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Tax form 720

Raymundo Larraín Nesbitt, April, 20. 2018

The following blog post has been summarised to avoid unnecessary tax technicalities. The quoted tax rates are subject to change from one year to the next. Seek professional legal advice on your matter – see disclaimer below.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
20th of April 2018

 

This tax form is only for reporting purposes, you do not actually pay any tax on filing it. I have structured this blog post as a FAQ for ease of comprehension.

Who needs to declare?

Spanish residents who own overseas assets over €50,000.

E.g. Mr and Mrs Smith live in Mijas Costa all year round. They own two houses in England, have open bank accounts in the UK and receive UK-based pensions. They consider themselves non-residents in Spain and only pay taxes in the UK.

Mr and Mrs Smith are in fact tax resident in Spain and need to file each a tax form 720.

Again, and for the avoidance of doubt, if you are non-resident in Spain you do NOT need to file this tax form.

Who is considered tax resident in Spain?

The Spanish Tax Office applies the following criteria:

  • You spend more than 183 days in a calendar year in Spanish territory.
  • Your centre of financial interests is located in Spain.
  • Your spouse and/or underage children live in Spain.

 

Reporting categories

There are three reporting categories, based on bank accounts, investments and immovable property.

Obligation to report?

You must report all assets in a particular category if the value of your total assets in it exceeds €50,000.

2018 submission period

From the 1st of January until the 2nd of April 2018.

Can I file it after the submission period?

Yes, but penalties may apply. Ask us.

If you have already filed tax form 720 in the past

You only need to file it again if:

  • The value of an existing asset grew by more than €20,000, or
  • You sold an asset, or
  • You obtained a new asset.

 

Penalties for non-compliance

The fines levied are stiff.

  • Failing to file 720 or filing it incorrectly: €5,000 per infraction.
  • Minimum fine of €10,000 for each group of assets.
  • Penalty of 150% on unpaid income tax.

 

Tax form 720 challenged in Brussels

The disproportionate fines have led to it being challenged in Brussels. And rightfully so.

In the meantime, this tax form is enforceable.

If you haven’t been filing it, for whatever reason, but you voluntarily file it before the tax office inspects you, the above fines are vastly reduced (you pay 15 - 20% as opposed to 150%). Which is why we strongly advise you to come clean and file it, even after the deadline.

The Common Reporting Standard

Please take good note that with the advent of the Common Reporting Standard, signed by over 100 countries to combat tax evasion, as from the 1st of January 2018, the Spanish Tax Office is being spoon-fed fiscal information by your home tax office.

For example, both the HRMC and the (Irish) Revenue Commissioners are supplying the Spanish Tax Office with detailed information (and vice versa) on all your overseas assets and reported income derived abroad as from January 2018.

We strongly advise you to file tax form 720 if you are resident in Spain.

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, inheritance, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Tax services Larraín Nesbitt Lawyers can offer you

 

Taxation-related articles


Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Never act as a guarantor in a Spanish mortgage loan

Raymundo Larraín Nesbitt, April, 10. 2018

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
10th of April 2018

 

Family is a bond that often transcends everything. It is a safety net that we can fall upon when things turn pear-shaped. Loving parents (and grandparents) have programmed in their genes to seek the happiness and welfare of their children, the next generation. As getting a foothold on the first rung of the property ladder has never been tougher than today, some young adults require the unabated financial support of their family.

It is in this context that some young adults enlist their parents (and/or grandparents) to act as guarantors of their Spanish mortgage. I mean, who could be such a grass snake and light-hearted to refuse their own children this plea? Actually, YOU.

Kind-hearted parents, specially if they are non-residents, are blissfully unaware of what acting as a guarantor entails in the Spanish legal system. Basically, on applying for a mortgage-backed loan, a lender will be hungry to secure its loan as much as possible spreading the risk. Young adults on low incomes with precarious McJobs, may require to lean on their family who own mortgage-free properties. Parents believe that acting as co-guarantors on signing a deed before a Notary means that in the remote event of a default their children are first in the pecking order and that a lender will leave them for last, if at all. Crass error!

