheap property. Let’s hope it stays that way.
That’s a very valid point Chopera. If and when the Spanish economy starts to turn it will be slow and from a very low base. So inevitably salaries will also remain low. The employment market will be competitive with desperate workers willing to take a job for smaller returns. Property values reflects incomes.
However even that has somewhere to go as unemployment in the Eurozone as a whole continues to rise with figures of almost 12% announced today, that’s 18.7 million people of the working population. 26.2% in Spain an increase on 25.8% the previous month. It’s a horror real story. http://www.bbc.co.uk/news/business-20554321
I’m not even sure we can rely on economic growth in Europe as a given any longer. 🙁 -
Here is a rather strange fact on Spanish (and British) property prices of which I have personal knowledge.
25 years ago you could sell your semi detached house in Bexleyheath and buy a four bedroom villa with a swimming pool in Spain with the proceeds.
Today, I could sell my villa in Spain and buy a semi detached house in Bexleyheath with the proceeds.
I’m not going to.
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It seems tax evasion helps you live much longer. 🙂
http://www.dailymail.co.uk/news/article-2240855/How-does-nation-rank-world-map-life-expectancy.html -
@itsme wrote:
I guess you wouldn’t need to have to go back 25 years. What about going back 10/12 years and it would be the same wouldn’t it?
What was the % rise and fall of real property prices in Spain during 2000 until 2012 (up and down?) ?
I would estimate that between 2000 and 2006, the property prices doubled, and now they’re back at 2000 levels.
Thinking about my London semi post, it would tend to show that 25 years ago Spain was a poor country, and it is again a poor country today.
How could it be any other way with youth unemployment at over 50%?
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@logan wrote:
I copied this from another forum: The aggressive tax policy has begun. Beware.
The Spanish Tax Authority is now taking
unpaid taxes direct from bank accounts2011 – Warning Letters
The tax authorities sent 300.000 letters to non resident property owners, informing them that there is no record of them paying their Non Resident taxes.2012 – Final Tax Demands
Now being sent. Tax bills from 2006 onwards with hefty fines to follow. One bill per person, per property, per year, to Spanish holiday home addresses and with limited time to respond.2013 – Consequences
If you ignore your tax obligations or these letters, your bank account will be frozen until your tax debt is cleared.Remember: Non Resident Tax is not optional
All this has been put out by afirm of Lawyers with a vested interest 🙄 Ex-pat rumour and scaremongoring. Who said spanish tax isn’t draconian 😮 We pay thousands less in the UK.
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I have to say I don’t understand Katy how that’s possible. It depends on your personal circumstances of course but every calculation I have made are au contraire.
Council tax for example is far higher in UK than either Spain or France. You require a relatively average income to be forced into the 40% tax band (£37.400+) with low personal threshold allowances (£6.475) Then there is 12% national insurance and the absolute need to make high pension contributions either corporate or private.
If you exclude UK council tax I actually think both countries are now fairly similar with France being much higher. 🙁
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I wasn’t refering to council tax although we haven’t found much difference. In Marbella we paid (approx. figures) 1250€ plus 850€ urbanisation fees. That was around 2 yrs ago, so probably more now. We pay around £2400 in the UK. Slightly more expensive but there are lots more services provided if needed!
Income tax is higher in Spain we pay thousands less here in the UK although it does depend on individual earnings. Someone I know who is receiving company pension and state pension says they are better off taxed in the UK.
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Well this may be a clue to why thousands of ex-pats living in France and Spain are trying to hold on to their fiscal residency in UK. It does of course mean illegalities in many cases because of the period they live there.
In Spain it’s almost now essential with the new tax laws forcing fiscal residents to declare their banks accounts and assets on penalty of a €10k fine.
As I have said Spain’s is getting serious on tax and it’s time for people to wake up rapido. -
katy I really doubt them being better off tax wise in the UK compared to Spain. Low earners pay very little tax in Spain. Most countries with tax treaties with Spain when it comes to pensions have it quite a lot better in Spain compared to their home country. If you earn a lot working it’s the other way around though.
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@Ardun wrote:
katy I really doubt them being better off tax wise in the UK compared to Spain. Low earners pay very little tax in Spain. Most countries with tax treaties with Spain when it comes to pensions have it quite a lot better in Spain compared to their home country. If you earn a lot working it’s the other way around though.
Well don’t doubt it as it’s true for us and others have said the same. It used to be the other way round when we first lived in Spain but it has swung the other way since Zapatero.
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Regarding Council Tax I see that Fuengi posted an article on his site that up to 3 million homes could have their rateable values increased in 2013, if you are reading Fuengi, how much could this rise on average properties and is it definite? 🙄
Also, I think it’s madness of the Government to raise the IVA from 4% to 10% on new property purchases after December, for example a 6% increase on a 300k property, 18k extra? Talk about shoot themselves in the foot, surely developers/banks will have to discount further to allow for this in order to get sales? 🙄
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@angie wrote:
I see that Fuengi posted an article on his site that up to 3 million homes could have their rateable values increased in 2013, if you are reading Fuengi, how much could this rise on average properties and is it definite?
Hi Angie,
The Government has approved a general increase in property tax rates (depending on when the ‘valor catastral’ was last revised. IF last revised before 2002, expect and increase of 10%, between 2002 and 2004 exepct a 6% increase and between 2008 to 2011, a 4% increase.
Up to the townhall whether we get a full increase or whether it is done incrementally over several years (i believe up to 10 years). -
I’ve got a lot of time for your view points Andrew I wish more agents were like you in Spain, for what it’s worth if I was buying on the CDS or recommending an agent there you’d be top of the list, and, at last I can see some value around now in Spain for lifestyle change as opposed to just investment. That said, I would probably wait a while longer to get some more of the gremlins out of the system first with the economic uncertainties around. 😉
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