Blog / News

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. 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

 

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% on applying for landlord tax relief (on average). So, owners who rent properties out in Spain (whether long or short-term) and hire us, save quite a bunch in taxes.

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%). 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. 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

 

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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Advantages of Making a Spanish will

Raymundo Larraín Nesbitt, January, 3. 2018

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
3rd of January 2018

Ideally foreigners should make two wills; one in their home country ruling on their national assets and a second Spanish will drawn up in Spain which will rule exclusively on their Spanish estate.

Our law firm can draft you a Spanish will from €150. More on this service: Will Service.

 

This blog post is an excerpt from my original article of the 3rd September 2009.

 

1. A Spanish will affects only your Spanish estate.
2. Drawing up a Spanish will help your heirs mitigate their tax bill. There’s a deadline of 6 months from the time of the testator’s demise to file and pay Spanish Inheritance Tax (IHT). Late payment of IHT attracts surcharges, penalties and delay interests. A Spanish will cuts through the red tape streamlining the succession procedure so tax is paid on time within the deadline (without attracting penalties and interests on top).
3. Drawing up a Spanish will saves both money and hassle. If you only make an English will, your beneficiaries will have to follow a Grant of Probate in the United Kingdom (over £1,200). You'll need to translate into Spanish by a sworn translator all legal documents, notarise them and affix to each of them the Apostille of The Hague Convention.
All this greatly increases the expenses for your beneficiaries, as well as significantly delaying the whole procedure of transferring your Spanish estate which will attract surcharges, penalties and delay interests (point two above). However, if you make a Spanish will, the above becomes redundant.
4. Spanish wills are stored safely at no extra charge. On making a Spanish will, you will be given only a “copia simple” (simple copy) or “copia autorizada”. The original is stored by the Notary in his files for record. Should you lose your copy, don’t panic. Moreover, all Spanish wills' details are safely stored at Madrid’s Central Registry of Last Wills. One can always request a copy and if you believe you are a beneficiary, they will let you know before which Notary it was witnessed.
5. Spanish wills drawn up before a Notary public add security. Making a will is a personal act. A Notary is a highly qualified law professional who witnesses the signing of the will. He will highlight any incorrection or illegality.
6. The content of a Spanish will is governed by your own national laws. This means that you are not constrained by Spain’s forced heirship rules. Additionally, if you are of British or Irish citizenship, you have free testamentary disposition in Spain. This means you can make a will exactly the same as you would in the U.K. or in Ireland, albeit with all the additional advantages for your loved ones that I’ve highlighted above.
7. Spanish wills can be worded in English. Spanish wills can be drafted in double barrel, English-Spanish, for your peace of mind. So you know fully, at all times, what you are signing at a Notary Public.

 

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

 

Inheritance-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.

2.009, 2.010 and 2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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Non-Resident Income Tax

Raymundo Larraín Nesbitt, December, 1. 2017

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1st of December 2017

 

The festive season is almost upon us. Most people have their minds set in the holiday break and spending some quality time with family and friends.

Unfortunately, it is also the time of the year where Non-Resident Income Tax is due (NRIT, for short). I have written this short blog post as a gentle year-end reminder.

If you own property in Spain, and are non-resident, you are liable to pay NRIT even if you do NOT rent your property out. You have until the 31st of December to file NRIT without attracting penalties and surcharges.

On selling your property, the Spanish Tax Office will verify you are up do date paying NRIT; otherwise they will simply pocket all or part of the 3% retention a property buyer is forced to withhold on buying your property and pay it into the tax office. Losing 3% of the sales proceeds is a large amount of money for most people. Why not pre-empt this following my advice?

In order to avoid losing money on selling your property in Spain, you should hire a law firm such as ours to file this annual tax on your behalf. This annual tax in itself is actually ultra-low and acts with a purpose of ‘control’. We offer the following legal service for a flat fee:

 

You can contact us until the 21st of December 2017 to file and pay your Non-Resident Income Tax. Stragglers are welcome!

 

What happens if I rent my property out in Spain?

 

In addition to filing the above annual tax, you will also have to pay a quarterly tax on your Spanish rental income.

When you let your Spanish property, regardless if it is short-term (i.e. holiday home or seasonal let) or long term, you should be filing and paying a quarterly tax on your rental income to the Spanish Tax Office. This tax is collected quarterly, on the first 20 days of every January, April, July and October.

