Blog / News

Termination of long-term lease agreements and ‘silent renewal’

Raymundo Larraín Nesbitt, April, 21. 2019

Landlord, are you leasing long term in Spain? Read this unless you fancy locking yourself into a 8 or 10-year contract.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Article copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of April 2019

Spain has recently amended its rental laws in March 2019, in most cases to the detriment of landlords, creating serious legal obligations landlords should be acutely aware of. One of the issues that is important to understand is what happens to a long-term lease when it is over.

Most landlords wrongly assume that when the mandatory five years are up (or seven, for legal persons) the lease agreement is automatically terminated - crass mistake. If nothing is done, an automatic extension to long-term leases operates by law (known as ‘silent renewal’ in English legal jargon or prórroga tácita, in Spanish). The idea behind it is to protect and bolster furthermore tenant rights.

Silent renewal periods

For all long-term rental contracts signed on or after the 6th of March 2019:

  • Physical landlords: adds an extra 3 years to the lease. Making a long-term tenancy’s total duration 8 years.
  • Legal landlords (i.e. companies): adds an extra 3 years to the lease. Making a long-term tenancy’s total duration 10 years.

 

Example: a contract signed on the 9th of March 2019 by a private landlord. If by 2024 the landlord takes no action, the contract will be automatically extended for a further 3 years until the 8th of March 2027.

Long term tenancies (contract duration, in years)

I'll throw in a little chart to make everyone's life easier (please excuse my apalling chart abilities).

 

Landlord

No silent renewal

  With silent renewal

Physical person

5

8

Legal entity

7

10

     
     
     

How do you avoid this legal extension?

A lawyer needs to draft a formal notice of termination and serve it to your tenant by recorded delivery within a specified time limit. This must be done giving a 2-month notice if a landlord is a physical person and with a 4-month notice if the landlord is a legal person (i.e. a company).

I’m trying to sell on the property, how would this affect me?

It affects you. Under the new changes to our rental laws, any buyer acquiring a property needs to respect the whole duration of a pre-existing lease agreement until it ends. This means a buyer may have to wait several years before he is able to attain vacant possession. Needless to say, most buyers do not have the patience to put up with this, putting a damper on any house deal.

For this reason alone, it is strongly advised landlords take legal counsel before signing any lease agreement in Spain. There are many different types of rental agreements, and some will lock you into an 8 or 10-year contract if you are not mindful.

That said, there are always legal ways to circumvent such pesky matters. Talk to a lawyer, we can pre-empt such matters, so they do not jeopardize your house sale.

 

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 952 19 22 88 or by completing our contact form to book an appointment.

Article originally published at IdealistaTermination of long-term lease agreements and ‘silent renewal’

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.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

 

... Read more

Community of owners may now ban holiday lettings

Raymundo Larraín Nesbitt, April, 11. 2019

Buy to let in Spain? This blog post sheds some light on the new changes brought to holiday lettings in 2019.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
11th of April 2019

 

As we reported back in March (Spain's new rental laws in 2019), a new law was approved which brought a raft of changes. In today’s blog post I will focus on the two changes which affect holiday lettings. Community of Owners have been greatly empowered to rule on them going forward. All changes effective as from 6th of March 2019.

 

  1. Community of owners may now ban holiday lettings outright

Spain’s Horizontal Act has now been amended allowing Community of Owners to vote by a simple majority of 3/5 (or 60%) to ban outright holiday rentals within a community.

I had already pointed out in a blog post in 2017 that this step was necessary, as the Horizontal Property Act at the time required unanimity to ban them, which logically was never going to happen because landlords would vote against it because of their vested interest.

This change has no retroactive effects.

  1. Community of owners may now increase the community fees of all those owners who market their properties as holiday lets through holiday platforms

Spain’s Horizontal Act has been amended allowing Community of Owners to increase the communal quota assigned to a landlord of the overall community budget.

In plain English, communities of owners may now vote to increase the community quota of a property owner who uses his property/ies as holiday lettings. They can vote to increase it by as much as 20%.

This change has no retroactive effects.

