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Golden Visa Spain

Raymundo Larraín Nesbitt, June, 8. 2017

Lawyer Raymond Nesbitt gives us a brief outline on the application for a so-called Golden Visa in Spain and its incredible advantages for non-EU nationals.

By Raymundo Larraín Nesbitt
Director of Larraín Nesbitt Lawyers
8th of June 2017

 

 

 

                                                                                                                          

 

                                                                                                                                                     

Golden Visa Spain

 

The Spanish Golden Visa scheme has become the gateway to Europe for thousands of applicants pursuing the European dream. They have combinedly invested over 2 billion euros since its launch in 2013. Spain has overtaken Portugal becoming Europe´s number one Golden Visa supplier.

This scheme allows applicants and its dependants unfettered access across Europe´s Schengen Area.

Although the procedure was initially tailored to attract affluent Chinese and Russian citizens, British nationals should seriously consider looking into this procedure with renewed interest.  

The reason is because the UK has opted out of the European Union. This scheme would allow British nationals that lack a EU passport to travel across Europe skipping pesky passport controls in equal terms to EU nationals. Just like before the UK decided to break away from Europe.

If you want more details, please read my in-depth article: Investor Guide to Spain’s Golden Visa Law. You can hire the Golden Visa legal service from our law firm. More information here: Golden Visa Application.

Thousands of non-EU nationals have already benefitted from this scheme, securing their families’ future and well-being.

Why haven't YOU invested in your family's future?

 

 

 

 

 

 

 

 

 

 

 

 

Golden Visa Advantages

 

  • Fast-tracked. This law is specifically tailored to attract affluent non-EU investors, and helps cut through the red tape.
  • Travel Europe visa-free. You can travel without a visa for 90 days out of every 180 days within the Schengen Area, but you will still need a visa to enter EU countries outside the Schengen Area (for example the United Kingdom).
  • Clear rules. Initially 1 year (Residency Visa), then 2 years (Residency Permit), renewable indefinitely every 2 years.
  • No need to become resident in Spain. You only have to visit Spain once to get or renew the Residency Permit. There is no minimum stay requirement, and you don’t have to become a fiscal resident or actually live in Spain.
  • Family included. You may get additional permits for your spouse and children under 18 years (or disabled children over 18). Same-sex partners inclusive.
  • Spanish nationality (optional). This is a 2-year Residency Permit, not the right to permanent residency or a Spanish passport. However, it can lead to long-term Spanish residency after 5 years of continuous residence, and citizenship after 10 years.
  • Underaged children may study in Europe. Underaged offspring can live and study in Spain, in company of your partner, whilst you work and earn money abroad.
  • Return on investment. Take advantage of Spain´s burgeoning real estate recovery. Prices are starting to rise led by Madrid and Barcelona. Rock-bottom property prices will not last forever.

 

General Requirements

 

 Applicants pursuing investor visas must comply with the following general requirements:

  • Non-EU national.
  • The investor applicant must be of legal age (18-years-old or over).
  • The investor must not hold a criminal record whether in Spain or in the previous five years where he has resided.
  • Not be already in Spain irregularly.
  • Have access to medical insurance whether private or public.
  • Have sufficient financial means to support both himself and his family whilst in Spain.
  • Pay the relevant application fee.

 

Specific Requirements

 

Qualified residency permits to non-EU residents will be offered in return for any of the following:

  • Investing at least €500.000 in Spanish Real Estate property (unencumbered, without taking a mortgage on said amount, you may apply for a mortgage on the excess).
  • Investing at least €2.000.000 in Spanish Treasury Bonds.
  • Investing at least €1.000.000 in shares of Spanish Companies.
  • Depositing at least €1.000.000 in Spanish Bank Accounts.
  • A ‘major’ business investment which fulfils at least one of the following three conditions:
  1. Meaningful job creation as a direct result of the investment.
  2. Significant socioeconomic impact in the geographical location where the activity will be carried out.
  3. Technological or scientific impact.