The fact they own mortgage-free properties is like warm candy in the eyes of a lender. In the event of defaulting a loan, a lender may start chasing the parents first! In my professional life I have witnessed how whole families have fallen like a house of cards one after the next because a lender has chased the children, then the parents and in some cases even the grandparents. Because of this, the safety net that I was speaking of in this blog’s introduction is completely wiped out, annihilated.

Additionally, on acting as a guarantor, a legal charge will be placed against your property by your children’s lender. This will seriously hamper your borowing ability should you need it later on in life i.e. raise funds due to poor health issues.

Although my advice may seem cold-hearted – I’m not even going to dispute it –  it is in fact borne out of experience and is very practical. If a young adult cannot afford the place of his dreams as his first abode, then he simply cannot; end of story. At no time should he drag in his whole family in the selfish and relentless pursuit of his own well-being. Life is about making sacrifices and choices and knowing when to concede. His parents already went through a life’s worth of ordeals and now deserve a well-earned rest, enjoying their properties; not being made homeless and destitute at age 50 along with their children. No one deserves that fate.

Bottom line, never act as a guarantor (avalista) in a Spanish mortgage loan as it may jeopardize your home. It is precisely because you love your children and care about them that you should refuse to accept. If your child has any money problems, he can always come back to the nest and lick his wounds until he gets up on his own two feet again. In time, your children will mature and come to terms with the decision you made, which was the right one for both. Who said parenting was easy?

 

“Children begin by loving their parents; as they grow older they judge them; sometimes they forgive them.” – Oscar Wilde

Oscar Fingal O'Flahertie Wills Wilde was an outstanding and brilliant Irish poet and playwright. He is best remembered for his epigrams and plays, and his novel The Picture of Dorian Gray. He died young imprisoned by an obtuse Society who abhorred of his sexual orientation.

 

This is one of many potential pitfalls buyers can be faced with. Our law firm has over 15 years’ experience dealing in conveyance matters. Don’t risk your hard-earned money, speak to independent lawyers.

 

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Mortgage-related articles


Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Buying resale property in Spain? Never allow a vendor to stay in the property

Raymundo Larraín Nesbitt, March, 30. 2018

This blog post explains the legal reasons on why you should never allow a vendor to remain in a property after you have paid for it.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
30th of March 2018

 

                                                                                                    

                                                                                                          Scammy needs to stay in your new home 'only' for a couple of days... he looks trusty.

 

Buyers, by nature, are hopeful and have a contagious positive outlook about them. However, this rose-tinted spectacles attitude may land them in hot water.

On buying property in Spain, some know-it-all vendors will politely ask his buyer if they can stay in the property ‘only’ for a couple of days until they have finished their move. The excuses they will give are multiple (preferably tear-shedding ones that build rapport appealing to your values, they work best with gentle souls):

  • “I am a single parent with young children. I need time to complete the move all by my own” (You care for young children, yes?).
  • “I only need a couple of days to pack my stuff up, you can trust me, I’m best friends with so and so, you know him/her” (You can trust a friend of a friend).
  • “It is now the summertime season and I cannot find affordable alternative accommodation” (I’m skint and homeless, have pity on me).
  • “I’m elderly and only need a couple of days to sort out some admin paperwork and I will be off in a jiffy” (I could be your father, you know).
  • “My pet Bungo can’t stand hotels. My vet says he needs fresh grass and sunlight for a few more days until I book my flight back to the UK” (you care for animals, yes?)
  • Other.

 

Fact is that some shrewd cookies, after selling a property have no intention whatsoever to leave the property they have just sold you. And why would they? It is all advantages for them to (over) stay in it:

  • They have just been paid for the property, so they are sitting on a pile of cash. It’s not as if they are cash-strapped.
  • They don’t need to pay a rental, because they ALREADY have the possession of the property, YOUR property.
  • They don’t need to move in their ‘stuff’, it is already there.
  • Any unpaid taxes or bills, they will not be responsible for, it is the new owner who is liable for them.
  • And God forbid the new owner stops paying the taxes or shuts off the utilities as he may find himself being criminally prosecuted by the vendor (coercion).