 

 

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) 952 19 22 88 or by completing our contact form to book an appointment.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Holiday lettings-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.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Ground floor vs. penthouse

Raymundo Larraín Nesbitt, April, 1. 2019

Buying in Spain? This blog post sheds some light on the differences between ground floors and penthouses.

Marbella-based Larrain Nesbitt Lawyers has over 16 year’s taxation & conveyancing experience at your service. Our team of native English-speaking lawyers and economists have a long track record successfully assisting expats all over Spain. You can review here our client’s testimonials.

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
1st of April 2019

 

Today, April’s fool, I decided to write a short blog post on the differences between buying a ground floor and a penthouse in Spain.

One of the first things that struck me when I moved to the United Kingdom to work for a British multinational, was the difference in concept between the UK and Spain regarding ground floors and penthouses.

In the UK, ground floors are considered the superior choice, the more expensive and prestigious option. Normally these properties are more accessible, as top floors in older buildings lack lifts (think of tenements); something which in Spain is almost taken for granted. You will be reminded of this each time you need to drag the groceries two flights of stairs in the UK. Besides this, ground floors have access to small, enclosed private gardens which are highly appreciated, especially in large cities. These, and several other reasons, translate into significant differences in property price. Hands down ground floors are the best option in the UK, even to rent out.

But how does this hold up in Spain?

Truth is not very well. In Spain, amusingly, this relation is in fact the opposite. Ground floors have traditionally been seen as ‘inferior’ properties and their price reflects this. Penthouses are in fact the coveted asset, specially in large cities where they are regarded as prime property and are a very sought-after commodity by those affluent enough to afford them.

What explains this difference in perception? Is it a reflection of differing cultural values, a whim? Personally, I think it has to do more with adaptation. There are objective justified reasons on why penthouses are – by far – the superior option in Spain; it is not something you can merely write off as a ‘cultural’ difference.

Penthouses have the following advantages over ground floors in Spain:

  • Security. Ground floor properties are easier to break in. Penthouses on the other hand tend to be more secure, safeguarded. Additionally, a little known fact is that Spain’s Criminal Code severely punishes thieves when they climb to steal. Thieves know our Criminal laws even better than most lawyers do and for them the ratio of efficiency is more proficient on stealing from ground floors rather than penthouses – if caught. For exactly the same theft, lower floors are left off the hook on paying a small fine whereas stealing from a penthouse may lead to jail terms (if climbing is required). You will find that ground floors in Spain have been broken into several times, in some instances, several times within the same year. Those iron railings you see in the windows of ground floors are there for good reason, it is not just decoration.
  • Noise. In a penthouse you don’t hear your upstairs neighbour walking all day long, let alone if they wear high heels. This is a major problem in older properties, especially with wooden floorings. The acoustic contamination of lower floors is significantly more acute than if you live in a quieter penthouse where you remain largely oblivious to street noises. Let us not talk about lifts. A ground floor will be permanently hearing the lift being taken all day long, whereas a penthouse won’t; because it is only used by the penthouse owner.
  • Accessibility. Because almost every building in Spain has lifts, this issue that applies to UK properties would not apply in Spain. Moreover, in modern buildings, penthouse owners normally have a key lift which gives them exclusive access to the upper floor.
  • Privacy. Whereas in the UK, ground floors tend to have their own private gardens of exclusive use sealed off with hedges, this does not apply in Spain. Anyone can have easy access to your garden, encroaching on you. Moreover, in some gated communities, your green garden is in fact legally labelled as a communal area; meaning other neighbours even have the right to come in! This means you cannot erect wooden fences or seal off your garden, because it is not really yours, and it is not really private, it belongs to the community of owners. Even on selling on the property, these metres squared will not be tallied in your title deed because it is a communal area in most cases. Penthouse owners on the other hand grow some very nice exclusive gardens to the point of creating their own mini jungles in large cities.
  • Sunshine & brightness. Ground floors normally have little to no sunshine exposure, being normally dark. Penthouses bask in sunlight almost all day long.
  • Cold. Ground floors in gated communities tend to be dank, as the water from top floor balconies trickles down on them, creating nasty humidity patches and mould growths which require continuous repainting of walls. Penthouses on the other hand, tend to be warmer as heat rises naturally and they are always blessed with more sunlight hours, especially if south-orientated. This in turn impacts your electricity and heating bills, as ground floors will need to spend more money to stave off the cold, unlike penthouses, which have a natural proclivity to store warmth.
  • Views. Last but not least, is the obvious fact that penthouses tend to have a commanding view of its surroundings, whereas ground floors are entrenched, dark and normally lack any views.