 

 

The predecessors plant trees [and] the next generation cools off in the shade – Ancient Chinese proverb.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Golden Visa related articles

• Investor Guide to Spain’s Golden Visa Law – 8th November 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

 

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.

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

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Which beneficiaries are hit worst by Spanish Inheritance Tax (IHT)?

Raymundo Larraín Nesbitt, June, 2. 2017

 

Lawyer Raymundo Larraín Nesbitt explains to us which taxpayers (inheritors) are likely the worse off on inheriting assets in Spain.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
2nd of June 2017

 

 

 

 

Spanish Inheritance Tax is a complex tax that requires planning ahead to mitigate exposure to this tax. Our law firm has expertise mitigating the IHT burden. Ask us.

In this blog post I highlight the beneficiaries (those who stand to inherit assets in Spain) who will likely be the worse off by this tax.

Beneficiaries included in one or more of the following categories below will likely be landed with a humongous IHT tax bill unless they follow my advice and plan ahead:

• Beneficiaries classified in Groups III & IV for IHT purposes (distant relatives or else with no family ties).

Group III: Relatives in second and third degree: in-laws, brothers/sisters (siblings), nephews/nieces, aunts and uncles.
Group IV: Relatives in fourth degree, or without any kinship: a friend, common law partners, mistress.


• Large estate inherited. It is difficult to give a precise number as it is in relation with multiple factors.
• Pre-existing net wealth in Spain of the inheritor is large. The worst-case scenario is an inheritor classified in Group IV who already has a pre-existing net wealth in Spain of over €4,020,770.98 (over £3,000,000) and who inherits over €797,555. In such a case, the inheritor would be applied an extreme tax rate of 81.6% (34%*2.4). This is clearly a problem that only affects someone who was already a multimillionaire before inheriting; not exactly a problem that affects us all (unfortunately!).
• The assets or rights inherited are located in what I label as a ‘tier 2’ region for IHT purposes; meaning the regional exemptions are negligible or non-existent.
• Aged between 21 and 65 years old (because multiple lavish exemptions would not apply to that age group).
• Beneficiaries are non-resident in the EU or EEA (this is because lenient regional tax allowances do not apply to those resident outside the European Union or European Economic Area).

Conclusion

If you plan to leave an estate in Spain to your loved ones, and your appointed beneficiaries qualify for a combination of one or more of the above then you (NOT the beneficiary!) should consider speaking with our law firm to do some serious estate planning to mitigate their inheritance tax exposure – they will be forever grateful.

 

“If you fail to plan, you plan to fail” – Benjamin Franklin.

Founding Father of the United States. Exceptionally gifted scientist, inventor, diplomat, writer, printer, postmaster and political theorist. Even politician in his spare time; nobody’s perfect.

 

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

Larraín Nesbitt Lawyers is a law firm specialized in taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. Please contact us for a free initial consultation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Related articles

 

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

 

 

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10 Questions you Should Ask your Agent on Leasing Office Space in Spain

Raymundo Larraín Nesbitt, May, 24. 2017

Lawyer Raymundo Larraín Nesbitt explains to us the questions you should level at your estate agent when you are hunting for office space in Spain. He also supplies us with some basic tips to avoid the most common pitfalls.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
24th of May 2017

 

 

 

So, you have finally made up your mind and decided to take the plunge setting up your own business in Spain? Good for you.

One of your fist port of calls, on prowling for suitable office space in Spain, will be an estate agent and a seasoned lawyer.

The following are just some of the basic questions you should be asking them, or the landlord, before you commit to signing on the dotted line.

10 Questions you Should Ask your Agent on Leasing Office Space in Spain

 

  1. Verify that who is leasing the property is in fact the owner or else is legally empowered to do so on his behalf before signing any document.

Nothing worse than making a huge down payment upfront only to realise you have been duped out of your money leasing from someone who was not legally empowered to do so.