 

Some vendors abuse their position and besides cashing in on the property get a free pass with a free rental, all scot-free.

Buyers naively think they can just walk in and change the locks to the property or shut off the utilities. Well, they are in for a rude awakening on how Law works in Spain. The vendor can file a police report (denuncia) and the naïve buyer can be remanded into custody for illegal trespassing and or coercion. This is because the vendor only handed over the title to the property, NOT the possession.

If a buyer wants to vacate an abusive vendor he will be forced to hire a litigation lawyer and go through a full-blown eviction procedure at his own cost. These, on average, are taking 6 – 9 months in Spain. So, for the next 6 to 9 months the vendor avails himself with free rental and his lifestyle continues just the same as it was (well, with a few extra zeros in the bank and without having to pay any bills or taxes). Not bad, eh? Win-win.

Bottom line, buyer don’t be a muppet, never allow a vendor to stay in a property after you buy it. Demand possession on completing before a Notary Public. No house keys, no completion, period.

Possession is nine-tenths of the law.”  Scottish expression

 

This is one of many potential pitfalls resale buyers can be faced with. Our law firm has over 15 years’ experience dealing in conveyance matters. Don’t risk your hard-earned money, speak to independent lawyers.

 

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Conveyancing-related articles

Buying Resale Property in Spain – 21st February 2013
Buying Off-Plan Property in Spain – 8th of June 2013
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
Buying Property in Spain from a Developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017


Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Buying off-plan in Spain? You need a Building Licence

Raymundo Larraín Nesbitt, March, 20. 2018

This blog post explains the key importance a Building Licence has for a buyer.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
20th of March 2018

Today marks the start of springtime. This traditionally kickstarts the real estate season to buy property in Spain. Scores of Nordic, Swiss and German buyers will begin to assail estate agencies all over Spain in search of the perfect property.

A popular choice of late is buying offplan. Over the last year, dozens of new-builds have sprouted, particularly in the Estepona area. Whilst buying a new property has its advantages, it also has some major legal risks would-be buyers ought to be aware of.

In today’s post, I will comment on the recent change in 2015 to the bank guarantees law and how that can lead a buyer to lose all his money on buying offplan property.

Bank guarantees are a legal tool which act as a safety net on the deposits paid by a buyer should the developer file for bankruptcy or should the development not be completed.

The change in the law is that bank guarantees are only valid as from the time a developer attains a Building Licence from the town hall. Only as from this moment onwards are bank guarantees valid.

Many developers try to allay investor fears claiming they have an application for a Building Licence; well, that doesn’t suffice. Unless a developer has attained a Building Licence, all the money you have paid towards your new property is unsecured.

Should the developer go bankrupt or the development become stalled (for whatever reason) you will lose ALL your money. Even if you have been issued with bank guarantees rubber stamped by a bank, they are totally useless unless a Building Licence has been issued. More on this matter in our article: Law 20/2015: Important new bank-guarantee legislation explained for off-plan buyers.

 

This is one of many potential pitfalls offplan buyers can be faced with. Our law firm has over 15 years’ experience dealing in conveyance matters. Don’t risk your hard-earned money, speak to independent lawyers.

 

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Conveyancing related articles

Bank Guarantees in Spain – 8th April 2013
Licence of First Occupation Explained – 8th April 2013
Buying Off-Plan Property in Spain – 8th of June 2013
Law 20/2015: Important new bank-guarantee legislation explained for off-plan buyers – 21st September 2015
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
Buying Property in Spain from a Developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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7 reasons on why you need legal representation on selling in Spain

Raymundo Larraín Nesbitt, March, 7. 2018

Selling in Spain? This blog post explains why you need to appoint legal representation.

Blog post copyrighted © 2018. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
7th of March 2018

 

Whilst some property owners may find it unnecessary, or even pointless, to hire a lawyer on selling, it is strongly recommended to avoid problems.