 

For all the above reasons, buying a penthouse is the superior option; at least 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) 952 19 22 88 or by completing our contact form to book an appointment.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Conveyancing-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.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Tax form 720

Raymundo Larraín Nesbitt, March, 21. 2019

Lawyer Raymond Nesbitt gives all Spanish tax residents a gentle reminder to submit tax form 720 over the next weeks. Last day to submit it is the 1st of April 2019.

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. Image courtesy of Blog Self Bank.

Blog post copyrighted © 2018, 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer - Abogado
21st of March 2019

This tax form is for reporting purposes only, you do NOT pay any tax on submitting it.

I have structured this blog post as a FAQ for ease of comprehension.

Who needs to declare?

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

E.g. Mr. and Mrs. Smith live all year round in Mijas Costa, Spain. They own two houses in Berwickshire, England, have open bank accounts in the UK and receive UK-based pensions.

Mr. and Mrs. Smith are in fact tax resident in Spain and they both need to submit 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; it’s only for residents.

Who is considered tax resident in Spain?

The Spanish Tax Office applies - amongst others - the following broad 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.

 

Obligation to report?

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

2019 submission period

From the 1st of January until the 1st of April 2019.

Can I file it after the submission period?

Yes, but penalties 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 disproportionate fines levied are (very) 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.

 

The Common Reporting Standard and you

Please take good note that with the advent of the Common Reporting Standard (CRS), 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 HM Revenue & Customs and Ireland’s Revenue Commissioners are busy supplying the Spanish Tax Office with detailed information (and vice versa) on all your overseas assets and reported income derived abroad as from the 1st of January 2018.

We strongly advise you to submit tax form 720 if you are resident in Spain to avoid steep penalties.

 

Larraín Nesbitt Lawyers offers this tax service: Tax form 720

 

 

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 to book an appointment.

"¿Qué es poesía?, dices, mientras clavas
en mi pupila tu pupila azul,
¡Qué es poesía! ¿Y tú me lo preguntas?
Poesía... eres tú."

Gustavo Adolfo Bécquer

Gustavo Adolfo Claudio Domínguez Bastida (1836 - 1870). Was a brilliant young Spanish poet belonging to the Romanticist bewegung. He was also a playwright, literary columnist and talented writer. Clearly, he had a penchant for blue-eyed girls. Posthumously he would be acknowledged as one of the most notorious and gifted figures in Spanish literature, displaying a truly rare artistic sensibility. He would die aged only 34 from tuberculosis, known as the "the romantic illness," as befits any true romantic poet. His crowning achievement would become his Rimas y Leyendas (Rhymes and Legends), an assorted collection of bewitching tales and poems that draws from popular Spanish folklore.

 

Tax services available from Larraín Nesbitt Lawyers

 

Non-resident 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 and 2019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Requerimiento - Spanish tax agency's summons

Raymundo Larraín Nesbitt, March, 7. 2019

Have you received in 2019 a 'requerimiento' letter (tax summons) from the Spanish Tax Office/Agencia Tributaria/Hacienda/AEAT? Don’t panic, contact us ASAP to settle your unpaid non-resident taxes. We will sort out your taxes for a very competitive fee. Remember, you only have 10 days to regularize your tax situation once you receive this letter without attracting supplementary penalties. Contact us!

Blog post and inset photo copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
8th of March 2019

Come March, the Spanish Tax Office's central non-resident HQ in Madrid, has been busy sending out massively to non-resident property owners tax summons, or ‘requerimientos’ in Spanish legal jargon, similar to this one.

This is a legal notification made by recorded delivery whereby the tax office formally notifies you that you are not up to date with your non-resident tax obligations. In this case they are requesting to be supplied with copies of all non-resident taxes submitted from the year 2014 onwards. The tax office only gives you 10 days to regularize your tax situation in Spain (see inset photo). So, if you submit your backdated taxes as from 2014 onwards, within the 10 days, you will receive no penalty.

