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

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8^th of May 2018

As previously warned in other articles of mine (Spanish Wills and Probate Law in light of European Regulation 650/2012) new European Regulation has rendered some old Spanish wills void. Any Spanish will witnessed before the 17th of August 2015 should be revised by a Lawyer to ensure it is fully compliant.

In today’s blog post we examine how two old Spanish wills, made by British nationals and granted prior to the changes of 17-08-15, were declared void by Spain’s Dirección General de los Registros y del Notariado (DGRN, for short). The DGRN is the legal body tasked to oversee the roles of both Notaries and Land Registrars in Spain.

We tend to forget the human tragedies that hide behind these unfortunate situations. What the annulment of these wills has meant is to shatter the lives of women, surviving spouses, who out of no fault of their own, had their life’s torn apart following the deaths of their husbands. Unprotected women who placed their trust and financial well-being in the hands of their now defunct husbands, and who were already going through an ordeal of their own, were cut out of the Spanish wills made by their late husbands. The children disagreed with the content of the wills, challenged them – and won.

This nightmare scenario could have been easily avoided altogether by their husbands if these had made a new updated cast-iron Spanish will compliant with the terms of the new EU Regulation. This tragedy is going to repeat itself over and over again in the future with other surviving spouses on not heeding my advice; if you care for your significant other, ensure your Spanish will is compliant with the new set of laws.

1. DGRN resolution of 14^th June 2016

A British national, who had his habitual residency in Spain, dies in September 2015 (after the changes that came into effect on the 17^th August 2015). He made a Spanish will in 2003. The man left three children and a wife. He decided to leave everything to his wife and cut out his three children.

His children contest the Spanish will. Long story short, the case reaches the DGRN and it rules that the Spanish will is void as it did not comply with the terms laid out by the new European Regulation 650/2012. As a result, his wife is cut out of the will and left penniless, whilst the three children inherit all his estate in equal shares.

2. DGRN resolution of 3^rd of July 2016

A British national, who had his habitual residency in Spain, dies in October 2015 (after the changes that came into effect on the 17^th August 2015). He made a Spanish will in 2005. The man had two children and a wife. He decided to leave everything to his wife and named as substitute heirs, in the event of his wife’s death, his two children.

His children contest the Spanish will. Long story short, the case reaches the DGRN and it rules that the Spanish will is void as it did not comply with the terms laid out by the new European Regulation 650/2012. As a result, his wife is cut out of the will and left penniless, whilst the two children inherit all his estate in equal shares.

Conclusion

The stark warning I gave in my article's conclusion of January 2015 still holds true:

“Surviving spouses or partners are the ones who stand to lose most (or all) under this new Regulation unless you act now.”

Do not take chances with your loved ones’ well-being and plan ahead for your demise. Making a new Spanish will, that is fully compliant with the new European Regulation, is only €195 through us. This is a paltry amount compared to the dozens of thousands of euros your family stand to lose through litigation unless you act now; not to mention the additional grief and aggravation you will spare them at a time of bereavement.

It is in truth a small price to pay for peace of mind that will avoid a family being torn apart over money matters. Ensure your last will is respected and carried out the way you wanted it to be.

"Dura lex, sed lex."

 Roman civil law maxim meaning that, however regrettable the outcome of a legal matter, the law must be upheld.

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

Legal services Larraín Nesbitt Lawyers can offer you

• Making a Spanish will
• Spanish Inheritance Tax Assessment Report (SITAR)
• Transfer of Estate to Heirs (Inheritance Tax)
• Legal Property Report (LPR)
• Death Certificate
• Land Registry Search (Nota Simple)