  1. What is the property size?

Do not get short changed on this as leases are often calculated based on the property size and if your property is considerably smaller you will get shafted overpaying.

  1. Does it have fibre optic cabling pre-installed?

Nowadays modern business needs require high-speed connections to internet. You really do not want to get stuck leasing office space that still uses a 48k dial-up modem, do you?

  1. Can you place your company logo on the exterior?

Something which is so basic is often taken for granted and overlooked on searching for office space. Unless you plan to set up a boiler room (hearsay has it that it is a very lucrative source of income in Spain) you need your company logo on the exterior. Some communities of owners do not allow this, some business centres (centro de negocios) also disallow this. Needless to say, you really need one unless you are into shady business.

  1. How much is the rental's deposit?

As I care to explain in my article Urban Rental Law in Spain there is freedom to negotiate with a landlord how many month´s deposit is required as a rental guarantee. Whilst the general practice is a two-month deposit for commercial premises (as per law) I stress there is leeway to negotiate, particularly on high-end commercial lets. For example, a beachfront pad located in a prime location such as Puerto Banus (Marbella) could set you back 12 months. Particularly if you are a non-resident tenant with no ties to Spain, a landlord will ask for more cast-iron financial guarantees (to hedge himself) as you may be perceived as a risky option. It is convenient this is cleared and negotiated by the parties from the outset as it is often a contentious point. More information on rental guarantees in my article: Renting in Spain Safely.

  1. Who Pays IBI tax and the Community of Owners Quota?

To avoid yourself nasty surprises this will be one of the first questions you should be asking. As a general rule, landlords shore up with both. However, in practice this may not be the case. So, make sure you ask first to be on the safe side. IBI tax is explained in my article Non-Resident Taxes in Spain. CO quota is explained in my article Community of Owners.

  1. Who pays for Rubbish Collection Tax?

Again, a question that is frequently overlooked by would-be-tenants. The general rule is that the landlord pays for it but can be agreed otherwise so careful with the small print. Rubbish collection tax is explained in my article Non-Resident Taxes in Spain.

  1. Who pays for the utilities (water & electricity)? Are the utilities connected (up and running)?

Although the answer may seem rather obvious at first, that it is the tenant who pays for both, in practice you may be surprised to learn that it is in fact the landlord who pays for water in office lets. Electricity is paid for by the tenant. You should also inquire if the utilities are currently connected to the supply grid unless you fancy the excitement of waiting for weeks on end (the infamous mañana, mañana one dreads to hear) for someone to actually turn up (unannounced) at the property and connect you…

  1. Does it have (modern) A/C?

Spain is a hot country all year round, particularly in the summertime. You really do not want to get stuck signing off a 12-month commercial lease only to find out the AC system is a vintage General Electric machine harking back to the 50s. This is one expense you should not be dragging your feet on and splash generously; bottom line, get yourself a good modern AC system.

  1. The Landlord

Success or business failure is often linked to your rapport with a landlord. Try to always be on his good side as they can easily make your life downright miserable. You should ask your agent on this.

 

Conclusion

Remember the golden rule that no matter how charming an estate agent may seem (Hollywood smile and all), he always works for the landlord; not for you. Don´t make (wrong) assumptions and do your own research.

For your own good, hire a competent lawyer from the outset to review any lease agreement before you commit and sign on the dotted line (or any other legal document for the matter). You will save yourself considerable money and aggravation on the long run sidestepping the most common blunders professionals are all too keenly aware of.

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:

 

Letting related articles

 

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved

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Selling property at a loss in Spain: ‘Plusvalía’ tax no longer payable

Raymundo Larraín Nesbitt, May, 18. 2017

Lawyer Raymundo Larraín Nesbitt explains to us the relevance of a new ruling from Spain´s Constitutional Court that affects all vendors of Spanish property, including non-residents. Specifically, vendors selling property at a loss and how they can claim back a full refund on their Plusvalia tax, plus legal interests.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
Thursday 18th of May 2017

 

 

 

Following up on my blog posts from March 2017, Spain’s Constitutional Court rules ‘Plusvalia’ tax is illegal if property is sold at a loss and Recap of Legal Actions in Spain against Banks & Others, Spain’s Constitutional court in a new landmark ruling from last 11th of May stated that the ‘plusvalía’ tax can no longer be charged by town halls when a vendor sells a property at a loss. This ruling has nationwide effects.