Failure to comply will result in them opening a tax inspection against you which may result in very steep fines (50 to 150% of all undeclared amounts) and, depending on the non-declared amount, may even derive in instigating legal proceedings against you.

Non-compliance with the Spanish Tax Authorities will result eventually in them placing a charge against your Spanish property for all the unpaid tax (plus penalties, plus delay interests, plus proceeding's expenses) and they may even seize your Spanish accounts ‘freezing’ them to secure the accrued debt.

Should you receive a similar letter from the tax office, as the one featured in this tax blog, don’t panic. Record the date on which you - or someone else - signed for it and get in touch with our law firm Larraín Nesbitt Lawyers immediately. Time is of the essence to avoid being landed with hefty penalties.

We will calculate and submit on your behalf, in a timely manner, your Non-Resident Imputed Income Tax (NRIIT) and also your Non-Resident Income Tax (NRIT) if you have been renting out your property since 2014 onwards (but not declaring any income in Spain).

As we care to point out in all our tax articles and tax blogs, you are taxed at source on renting out in Spain. So, if you have been declaring and paying income tax derived in Spain only in your home country (i.e. in the UK) you are at fault and must also pay tax in Spain on your Spanish income (e.g. on your rental income). It does not suffice that you only paid income tax in your home country on any income made in Spain. HM Revenue & Customs will give you tax breaks on any tax you have already paid in Spain, following the Double Taxation Treaty signed between the Kingdom of Spain and the United Kingdom.

The reason on why thousands of non-resident expats are now being mailed these tax summons in 2019, to bring their tax situation to date in Spain, is because of the advent of the Common Reporting Standard which we had been warning about over the last two years. More and more, the net closes in on all those expats who are not declaring & paying taxes in Spain.

It should be noted how the tax office is 'positively discriminating' non-resident property owners - they are being treated exquisitely. The fact they are giving you a slap on the wrist and allowing you 10 days to 'sort out' your tax situation - without any penalty - is beyond unusual. Any Spanish tax resident would not be treated with such leniency, and would have received, along with this tax summons, a steep fine to pay. 

One of the many advantages of appointing us as your tax representatives in Spain, is that we will receive all tax-related correspondence generated throughout a fiscal year by the tax office. This is ideal for all those non-resident taxpayers who have limited access to their Spanish mail box. We offer this service at no extra charge with our Fiscal Representation Service.

 

 

We lower by 70% our client’s tax bills, on average, on renting out. What are you waiting for? Call or email us. We make life simple.

 

We offer the most competitive fees in the market.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

Holiday Rental Accounting Service (HRAS) €100/tax quarter/property

We are specialized in taxation

 

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) 952 19 22 88 or by completing our contact form to book an appointment.

Legal & tax services available from Larraín Nesbitt Lawyers:

 

Holiday lettings-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.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Save taxes on selling your Spanish home!

Raymundo Larraín Nesbitt, March, 1. 2019

Selling in Spain? This blog explains how to greatly reduce your tax bill saving you thousands of euros in taxes.

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
1st of March 2019

 

Congratulations, you have found a buyer for your Spanish property!

Your first port of call should be to hire a conveyancing law firm, such as Larraín Nesbitt Lawyers, with over 16 years’ conveyancing experience, assisting expats all over Spain.

It is a little-known fact amongst home sellers that you can greatly reduce your tax bill on selling in Spain. This is part of our job as conveyancers. More details in our article: 7 reasons on why you need legal representation on selling in Spain – 7th March 2018.

 

Tax-deductible VAT invoices

 

You may legally deduct all purchase and refurbishment expenses:

  • Lawyer’s fees (on buying the property).
  • Notary fees (on buying the property).
  • Land Registry fees (on buying the property).
  • Taxes (on buying the property).
  • All property-improvements i.e. glass curtains, refitted kitchen, roof retiling, wood flooring, A/C etc.

 

Our law firm can assist you greatly reducing the taxation on your sales proceeds. Why pay more taxes?