  • Avoid payment scams. A seller that does not hire a lawyer is vulnerable and may fall prey to payment scams. Please read our article Selling Property in Spain – 10 Reasons to Hire a Lawyer which explains the kind of scams a seller may be faced with without appointing legal representation.
  • Avoid commission abuses on selling up. A seller that has no legal representation can be the subject of commission abuses by unscrupulous agents. An example of this here: commission abuses.  
  • Tax mitigation. We will mitigate your capital gains tax liability on selling. We can offset both the associated purchase costs as well as the refurbishment expenses on your property to reduce your tax burden as much as is legally admissible (contingent on the vendor supplying us with original VAT invoices).
  • Refund of 3% of the sales price. Non-residents, on selling in Spain, are withheld 3% of the sales proceeds by the buyer's lawyer. This money is paid into the Spanish Tax Office. We can apply for a refund on your behalf (if applicable).
  • Cancelling pre-existing mortgages. If there is an existing mortgage/charge against the seller's property this needs to be formally cancelled by a lawyer prior to selling on signing a deed witnessed by a Notary public. No buyer will acquire a property with an existing charge against it.
  • Apply for a duplicate NIE Number. Although your assigned NIE Number is yours for life, and does not change, the issued NIE certificate itself has only a 3-month validity. On selling, your Notary will require an up-to-date certificate from the Police. Avoid lengthy queues and red tape through us.
  • Are you selling at a loss? We can apply for a tax rebate on your ‘plusvalia’ tax. More details in our article: Have you sold property at a loss in Spain? You can now apply for a tax refund. No win no fee available.

 

Most of the points above can only be done on retaining a qualified lawyer. Hiring a lawyer on selling adds security and helps you pay less taxes.

Do you still think you do not need a lawyer on selling in Spain?

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, inheritance, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Conveyancing related articles

Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
Buying Property in Spain from a Developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
Selling Property in Spain – 10 Reasons to Hire a Lawyer – 8th December 2016

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Spain’s Supreme Court quashes borrower’s hopes on refunds for mortgage set up costs

Raymundo Larraín Nesbitt, March, 1. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1st of March 2018

 

Spain’s Supreme Court ruled yesterday 28th of February that Spanish lenders would not have to refund borrower’s Stamp Duty Tax on their Spanish mortgage. This new ruling allows Spanish lenders to dodge a multi-billion euro bullet. This now leaves the door ajar to be appealed before the European Court of Justice.

In a blog post we published well over a year ago (Lender’s to pay for mortgage setup costs – 27th of January 2017) we severely criticized this opportunistic litigation approach as the risks it entailed, in our humble opinion, were perilously close to indulging into reckless litigation that could leave borrowers seriously out-of-pocket on losing their court cases.

We warned yet again in our blog post of 16th March 2017 (Recap of Legal Actions in Spain against Banks & Others) that we personally found “bleak” the success odds of litigating against lenders for the purpose of recovering the set-up mortgage costs (point three). In line with this, our law firm tried to talk clients out of pursuing this litigation course because we did not see the likelihood of this turning out positive.

Fast-forward a year later, and the Supreme Court ruled yesterday against borrowers being refunded Stamp Duty for exactly the same legal reasons we pointed out in our January 2017 blog post. 

Notwithstanding the above, borrowers litigated en masse to recoup Notary fees, Land Registry fees and the Stamp Duty tax. Law courts have been awarding the Notary and Land Registry fees with a mixed bag of results (some rule that 100% should be awarded whereas other regional ones are of the opinion that only 50% should be awarded). This disparity in rulings prompted the Supreme Court to clarify the situation with yesterday’s ruling to settle the matter once and for all and unify Doctrine.

However, the lion’s share of the set-up costs was always the Stamp Duty which accounts for well over 90% of the set-up costs. It was this contentious point that made or break the case.

The Stamp Duty Act, a decades-old law, always made it clear that the taxpayer was the borrower, not the lender, so there was little to no room to manoeuvre. So, for this reason we labelled these legal actions with a “bleak” success outcome as opposed to other litigation options which have proven most successful.

It will be interesting to see what happens with the thousands of cases that were instigated on a no win no fee basis. I suspect that in many cases plaintiffs were not warned by their litigation lawyers that if they lost their case they would likely have to pay for the defendant’s set of legal costs; that is the bank’s lawyer’s fees, court runner's fees besides other lender's costs. More on this: No win no fee: not always a good idea.