In plain English; no profit, no taxation.

I strongly recommend my blog posts from March are read in tandem with this other post to fully understand the new tax situation.

As a quick recap, on selling property in Spain, a vendor is liable for two taxes (you can read further in my article Taxes on Selling Spanish Property):

  1. Capital gains tax (paid to regional Authorities).
  2. ‘Plusvalía’ tax (levied by town halls).

Regarding the first tax, capital gains tax, I had already covered in a detailed article the consequences of receiving a ‘Complementaria’ or Bargain-Hunter tax and how to appeal it successfully. I won´t mention it further in this post.

Today´s blog post will focus on the second tax listed above; the so-called ‘plusvalía’ tax. On selling, property vendors need to pay this tax as a result of the increase of value in the land to the town hall where the property conveyed is located. If there is no increase in value it stands to logic no tax should be collected, right? Wrong!

Town halls have fought tooth and nail to avoid this as they are overdependent on this local tax. This tax constitutes in most cases their main source of income. Only last year over 140 million euros were collected in Malaga province alone.

In March’s blog post I explained how the Constitutional Court ruled that some articles of a regional law from the Basque Country were deemed unconstitutional. The wording used in that regional regulation was in fact a blatant copy of a national law, word-for-word. So, it stands to logic I argued that if the court declared it was unconstitutional for the Basque Country it follows that its null and void effects should also be made extensive nationwide; which is exactly what´s happened two months on.

The new key ruling from 11th of May has done just that. Spain’s Constitutional Court has declared, with nationwide effects, that when a vendor sells a property at a loss they are no longer liable to pay plusvalía tax. 

Before you put the champagne on ice, please continue reading for the small print…

Practical Effects of this New Ruling

  • All vendors who sold property at a loss as from May 2013 can now request a full refund of plusvalía tax plus legal interests on top (a lawyer needs to be hired).
  • It is estimated over 550,000 vendors qualify for this refund since 2013.
  • Refunds on average stand to be in excess of €1,000.

 

Does that mean I no longer have to pay this tax on selling at a loss?

No. You will be expected to pay this tax on selling a property whether you have made a profit or not on selling property.

Hang on, you just said that on selling at a loss you no longer had to pay this tax! This is as clear as mud!

The law has still not been amended. Spanish Courts cannot rewrite tax laws but may declare them null and void. Tax laws need to be formally repealed, redrafted and enacted by Congress. It may take a while until a consensus is reached on new legislation and is formally approved by all political forces.

In the meantime, town halls, despite all these rulings from Spain’s Constitutional Court, will continue to exact from vendors the plusvalía tax as if nothing had changed.

As I wrote back in March, town halls are heavily reliant on the plusvalía tax to finance their public coffers. Ruling or not, they will continue to demand this tax until a new tax law has been approved on the matter. Don´t hold your breath waiting.

What to do If you sold property at a loss after May 2013

To claim, you must first pay the plusvalía tax as normal.

Only once paid, can your lawyer then lodge an appeal to claw back this tax successfully. Following this new ruling from May, the chances to attain a full refund (plus interests) are now excellent (they were moderate back in March when I first wrote on the subject prior to this new ruling).

Timeframe to Claim

Unfortunately, vendors can only claim back tax dating the last four years as any tax collected before May 2013 is now time-barred. In other words, any vendor who’s sold a property at a loss since May 2013, and has paid plusvalía tax, is now entitled to a full refund. The vast majority of vendors paid on average €1,000 or more in plusvalia tax on selling at a loss.