We offer the following legal service which is very competitively priced:

 

On average, we are able to reduce 30 to 40% of a landlord’s taxable base on applying for landlord tax relief (including non-residents, as long as you are EEA/EU-resident).

More details in my article: Renting in Spain: Non-Resident Landlord's Rental Tax Relief – 14th of January 2017

We welcome you to contact us and discuss your tax matters, so you are fully tax-compliant (and pay less taxes of course!).

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, conveyancing, litigation and inheritance. 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.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

 

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The magic of lettings in Spain

Raymundo Larraín Nesbitt, November, 21. 2017

By Raymundo Larraín Nesbitt
Lawyer and Director of Larraín Nesbitt Lawyers
21st of November 2017

 

So, you’ve heard all the good news surrounding the explosive double-digit growth on Spanish rental asking prices and your curiosity has been peaked? You may feel half tempted to jump onto the bandwagon of landlords that make a nice little extra income in the summertime renting out to tourists.

But what is holding you back is being put off by all the newspaper articles hammering on the new batch of regional regulations sweeping Spain that have put in place stringent requirements to let properties out to tourists, require a mandatory rental licence from regional Authorities and which are subject to humongous fines on non-compliance. I know, what a bummer.

What if I were to tell you that you could legally sidestep all the above pesky requirements? There is a perfectly legal way to rent out your property in Spain to tourists during the summer season which does NOT require:

  • Registration of your rental with the regional Authorities. Tick.
  • No need to apply for a tourist rental licence. Tick.
  • Your property will not be subject to inspections by regional Authorities. Tick.
  • You do not need to meet daft expensive requirements such as A/C installed in every room, WIFI, mandatory rental insurance etc. Tick.
  • You will not be liable for massive fines on non-compliance. Tick.

 

Interested? Well, come and speak to the experts; we can make it happen for you. *

Making life simple.

 

*Not everyone qualifies, ask us.

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, litigation and inheritance. 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.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

 

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Nota Simple – Land Registry Search (LRS)

Raymundo Larraín Nesbitt, November, 10. 2017

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
10th of November 2017

 

A Land Registry Search (LRS) is a legal service thought for those who need to find assets in Spain under the name of individuals or companies. In Spanish, it is known as a 'nota simple'. The nota simple is one of the most important documents used in the Spanish property conveyancing process.

What is a Nota Simple used for?

  • Buying property.
  • Selling property.
  • Inheriting property.
  • Letting property.
  • Applying for a mortgage loan.
  • Asset-hunting.

 

What key information can be found in a Nota Simple?

  • Ownership.
  • General property description.
  • Charges, debts, easements or encumbrances.
  • Other.

 

Nota Simple example

This legal service is suitable for:

  • Matrimonial proceedings: tracing Spanish property ownership of an opponent party.
  • Inheritance proceedings: tracing Spanish assets of a deceased.
  • Debt recovery: trace assets in Spain belonging to individuals or companies, seize them legally (separate legal service applies, ask us).
  • Buying, selling or renting property in Spain: Find out if a property has charges, liens, encumbrances, long term tenants, if the vendor is who he really says he is (avoid sale scams), if a property is classified as rural or urban, if it has legal proceedings against it under way, embargoed etc.
  • Loan applications: if you are applying for a (mortgage) loan on a property you will be asked for an updated nota simple.

 

What this service includes:

  • Property search.
  • Reply within 24 hours (contingent on the Land Registry).
  • Basic translation into English of legal terms and property extract. *

 

*optional, additional fees apply.

What you need to supply us (one or more of the following):

  • First name and surname of owner/s.
  • Identification details of owner i.e. NIE number.
  • Identification details of property i.e. IDUFIR (single property registration identifier).
  • Region in Spain where you think the property may be located (optional).

 

Legal fees (per property):

  • No English translation: €50
  • With basic English translation: €70
  • Bulk orders: fees on application.

 

EDIT 16/02/2018: The rules of the Land Registry have changed and negative result searches are now billed going forward.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, litigation and inheritance. 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

 

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 © Raymundo Larraín Nesbitt. All rights reserved.

 

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Andalusia starts fining holiday home landlords

Raymundo Larraín Nesbitt, October, 31. 2017

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
31st of October 2017

 

In my article on Decree 28/2016, which details the requirements to register oneself before Andalusia’s Tourism Registry as a holiday home, I made it clear that the most important requirement was to attain a Licence of First Occupation. I also wrote a specific blog post last July warning landlords not to register before the ATR unless they were fully compliant least they risk being fined at least two thousand euros on non-compliance.