Only the ECJ can now turn the tide of events in favour of borrowers…

You can find a press release from the Supreme Court here.

 

 Lawyers exist to protect us from other lawyers.

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in inheritance, conveyancing, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Litigation related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No delusional politician was harmed on writing this blog post. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

 

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Brexit and you

Raymundo Larraín Nesbitt, February, 19. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21st of February 2018

 

We have all listened to the embellished speeches, to the staunch defence of lofty ideals and as a result witnessed a splintered society consequence of the dissension sowed by irresponsible career politicians always eager to advance their own power even it is at the expense of a nation’s future. We are all too familiar with the political spiel, but how does Brexit really affect you, how does it affect your pocket?                                                            Image credit:  Theophilos Papadopoulos

This is something seldom spoken about. I will try to briefly summarise in this blog post the (short-term) impact of this landmark political decision from the Spanish perspective of non-resident British wishing to find a bolthole under the sun.

  • Income tax: Increased from 19% to 24%.
  • Inheritance tax: Lenient regional tax allowances will no longer be available; only national ones.
  • Inheritance tax: Local tax allowances will no longer be available.
  • Rentals: British residents will no longer qualify to benefit from generous landlord tax relief which reduce, on average, a rental income tax bill by 40%.
  • Capital gains tax: No rollover relief (under 65-year-olds) on reinvesting the sales proceeds in a new main home located in the United Kingdom.

 

What the future holds

Leaving my crystal ball aside, as a Member State, the United Kingdom is compelled to negotiate in block with the European Union’s appointed chief Negotiator, Mr Michel Barnier. I’m sure general de Gaulle would feel somewhat vindicated by the poetic justice of a Frenchman in the role of having to slap a ‘non’ to the UK – repeatedly –. There is no hiding this fiasco will be the most expensive divorce settlement in recorded history, some 60 billion euros. Which goes on to explain why the pound is sitting at an all-time low.

That said, once it is a fait accompli next 29th of March 2019 at midnight, and the dust settles, the United Kingdom will be unshackled to once more strike individual deals with Member States. Amongst them, Spain. It is undeniable the sway British hold over the Spanish economy. British are, by a long shot, the number one nation exporting tourists to Spain with over 18 million pa (and growing). The Tourism industry, set up slily by general Franco in the sixties, is Spain’s number one contributing GDP industry with over 16% (in fact, Spain became in 2017 the world’s second tourist destination overtaking the US). Not to mention that British unwaveringly spearhead the real estate market in Spain by number of non-domestic sales year-on-year. Likewise, the construction business in Spain accounts for a significant GDP contribution, with almost 6%. So, given the British clout over Spain's economy, like it or not with cherries on top, if the United Kingdom sneezes, we catch a cold in Spain.

British nationals, with the intent of acquiring property or who plan to become resident in Spain (i.e. retire), should be treated über generously from a taxation point of view to foster investments in Spain. Additionally, healthcare plays a major role for senior citizens, so this matter should also be agreed upon allowing them full rights. Spain must compete (aggressively) with our neighbours Portugal and France to attract British investments. The hawk-eyed politicians of these two countries, especially the former, have been all-too busy over the last two years approving fiscal and legal measures to entice British investments that put to shame what short-sighted Spanish politicians have been doing (nada) with their attention all-consumed by domestic matters.

Bottom line, for the sake of us all, the Spanish government should bend over backwards to reach an attractive proposition post-Brexit casting aside any inbred prejudices. This would allay investor fears and money, British money, would once more pour into the Spanish coffers in droves. Unashamedly borrowing a slogan from Bill Clinton's campaign, "It's the taxation, stupid."

One can only hope that Madrid gets a grip and realizes what is at stake here for the national economy. It is in the best interests of both nations that we seek a consensuated solution that works for us all in a brave new world.

Politics: the art of creating new problems where none existed.”