Larraín Nesbitt Lawyers can represent you on selling your property in Spain for a very competitive fee. Hiring a lawyer on selling adds security and helps you pay less taxes.

 

 

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) 952 19 22 88 or by completing our contact form to book an appointment.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Conveyancing-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.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Andalusia to abolish inheritance tax in 2019

Raymundo Larraín Nesbitt, February, 18. 2019

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
18th of February 2019

Well, I’ll eat my hat. Politicians doing their job, whatever next?

Andalusia’s centre left wing party was ousted from power last December after 37 years in control. With the turn of tide, the new centre-right wing ruling coalition (including a far right-wing party) have agreed in Seville this week to abolish inheritance tax in Andalusia. It won’t actually be abolished – excuse the catchy title – it will be suppressed by 99% on all estates over €1 mn. This translates into only HNWI’s paying a paltry amount on inheriting; the rest of us get to walk away scot-free.

This landmark tax reform is without a shadow of a doubt one of the most important tax milestones in the autonomous region of Andalusia over the last 4 decades (since its inception in 1982). It is the result of a long-winded campaign led by political activists, such as the group ‘Stop Sucesiones’ and other right-wing political groups.

The change translates into 99.99% of inheritors in Andalusia will no longer need to pay inheritance tax on inheriting assets from their parents or spouse, which is a welcome respite. Despite what you may hear, IHT never taxed the ‘rich’ but the hard-working middle class. These fiscal changes are in addition to those approved in 2016 and in 2017 which I had already profusely covered in previous articles and blog posts (see below for related taxation articles).

This bold move allows Andalusia to jump onto the front of the band wagon of other autonomous regions in Spain which are applying reductions on IHT to such an extent which in practice translates to almost suppressing it i.e. Madrid, Basque Country, La Rioja, Navarre, Catalonia, Valencia, Balearic, Canary Islands and now Andalusia too, leading the pack.

Andalusia will officially become in 2019 a tier 1 tax-friendly region for inheritance tax, even surpassing Madrid in some respects. As I had previously pointed out in other tax articles of mine relating to Spanish Inheritance Tax, there was an ongoing movement throughout Spain over the last decade to suppress or greatly reduce inheritance tax to the point of negating it. This trend has finally coalesced into this new regulation.

In a nutshell, inheritance tax will be as follows in Andalusia:

Requirements to benefit from this tax allowance

  • Inheritor/estate beneficiary/taxpayer needs to be EEA/EU-resident.

 Inheritance Tax in Andalusia

  • Pre-existing wealth nil-rate band raised to €1,000,000 (per inheritor).
  • Estates equal to or below €1,000,000 will go untaxed (per inheritor).
  • Estates over €1,000,000 will benefit from a 99% exemption (per inheritor). Meaning you only pay 1% over what exceeds the 1mn threshold.

Who benefits?

  • Group I: natural and adopted children under 21.
  • Group II: natural and adopted children over 21, spouse, registered civil partnerships, parents, adoptive parents, grandparents and great-grandparents.

 

Conclusion

This is as positive as news get. Inheritance taxation had traditionally been Andalusia’s Achille’s heel. It turns out it will now become one of its main selling points! Go figure.

I really do not need to explain how positive this tax news is for Andalusia and the broader market. I never thought I would live to see the day Andalusia led the abolition of IHT in Spain, even surpassing liberal Madrid, but there you go. Times change and the world moves on.

Holding structures incorporated with the sole purpose to mitigate or negate IHT liability will now become redundant in Andalusia following the approval of this change in regulation. This law is expected to be approved over the course of 2019.

For once, I’m happy to commend politicians on adopting a sensible tax measure that benefits legions and contributes towards dynamising the Andalusian economy. Kudos to them!

I don’t want to push my luck, but now that politicians are on a warm fuzzy mood, can we ask them to show some love and adopt a similar programme to Portugal’s Non-Habitual Resident tax scheme (NHR) to attract non-resident investments, particularly British? Pretty please with cherries on top?

“It’s the economy, stupid.” – James Carville

James Carville (1944). He coined this political slogan as campaign strategist of Bill Clinton’s successful 1992 presidential bid against sitting president George H. W. Bush.