Can I claim without a lawyer?

You can certainly try and fail. You need a lawyer, period.

How to Claim

The process is not straightforward as it requires the input of professionals. It does not suffice to show the difference between the buying and selling price in the Title deeds as it will surely be turned down by the Administration. You need to appoint a competent law firm to act on your behalf to claw back this tax. To appeal the tax successfully a technical report must be commanded to back the legal recourse.

Contact us for more information on your matter. We will be glad to assist you.

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.

Blog post also published at Spanish Property Insight: Selling property at a loss in Spain: ‘Plusvalía’ tax no longer payable

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Related articles

 

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

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Driving in Spain: Documents to Carry in your Car

Raymundo Larraín Nesbitt, May, 10. 2017

Lawyer Raymundo Larraín Nesbitt explains what documents are required when driving in Spain.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
Wednesday 10th of May 2017

 

 

                                                                                                                                             

                                                                                                                                              Photo credit: José Manuel Casal

 

Whilst driving in Spain, you can be stopped at any point in time by the Guardia Civil or the National Police. It is strongly advised that you carry all the documents required by law (whether you are resident or non-resident).

In addition, Spanish-plated cars are expected to carry a series of extras which can also be checked besides the documents.

1. Spanish-Plated Cars: Mandatory Documents

  • European Driving licence (in force).
  • Permiso de Circulación (vehicle registration document).
  • Tarjeta de inspeccion técnica ITV (equivalent to the UKs MOT report.)
  • ITV sticker (to prove you are driving an MOT-compliant car).
  • Car insurance. Spanish police can now find online if your car is insured. It is no longer required you carry a receipt of having paid it.
  • Resguardo Impuesto sobre Vehículos de Tracción Mecánica (IVTM). Receipt of having paid your annual town hall car tax.

 

Additional Extras Spanish-plated cars must comply with

It is mandatory, by law, to carry all the following:

  • (Small) fire extinguisher.
  • Two warning triangles.
  • One yellow reflecting safety jacket.

 

2. Non-Spanish Plated Cars: Mandatory Documents

  • Driving Licence (in force).
  • MOT report (in force).
  • Car insurance (green card).

 

Word of Advice

Whilst not strictly obligatory, which is why I do not list it above, I strongly recommend you carry at all times in your car at least two copies of a European accident report (parte amistoso de accidentes in Spanish). Your insurance company can supply you with these free of charge. They are most useful when somebody bumps into you on the road and you pull one out and complete it on the fly with the other driver’s car details.

I have done this several times in the past to much success always claiming from the other driver’s insurance company. It is also a very good idea to pull out your smart phone, like I do, and take several pictures of the accident to avoid ‘misunderstandings’ further down the line.  

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.

Driving in Spain related articles

New Driving Laws in Spain – 8th December 2014

 

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

 

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Recap of Legal Actions in Spain against Banks & Others

Raymundo Larraín Nesbitt, March, 16. 2017

Lawyer Raymundo Larraín Nesbitt gives us a brief recap of all the recent court cases in Spain which may award non-residents with unexpected huge windfalls.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
21st of March 2017

 

 

Several key court rulings have hit the Spanish headlines over the last months raising huge waves which ripples we continue to feel every day in the shape of glossy newspaper and radio ads soliciting litigation clients. Lawyers have all too eagerly witnessed the recent snowball of landmark rulings which have opened up new venues to litigate that were previously barred to us.

To laymen, these rulings mark an inflection point allowing them a golden chance to claw back lost off-plan deposits from developers, undue interest rates pocketed by lenders, overcharged taxes from town halls and even from the Spanish Tax Office itself. Most of this money was written off years ago, by those affected (in the majority UK nationals). These new rulings have tipped the scales, turning legal outcomes upside down enabling successful litigation (and payback, which is really what it’s all about).