A Licence of First Occupation (LFO, for short) is an administrative licence issued by the town hall, where the property is located, and certifies the development is in full compliance with the Building Licence (BL) and all associated Planning laws.

Despite these repeated warnings, hundreds of landlords ploughed ahead and self-registered themselves to take advantage of the summer season or else used non-qualified acquaintances to register them (in exchange of a fee). The idea was that they could register provisionally and rent the properties out and subsequently receive from the ATR their rental number in the following weeks or months despite not being fully compliant. Almost 30,000 properties have been registered so far in Andalusia.

Many landlords registered without using a lawyer, not fully understanding the legal consequences of their own actions and as a result are being landed with €2,001 fines, at the least. Fines in Andalusia range from €2,000 up to €150,000.

All along September and October landlords have been receiving these fines (see blog post photo) in the region of Andalusia from the ATR informing them a case had been brought against them and classified as a serious breach.

Failure to pay these fines will result in the ATR placing a charge against your property. There is only a 10-day deadline to appeal a fine. You need to hire a lawyer to lodge an appeal.

What we can glean from the above is:

  • You should apply for a touristic rental licence in Andalusia and declare and pay your rental income (in Spain) if you do not want to be heavily fined by the Authorities.
  • Do NOT register before Andalusia’s Tourism Registry unless you are fully compliant with the requirements set out in Decree 28/2016.
  • I strongly advise would-be holiday home landlords to register only using the services of a law firm such as ours which fully understands what’s being asked and avoid the client humongous fines and court cases. You should also hire a law firm to deal with the taxation side of things, applying for landlord tax relief which significantly reduces your taxable base (on average by 30 to 40%). More information on this service: Holiday Rental Accounting Service (HRAS).

 

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, litigation and inheritance. 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

 

Holiday-homes 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 © Raymundo Larraín Nesbitt. All rights reserved.

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Let-to-buy contracts: do not forget to add a clause forbidding sublets!

Raymundo Larraín Nesbitt, October, 20. 2017

By Raymundo Larraín Nesbitt
Lawyer and Director of Larraín Nesbitt Lawyers
20th of October 2017

 

Back in 2009, I wrote an article on the advantages of let-to-buy contracts as opposed to buying outright a property (Let-to-Buy in Spain: The Smart Choice). The idea behind the article was that if you waited long enough, you could benefit from a steep drop in property prices. In retrospective, the year 2011 marked the inflection point as property prices reached their trough in Spain and have been steadily rising ever since.

Resale property vendors have faced a challenging sales environment over the last years as sales remain sluggish (as opposed to off-plan properties and holiday rentals which have been booming in some areas in Spain). The bid for independence in Catalonia has not been helpful either to build up confidence in the resales market.

Given this sales scenario, I was struck the other day on being queried by the wording of a rent-to-buy contract. The landlords had drafted a contract, and in their haste to sell, had bent over backwards to be accommodating as much as possible towards the prospective would-be buyer. So much so, that the landlords had forgotten to add a clause whereby subletting was forbidden. This mistake was compounded by the fact that they had also agreed to arrange a let which was significantly below the market value to sweeten the deal. The property is in a prime location in Marbella…

In their desperation, and acting in good faith, the vendors omitted this clause on renting a two-storey townhouse (with – hopefully – a view to sell). Unbeknownst to the non-resident owners, the tenant was devious as they come. Wasting no time, the artful dodger immediately set about subletting the property to multiple tenants with a significant mark up. Given the properties prime location, it was rented out in no time. The ground floor was rented to a business, and the upper floors were rented out as a long-term contract.

The sly ‘tenant’, banking on the landlord’s good faith and desperation to sell, had made a shrewd move which netted him a substantial amount in a short span of time using in the process someone else’s property as if it were his own. Needless to say, the tenant has no intention whatsoever to buy the property and was unfazed when confronted on what he had done. The saddest part of it all was that it was perfectly legal.

 

We can learn from above the following:

  1. Legal contracts in Spain should be drawn up only by professionals (lawyers). We offer a professional drafting conveyancing service: rentals.
  2. Let-to-buy contracts should always have a clause forbidding subletting.
  3. Let-to-buy contracts should have a normal rental in line with the market. Do not go out of your way agreeing to below market rentals because you do not know if your tenant will end up buying your property (or not).  

 

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, litigation and inheritance. 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.

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

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