Blog originally published at Spanish Property Insight: Andalusia to abolish inheritance tax in 2019

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. No delusional politician was harmed on writing this article. VOV.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Holiday lettings: VAT invoice dissected

Raymundo Larraín Nesbitt, February, 11. 2019

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
11th of February 2019

 

In order to claim lenient landlord tax relief from the Spanish Tax Office that leads to a 70% tax mitigation from your tax bill on renting out, your VAT invoice must meet a series of requirements. In Spanish a VAT invoice is called a factura. Many suppliers will be highly reluctant to issue you with one (because they work off the books and do not submit any taxes). Others will hand you a factura just to keep you happy, but it will be missing key elements which make them void i.e. VAT is missing (true case, see examples below). A VAT invoice that misses out on key elements cannot be claimed for tax relief purposes.

By law, you must store all VAT invoices on which you are claiming landlord tax relief over the next 5 years. This is in case you are landed with a tax inspection, where you will be required to produce copies of all VAT invoices you have claimed tax relief on.

Anyone handing you an invoice without VAT is not tax-deductible. Make no mistake, you are in fact paying for that other person’s tax when you are not handed over a VAT invoice. I don't know about you, but I've never fancied subsidizing other people's taxes...

Today's tax blog is going to briefly go over the key elements which constitute a proper VAT invoice (factura).

The Spanish Tax Office lists these requirements in much detail on its web page. In this blog, we are going to simplify and only outline the main points that are required (see the blog’s inset photo, right, as graphical support):

Invoice examples, spot the differences!

Sample of a good VAT invoice

Sample of a non-acceptable VAT invoice

Anatomy of a VAT invoice (factura)

 

  1. Personal details of the invoice provider
  • Full name and surname.
  • Company name.
  • NIF number of trader/service provider; if a company, it’s CIF number.
  • Address.
  1. VAT invoice number. i.e. 37/2019
  2. Personal details of the invoice receiver
  • Full name and surname.
  • Company name.
  • NIF number.
  • Address.
  1. Service date.
  2. Service provided, brief description.
  3. Breakdown of Value Added Tax i.e. 21%
  4. Total amount to pay, including VAT on top.
  5. Company’s rubber-stamp seal (optional)

 

The Spanish Tax Office only accepts you claim tax relief against proper VAT invoices. If the VAT invoice you have been handed does not meet all the above requirements, it will not be accepted, and we will not be able to claim tax relief on your behalf.

We gently remind you that till tickets from supermarkets, commercial centres and petrol stations are not accepted by the tax office as tax-deductible. Only proper VAT invoices such as the one featured above.

 

We lower by 70% our client’s tax bills, on average, on renting out. What are you waiting for? Call or email us.

 

We offer the most competitive fees in the market.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

Holiday Rental Accounting Service (HRAS) 100/tax quarter

We are specialized in taxation

 

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) 952 19 22 88 or by completing our contact form to book an appointment.

Tax & legal services available from Larraín Nesbitt Lawyers:

 

Holiday lettings-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.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

How to apply for Spanish residency

Raymundo Larraín Nesbitt, February, 1. 2019

Lawyer Raymundo Larraín explains how to attain Spanish residency.

Blog post copyrighted © 2019. Plagiarism will be criminally prosecuted.

 

 

By Raymundo Larraín Nesbitt
Lawyer - Abogado
1st of February 2019

 

EDIT: March 2019. Due to Brexit-related issues, this procedure has become convoluted and it is strongly advised you hire our residency service: Spanish residency

The following procedure we explain below is only for registration of fellow EU nationals i.e. British national. Any national of a country outwith the EU, cannot follow what we explain below.

British nationals may enter Spanish territory without a visa as we are within the Schengen Area. However, should you remain in Spain for more than 3 consecutive months - by law - you must apply for Spanish residency (residencia, in Spanish). As a EU national, this requires you attain a Certificado de Registro de Ciudadano de la Unión (Registry for citizens members of the Union). The procedure is extremely easy and straightforward.