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in inheritance, conveyancing, taxation and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Conveyancing-related articles

Buying Property in Spain from a Private Seller (Resale Property) – 21st of February 2017
Buying Property in Spain from a Developer (Off-Plan Property) – 8th March 2017
How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
Buying Property in Spain – 10 Reasons to Hire a Lawyer – 8th November 2016
Selling Property in Spain – 10 Reasons to Hire a Lawyer – 8th December 2016

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. No delusional politician was harmed on writing this blog post. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

 

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How (not) to bypass regional Holiday Home Laws in Spain

Raymundo Larraín Nesbitt, February, 9. 2018

Photo: Nah ah! Judge Judy with her hallmark “no wagging finger”

 

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
9th of February 2018

 

Almost every region in Spain has regulated holiday homes over the last five years. These regional regulations define what is understood by ‘holiday home’. Boringly, almost every region has made a carbon copy excluding long-term rentals. So effectively, if your rent out your property long-term you do not have to comply with pesky holiday rental laws.

Now this is where it gets interesting. In the Balearics Islands long-term rentals are understood as those where a property is rented out to the same individual for more than a month. In Andalusia, a long-term rental is understood as leasing a property to the same individual for over 2 months.

Some would-be landlords, that lack the legal requirements to offer their plush properties as holiday homes (i.e. have NOT attained what is known as a Licence of First Occupation) or quite simply because they can’t be bothered to comply with the raft of new rental laws, are resorting to a devious mechanism to circumvent existing holiday home regulations. They are renting their properties out as fake ‘long term’ to intermediary companies, for say 8 months, and these in turn are busily subletting their properties short-term as holiday homes through property portals.

Landlords are all too aware their property is being sublet, as they purposely ‘forget’ to add the typical clause forbidding sublets which any lawyer worth his salt would advise. More on this in my blog post: Let-to-buy contracts: do not forget to add a clause forbidding sublets!.

These people think they are being smart flaunting existing regional holiday rental regulations. The fact is that regional inspectors will trawl internet ads on any portal (even if located and marketed outside Spain) and if the (Spanish) properties being offered as short-term accommodation lack the mandatory alphanumeric code or tourist licence registration number it will raise a red flag. Inspectors are not going to complicate themselves and will simply fine the registered Spanish property owner/s. Ignorance of law does not exempt from its fulfilment (article 6.1 of the Spanish Civil Code).

What this means in laymen’s terms is that all those property owners who mistakenly believe they have outsmarted regional laws on renting out their lush villas purportedly as long-term lease agreements, when in reality they are being offered by intermediaries as short-term accommodations in exchange of thousands of euros a week, are going to be landed in the future with humongous fines, plus penalties, plus interests on top. They are simply deluding themselves. More on landlord fines: Andalusia starts fining holiday home landlords.

The only legal way to circumvent holiday home regulations is signing a seasonal contract as explained in detail in my article: Seasonal lets: an alternative to holiday home rentals – 8th of October 2017. Taking alternative ‘options’ is simply chancing it. Failure to pay fines (and associated penalties) will result in a charge being placed against your property which may even lead you to lose it.

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in inheritance, conveyancing, taxation and litigation. We will be very pleased to discuss your matter with you. Please contact us for a free initial consultation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Rental-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

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Has your Spanish bank notified you they are going to disclose information about you to the Spanish Tax Office?

Raymundo Larraín Nesbitt, January, 30. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
30th of January 2018

 

In my article from last December 2017, Non-Resident Income Tax, I wrote on the consequences for non-residents on what is known as the Common Reporting Standard or CRS, for short.

Spain signed in 2014 a treaty, along with over 100 other countries, for cross-border tax co-operation to combat tax evasion. As from 2018, the Spanish Tax Authority (AEAT) will automatically receive a great deal of fiscal information from non-resident owners, including UK and Irish nationals. And by the same token, the Spanish Tax Office will be collating a great deal of fiscal information on you from Spanish banks, and other sources, and sending it back to all those countries that signed the CRS treaty.

One of the (most visible) results of this budding cooperation between tax offices is the letter or e-mail you will have received in January 2018 from your Spanish bank/s informing you they are going to pass along a great deal of fiscal information on you to the Spanish Tax Office, which in turn will relay it over to your home country’s tax office.