Inheritance-related articles

• New EU Regulation to be Passed on Succession and Wills –18th May 2010
• EU Pulls the Stops and Vows to Put and End to Inheritance Taxation Discrimination on Non-Resident Beneficiaries Inheriting in Spain – 20th May 2010
• Non-Residents: Six Advantages of Making a Will in Spain – 8th August 2012
• Spanish Wills and Probate Law in Light of European Regulation 650/2012 – 8th January 2015
• Changes to Spain’s Inheritance and Gift Tax Law – 21st February 2015
• Dispelling Spanish Inheritance Tax Myths – 8th August 2015
• Spanish Inheritance Tax for Non-Residents (Part I) – 21st February 2016
• Spanish Inheritance Tax for Non-Residents (Part II) – 8th March 2016
• Inheritance Tax Novelties in Andalusia. FAQ on IHT – 8th September 2016
• Which beneficiaries are hit worst by Spanish Inheritance Tax (IHT)? – 2nd June 2017
• Non-Resident: Why you need to make a Spanish will – 24th June 2017
• Non-resident: careful on making a will in Spain – 30th August 2017
• Andalusia to slash Inheritance tax for inheritances under 1 million euros – 21st September 2017
• Spanish Inheritance Tax Assessment Report (SITAR) – 8th October 2017
• Seven Advantages of making a Spanish will – 8^th May 2018
• Old Spanish wills made by (resident) British nationals are being declared void – 8^th May 2018

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.

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

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
25^th of April 2018

Since the floodgates to devolved competencies were open by the government in 2013, which I heavily criticized at the time, the asking rental price in Palma de Mallorca has risen by over 40%. Moreover, over the last two years this trend has accelerated, and rental prices have hiked by two digits p.a. Clearly, this is unsustainable long term. The advent of huge American companies, such as AirBnB, clearly correlates the push in rental prices upwards.

Landlords, only too keen to jump onto the bandwagon, have pulled their properties from long term rentals morphing them into holiday rentals which are far more lucrative. This has created a huge shortage in the stock of available long-term rental properties for natives, driving prices further up in a pernicious spiral.

Whilst the problem remains serious, I strongly disagree with the blanket approach of forbidding holiday rentals. As I have cared to examine in previous articles of mine, this introduces malicious asymmetries in the market that compound problems furthermore.

As an example, as reported yesterday by El Pais daily, the Mallorca left-wing coalition (PSOE, Podemos and group Més per Mallorca) approved to ban holiday rentals in Palma city centre. The idea behind this is to protect natives so they have access to affordable long-term rentals as they were being priced out of the market by holiday rentals. Or at least, so goes the theory.

In practice, the irony is that a left-wing coalition has created a side effect making the rich, richer and the poor, poorer. This is because holiday rentals will still be allowed in chalets (detached villas), normally owned by affluent owners, whilst it will be outright banned in flats (normally owned by less well-off citizens). The automatic effect this ban has is to reduce the property value of properties located in the city centre whilst simultaneously increasing the value of detached villas which now have carte blanche to be let as holiday rentals.

This is precisely why in my previous article on the Balearics I warned that lopsided regional regulation had the risk of derailing the rules of a market economy on artificially stifling competition and driving prices up; which is not good news for consumers. My conclusion to my September article was that the Spanish government needs to pub stomp this by acting resolutely and rein in devolved competencies which would iron out all these pesky market distortions. The holiday rental market is becoming increasingly fragmented and confusing in Spain and needs to be urgently addressed nationwide from Madrid unifying in one legal body the holiday rental regulation.

Banning holiday rentals in city centres is not the answer; it has already been tried and tested in other large cities and failed (i.e. Berlin). Curtailing property rights is not the answer and is a frontal attack to private property which is enshrined in art. 33 of Spain’s Constitution. Politicians have no business restricting individual’s property rights, thank you very much. This faux pas by local politicians will adversely affect foreign investments in the Balearics at a time when the property market was roaring.

At times, I get the distinct impression politicians have an innate ability to disrupt the market and plunge us headlong into recessions. Surely, just my imagination…

AirBnB to pass all guest details over to the Spanish Tax Office

On a different note, as reported yesterday by financial newspaper CincoDias, AirBnB has signed an agreement with the Spanish Tax Office to disclose and pass them all the financial details of landlord’s guests. This is going to constitute a massive shakedown of undeclared holiday rentals (read tax dodgers). If you own property in Spain and you rent it out, whether long or short-term, you must declare your rental income and pay taxes in Spain.

The Spanish Tax Office is growing weary as billions of euros are going untaxed. The AEAT will be cracking down on this skulduggery going forward. Over 1,400 properties have already been fined by Authorities in the province of Malaga alone as they did not meet the holiday rental requirements set out by regional regulation.