You must make an appointment at your local the Oficina de Extranjeros (normally 2 weeks' waiting time) and bring the following with you:

  1. Passport in force.
  2. Two copies of the official form (EX-18) completed in Spanish and signed by the EU-national.
  3. Depending on your situation:
  • Employed: signed job contract & other proof.
  • Self-employed: proof of registration in the register of economic activities (Registro de Actividades Económicas), enrolled in Social Security.
  • Unemployed: prove of hiring private healthcare cover and having sufficient financial means to support yourself and your family.
  • Students: prove of being enrolled in an academic course, proof of health cover (public or private), proof you have sufficient financial means to support yourself.
  • Pensioners: proof of health cover.

 

If you meet all the above requirements, you will be issued shortly after with a certificate member of the Union.

So why is all this relevant you may ask? Because post-Brexit, if you did not register yourself as a member of the Union, you will be stripped off a series of rights and entitlements to which you would otherwise be entitled. You may also be regarded as an illegal alien in EU territory by the Authorities, which may even lead to your deportation to your country of origin.

After five years of continued and legal residence, you may apply for permanent residency or residencia permanente. This allows you unconditional residency in Spain.

After ten years of continued and legal residence, you may opt for Spanish nationality (optional).

 

We can offer you this legal service: Spanish residency

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 952 19 22 88 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Brexit-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.

2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more

Holiday lettings: “Con factura, por favor.”

Raymundo Larraín Nesbitt, January, 21. 2019

Blog post copyrighted © 2017 and 2019. Plagiarism will be criminally prosecuted.

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
21st of January 2019

These four simple words in Spanish ('with a VAT invoice, please') can save you a massive amount of money when you pay non-resident taxes in Spain.

Following new EU regulation, all non-resident EU/EEA property owners who lease property, are entitled to deduct from their quarterly tax bill all property-related expenses (Iceland, Liechtenstein and Norway tax residents may also benefit from these generous tax deductions). That is quite a lot of money you can offset, greatly mitigating your tax bill. If you are not EU-resident, you cannot benefit from this.

This is understood as expenses that contribute towards the upkeep of your Spanish property.

Anyone handing you an invoice without VAT, is not tax-deductible. Make no mistake, as you cannot offset this expense you are in fact paying for the tax of this other person. I don't know about you, but I've never fancied paying for other people's taxes out of my own pocket...

You may claim as tax relief all the following expenses, providing you have been issued with a proper VAT invoice (till receipts from supermarkets or petrol stations are not acceptable).

  • Interests arising from a loan to buy the property (i.e. mortgage loan).
  • Local taxes and administrative charges and surcharges that impact on the rental income or else on the property itself (i.e. IBI tax, SUMA tax, rubbish collection tax).
  • Expenses arising from formalising rental contracts such as lets or sublets (i.e. Notary and/or Land Registry fees); legal defence (i.e. hiring a lawyer for tenant eviction purposes).
  • Maintenance costs may be offset; refurbishment expenses (improvements) are excluded.
  • Community of owners’ fees: these receipts have no VAT, by Law.
  • Home insurance premiums: fire, theft, civil liability etc.
  • Property repairs: plumbing, roof retiling, painting, pool pump etc.
  • Utility invoices: electricity, water, gas, internet, and landline.
  • Cleaning
  • Concierge, gardening & security services (i.e. gated communities).
  • Lawyer’s fees: to calculate you quarterly tax returns.
  • Property management fees: to manage your rentals.
  • Advertising expenses: online/offline.
  • Marketing expenses.
  • Home depreciation and amortization. The calculation is 3% on the highest value of the following two: home buying costs or cadastral value; the value of the land is excluded.

 

We lower by 70% our client’s tax bills, on average. What are you waiting for? Call or email us.

 

We offer the most competitive fees in the market.

Non-Resident Imputed Income Tax (Fiscal Representation Service) €90/year

Holiday Rental Accounting Service (HRAS) 100/tax quarter

We are specialized in taxation

 

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) 952 19 22 88 or by completing our contact form.

Legal & tax services available from Larraín Nesbitt Lawyers:

 

Holiday lettings-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 2.019 © Raymundo Larraín Nesbitt. All rights reserved.

... Read more
1 >