Both countries, going forward, will now be busy cross-checking your fiscal declarations and tax residency to catch you out in case you have not been declaring and paying your taxes in your country of tax residence as well as in Spain.

If you are tax resident in Spain, even unbeknownst to yourself, and you have failed to declare your income you may be facing fines for tax model 720 follow a sliding scale. Any ‘incongruity’ is fined starting at €10,000 and any data ‘omitted’ is fined starting at €5,000. Fines can lead up to a staggering 120% of the undeclared amounts you hold abroad on being resident in Spain. The afore does not preclude the fines for Income Tax which additionally can be up to 150%.

Bottom line, for your own sake, if you own assets or derive any income in Spain, get your taxes sorted out pronto because it is a ticking time bomb and time is running against you. Speak to us to sort out your tax matters and become fully tax compliant. We can help you sort out your tax affairs regularising them for a nominal fee for your peace of mind. We only charge for our legal services; a pain-free stomach is gratis

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. Please contact us for a free initial consultation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Taxation-related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Holiday Rentals Accounting Service (HRAS)

Raymundo Larraín Nesbitt, January, 15. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
16th of January 2018

 

 

The explosive two-digit year-on-year growth on rental income we have witnessed over the last years in Spain has brought a huge demand for professional holiday-home rental accounting services. This is hardly surprising given how Spain overtook the US in 2017 as the world’s second biggest holiday destination.

Our law firm offers a bespoke rental income accounting service for both legal and physical non-resident landlords.

Our team of dedicated lawyers and economists will file and lodge your quarterly tax forms for a very competitive fee. Because of how admin intensive this procedure is, and the need for specialized tax software, landlords should not realistically hope to complete it on their own without attracting fines & penalties.

The most interesting part of our accounting service is that, following new regulation, we bring down non-resident landlord tax bills by 40% (or more) on applying for landlord tax relief. In some instances, we have even reduced a taxpayer's tax bill by 97%! So, owners who rent properties out in Spain (whether long or short-term) and hire us, save quite a bunch in taxes.

We will save you more money than what you spend on hiring us.

We take the stress off your taxation freeing you up, so you can relax and spend more time enjoying what you value in life most.

 

Our Holiday Rentals Accounting Service (HRAS) offers all the following advantages for a low fee:

 

  • Deal only with native English-speaking lawyers. No more ‘lost in translation’ shenanigans.
  • Apply for landlord tax relief (on average these tax allowances reduce a landlord’s tax bill by 40%, or more). I can honestly say that after having worked in multiple companies for over a decade, very few actually go into all the trouble of claiming back all these expenses on behalf of their clients because it is quite laborious. We do, for the quoted fee. We will let you know exactly how much money we are saving you in taxes. All EU non-residents can benefit from this, including UK-residents.
  • Complete your quarterly tax forms in Spanish. We will email you a copy once filed for your records and for your peace of mind.
  • Ensure you do not overpay on calculating the tax due on your property based on its rateable value and the number of days you have owned it on a pro rata basis when it is not rented out.
  • Fast, responsive service. No more having to wait for weeks on end for your Spanish lawyer to reply to your calls or emails.
  • Submit the tax returns before the Spanish Tax Office in a timely manner (thus avoiding attracting penalties and surcharges on late payment).
  • Setting a fiscal representative’s address to deal with all tax-related correspondence generated throughout a fiscal year.
  • Reply to any tax notifications within the deadline ensuring tax compliance.
  • Appeal misunderstandings or material errors (additional fees may apply).
  • Mandatory Professional Indemnity Insurance which you can claim from in case of negligence or malpractice. Currently this cover stands at €800,000 with Larraín Nesbitt Lawyers.
  • Up-to-date knowledge on fast-paced fiscal and legal changes.

 

Legal fees: From 100.

 

Larraín Nesbitt Lawyers, small on fees, big on service.

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 951 894 675 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Holiday-home letting related articles

 

Please note the information provided in this blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice. This article may be posted freely in websites or other social media so long as the author is duly credited. Plagiarizing, whether in whole or in part, this article without crediting the author may result in criminal prosecution. VOV.

2.017 and 2.018 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

 

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