We strongly advise all landlords (resident and non-resident) to declare and pay their rental income taxes in Spain.

Our law firm offers a bespoke tax service, for a very competitive fee, which is tailored for holiday rentals (Holiday Rentals Accounting Service). We can reduce on average by 40%, or more, landlord’s tax bills. We will save you more money than what you spend on hiring us. It pays off to be legal.

“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 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.

Tax services Larraín Nesbitt Lawyers can offer you

• Holiday Rentals Accounting Service (HRAS)
• Non-Resident Income Tax (Fiscal Representation)
• IRPF (Spanish Resident Income Tax)
• Tax form 720
• Spanish Inheritance Tax (IHT)
• Spanish Inheritance Tax Assessment Report (SITAR)
• Wealth Tax

Taxation-related articles

• Spain’s Wealth Tax Reloaded – 8th September 2011
• Spanish Wealth Tax (Patrimonio) – 8th November 2011
• Fiscal Novelties Affecting Spanish Property Owners – 8th December 2012
• Buying and Owning Spanish Property through Companies: Pros and Cons – 7th March 2014
• Taxes on Selling Spanish Property – 8th December 2014
• Changes to Spain’s Inheritance and Gift Tax Law – 21st February 2015
• La Complementaria or ‘Bargain-Hunter Tax’ – 8th May 2015
• Taxes on Buying Spanish Property – 8th July 2015
• Dispelling Spanish Inheritance Tax Myths – 8th August 2015
• Non-Resident Taxes in Spain – 8th December 2015
• Spanish Inheritance Tax for Non-residents (Part I) – 8th February 2016
• Spanish Inheritance Tax for Non-residents (Part II) – 8th March 2016
• Spain’s Non-Dom Tax Scheme – 8th July 2016
• Inheritance Tax Novelties in Andalusia. FAQ on IHT – 8th September 2016
• Renting in Spain - Landlord´s Taxation – 8th of January 2017
• Renting in Spain: Non-Resident Landlord's Rental Tax Relief – 14th of January 2017
• Which beneficiaries are hit worst by Spanish Inheritance Tax (IHT)? – 2nd June 2017
• Holiday Home Taxation in Spain – 8th of July 2017
• Andalusia to slash Inheritance tax for inheritances under 1 million euros – 21st September 2017
• Spanish Inheritance Tax Assessment Report (SITAR) – 8th of October 2017
• Non-Resident Income Tax – 1st December 2017
• Non-Resident Income Tax – 8^th December 2017
• Tax advantages on becoming resident in Spain. – 8^th March 2018
• Tax form 720 – 20th April 2018

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.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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
20^th 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 1^st of January until the 2^nd 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 1^st 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 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) 952 19 22 88 or by completing our contact form to book an appointment.

Tax services Larraín Nesbitt Lawyers can offer you

• Tax form 720
• Non-Resident Income Tax (Fiscal Representation)
• IRPF (Spanish Resident Income Tax)
• Holiday Rentals Accounting Service (HRAS)
• Spanish Inheritance Tax (IHT)
• Spanish Inheritance Tax Assessment Report (SITAR)
• Wealth Tax

Taxation-related articles

• Spain’s Wealth Tax Reloaded – 8th September 2011
• Spanish Wealth Tax (Patrimonio) – 8th November 2011
• Fiscal Novelties Affecting Spanish Property Owners – 8th December 2012
• Buying and Owning Spanish Property through Companies: Pros and Cons – 7th March 2014
• Taxes on Selling Spanish Property – 8th December 2014
• Changes to Spain’s Inheritance and Gift Tax Law – 21st February 2015
• La Complementaria or ‘Bargain-Hunter Tax’ – 8th May 2015
• Taxes on Buying Spanish Property – 8th July 2015
• Dispelling Spanish Inheritance Tax Myths – 8th August 2015
• Non-Resident Taxes in Spain – 8th December 2015
• Spanish Inheritance Tax for Non-residents (Part I) – 8th February 2016
• Spanish Inheritance Tax for Non-residents (Part II) – 8th March 2016
• Spain’s Non-Dom Tax Scheme – 8th July 2016
• Inheritance Tax Novelties in Andalusia. FAQ on IHT – 8th September 2016
• Renting in Spain - Landlord´s Taxation – 8th of January 2017
• Renting in Spain: Non-Resident Landlord's Rental Tax Relief – 14th of January 2017
• Which beneficiaries are hit worst by Spanish Inheritance Tax (IHT)? – 2nd June 2017
• Holiday Home Taxation in Spain – 8th of July 2017
• Andalusia to slash Inheritance tax for inheritances under 1 million euros – 21st September 2017
• Spanish Inheritance Tax Assessment Report (SITAR) – 8th of October 2017
• Non-Resident Income Tax – 1st December 2017
• Non-Resident Income Tax – 8^th December 2017
• Tax advantages on becoming resident in Spain. – 8^th March 2018
• Tax form 720 – 20th April 2018

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.

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

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
10^th 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.

• Conveyancing – Buying from €995

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.

Legal services Larraín Nesbitt Lawyers can offer you

• Conveyancing – Buying from €995
• Conveyancing – Selling from €795

Mortgage-related articles

• Lifetime Loans or Reverse Mortgages in Spain Explained – 21st February 2011
• Advice to Struggling Mortgage Borrowers in Spain – 8th March 2011
• Spanish Mortgage Loans: Beware of Abusive Clauses – 8th January 2012
• Spanish Mortgage Loans: An Overview – 21st February 2012
• Floor Clauses Revisited (‘Cláusulas Suelo’) – 8th December 2013
• Bank Repossessions in Spain– 21st February 2014
• Bad Debtor’s List (‘Fichero de Morosos’) – 8th April 2014
• Spanish Creditors Pursuing Debts Abroad – 8th May 2014
• Dación en Pago Explained or How to hand Back the Keys – 8th December 2014
• Limiting Liability in Spain – 8th November 2015
• Personal Bankrutpcy in Spain: Second Opportunity Law – 8th September 2015
• Never act as a guarantor in a Spanish mortgage loan – 10th April 2018

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.

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
30^th 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.

• Conveyancing – Buying from €995

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.

Legal services Larraín Nesbitt Lawyers can offer you

• Conveyancing – Buying from €995
• Conveyancing – Selling from €795
• Tenant Eviction Service from €1,400

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.

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
20^th 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.

• Conveyancing – Buying from €995.

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.

Legal services Larraín Nesbitt Lawyers can offer you

• Conveyancing – Buying from €995
• Conveyancing – Selling from €795

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.

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
7^th 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 abusive sales commissions. A seller that has no legal representation can be the subject of commission abuses by unscrupulous agents. An example of this here: commission abuses.  
• Lawyer's fees are 100% tax-deductible! The fees you pay us to sell your property are fully deductible from the sales tax (CGT), meaning you pay less tax on hiring us.
• 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). More information in our tax blog: Save taxes on selling your Spanish home! – 1st March 2019
• 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.
• 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.

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? We offer the most competitive fees in the market.

Conveyancing – Selling 

We are specialized in conveyancing.

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.

Legal services Larraín Nesbitt Lawyers can offer you

• Conveyancing – Selling from €795
• Conveyancing – Buying from €995

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.

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

Spain’s Supreme Court ruled yesterday 28^th 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 16^th 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) 952 19 22 88 or by completing our contact form.

Legal services Larraín Nesbitt Lawyers can offer you

• Litigation
• Conveyancing – Buying from €995
• Conveyancing – Selling from €795

Litigation related articles

• Is Litigation Against Spanish Developers Worthwhile? – 23^rd May 2008
• 10 Reasons why your Case against a Developer may be thrown out of Court in Spain – 8^th September 2012
• Supreme Court Rulings on Bank Guarantees – 8th April 2015
• Off-Plan Bank Guarantees and Supreme Court Rulings – Payback Time – 8^th June 2016
• Lender’s to pay for mortgage setup costs – 27th of January 2017
• Spain’s Constitutional Court rules ‘Plusvalia’ tax is illegal if property is sold at a loss – 3rd March 2017
• Recap of Legal Actions in Spain against Banks & Others – 21st March 2017
• Selling property at a loss in Spain: ‘Plusvalía’ tax no longer payable – 18th May 2017
• Have you sold property at a loss in Spain? You can now apply for a tax refund – 8th November 2017
• Spain’s Supreme Court quashes borrower’s hopes on refunds for mortgage set up costs – 1st March 2018

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.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
21^st 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 self-serving 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% (that's a hike of 26% in tax rate post-Brexit).
• Inheritance tax: Lenient regional tax allowances will no longer be available; only national ones which are negligible. This translates into a change going from expats having to pay no inheritance tax, or very little, to a punitive inheritance bill.
• 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 70%. This means that expat landlords will now face a huge spike in their quarterly tax returns on renting out.
• 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. Which means cgt must now be paid on selling.

Brexit has quantifiable adverse monetary effects for hundreds of thousands of expats.

It is my personal opinion that Brexit is an ill-conceived idea fruit of the unbridled arrogance of a single politician that took a gamble with all our children's future and lost miserably. Besides polarizing society and fracturing our unity as a nation, it will greatly weaken the United Kingdom for generations to come and plays right into the hands of our nation's enemies that work tirelessly to weaken our resolve and undermine our institutions that secure peace and prosperity for us all. It should give us pause to see them openly advocating and supporting Brexit.

With all its flaws, the European Union has brought peace and prosperity to Europe for three quarters of a century (backed unwaveringly by our US cousins). A Europe which historically is prone to be ravished by petty wars. Turning our back on this political feat leaves the door ajar to political instability, to in-bred nationalisms, which power-hungry men to the East will be only too eager to exploit. For the sake of our children's future, we should avoid this historic error.

“Those who cannot remember the past are condemned to repeat it.” – George Santayana.

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

Legal services Larraín Nesbitt Lawyers can offer you

• Conveyancing – Buying 
• Conveyancing – Selling 

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 secessionist politician was harmed on writing this blog post. VOV.

2.018 © Raymundo Larraín Nesbitt. All rights reserved.

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

Photo credit: Photobucket, Judge Judy.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
9^th 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 – 8^th 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) 952 19 22 88 or by completing our contact form.

Legal services Larraín Nesbitt Lawyers can offer you

• Registration of Holiday Rental Homes
• Rentals (contract drafting)
• Holiday Rentals Accounting Service (HRAS)
• Tenant Eviction Service
• Non-Resident Income Tax (Fiscal Representation)
• NIE Number (Tax Identification Number)

Rental-related articles

• Renting in Spain: Top Ten Mistakes – 8th of June 2011
• Let-to-Buy in Spain: The Smart Choice – 8th of April 2012
• Letting in Spain: The Safe Way – 10th of October 2012
• New Measures to Bolster Spain’s Ailing Rental Market – 8th of July 2013
• Tenant Eviction in Spain – 8th of June 2014
• Holiday Rental Laws in Spain – 8th of March 2015
• Holiday Rental Laws in Andalusia (Decree 28/2016) – 8th of February 2016
• Decree 20/2002: Andalusia’s Holiday Rural Rental Decree – 8th of April 2016
• Urban Rental Law in Spain – Spain's Tenancy Act – 8th May 2016
• Renting in Spain - Landlord´s Taxation – 8th of January 2017
• Renting in Spain: Non-Resident Landlord's Rental Tax Relief – 14th of January 2017
• Community of Owners in Madrid to bar Holiday Rentals – 29th June 2017
• 10 Questions you Should Ask your Agent on Leasing Office Space in Spain – 24th May 2017
• Holiday Rental Home Taxation in Spain – 8th July 2017
• Holiday Rentals in Andalusia Made Easy – 3^rd July 2017
• How to inspect an off-plan property overseas – Q&A with The Sunday Times. July 2017
• Holiday-home lettings: Do NOT register with Andalusia's Tourism Registry unless you are fully compliant – 21^st of July 2017
• New Balearics Holiday Rental Law – 8^th of September 2017
• Seasonal lets: an alternative to holiday home rentals – 8^th of October 2017
• Let-to-buy contracts: do not forget to add a clause forbidding sublets! – 20^th October 2017
• The magic of lettings in Spain – 21^st November 2017
• 7 illegal clauses in Spanish rental contracts – 8^th January 2018
• Holiday Rentals Accounting Service (HRAS) – 16^th January 2018
• How (not) to bypass regional Holiday Home Laws in Spain – 9^th February 2018

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.