The best way to go about it is to simply provide a brief overview of all the ongoing court cases, one by one, giving the likely success odds, timeframe to claim and the amounts claimed back. I close each one referencing my own articles on a matter for those that seek more information. I only list those likely to affect my readers/clients i.e. non-residents.

There are more court cases than the ones I collate below, but these overwhelmingly affect Spanish nationals (e.g. preferentes) so I will purposely leave them off the list.

It should be noted that the following blog post is of general interest only and is not to be construed or intended as substitute for professional legal advice.

1. Recovering Off-Plan deposits from banks

 

Recap: Recent court rulings from 2015 considered that banks were jointly responsible, along with developers, of any off-plan deposits paid by buyers on failed new-builds. This allowed for the first time ever to litigate successfully against banks despite there being no bank guarantees issued securing off-plan staged payments. And banks, unlike developers, do have money to pay up. Moreover, most banks in Spain have allocated huge provisions in preparation for a tidal wave of litigation reminiscent of the PPI scandal that engulfed British high street banks on miss-selling financial products.

Who can claim: Buyers of off-plan property in Spain that were not issued with mandatory bank guarantees and whose developments were either never started or completed in time.

Timeframe to claim: 15 years as from the time of making the first staged payment.

Amount claimed back: Substantial, ranging from €50,000 to €300,000. In truth there is no cap as it will depend on a case-by-case.

Success outcome: Excellent. To the point most law firms feel bold enough to offer no win, no fees.

Related articles on the matter:

 

 

2. ‘Floor Clauses’ or Cláusulas Suelo in Spanish

 

Recap: Long story short, lenders introduced in the heyday of the property boom abusive clauses in borrower’s Mortgage deeds which effectively resulted in banks pocketing the money when interest rates dropped across the board i.e. Euribor rate which most variable interest loans used as a benchmark. The European Court of Justice recently ruled in favour of borrowers declaring these abusive clauses as null and void with retroactive effects.

Who can claim: borrowers who took a mortgage loan in Spain to, for example, finance the acquisition of a property.

Timeframe to claim: the new ECJ ruling has declared these clauses as null and void with no time limits on how far back claims can go.

Amount claimed back: on average €15,000 per borrower.

Success outcome: Excellent. To the point most law firms feel confident enough to offer no win, no fees.

Related articles on the matter:

 

3. Claiming back Mortgage set-up costs from Banks

 

Recap: A new court ruling has declared a series of abusive mortgage clauses null and void. Amongst them are the set-up costs on taking on a mortgage loan.

Who can claim: borrowers who took a mortgage loan in Spain to, for example, finance the acquisition of a property.

Timeframe to claim: the previous four years.

Amount claimed back: several thousand euros per borrower.

Success outcome: Bleak. More like-minded rulings are required before litigating successfully.

Related articles on the matter:

 

4. Selling property at a loss: claiming back ‘Plusvalia’ tax from town halls

 

Recap: A new court ruling has established that there can only be taxation when a seller makes a profit. Town halls have to payback all overcharged tax on selling at a loss. This ruling can be made extensive to all of Spain.

Who can claim: Sellers who sold property in Spain at a loss.

Timeframe to claim: The previous four years. Sellers can only claim back on property sold at a loss as from February 2013 onwards.

Amount claimed back: For most sellers, a paltry amount in the hundreds of euros. Exceptionally, some large plots of land are lined up for a huge windfall.

Success outcome: *Excellent (EDIT 18th of May 2017). It is likely town halls will fight back appealing, forcing lawyers to go through a full-blown litigation procedure.

Related articles on the matter:

 

5. Claiming back Spanish Inheritance Tax from the Spanish Tax Office

 

Recap: In September 2014, a new ECJ put an end to fiscal discrimination between residents and non-residents in Spain on taxation matters. Without going into detail, this affected, amid other taxes, Spain’s dreaded Inheritance Tax. This opened up the opportunity for those that had inherited assets in Spain to claim back from the Spanish Tax Office all the tax they had unduly been overcharged on grounds of (fiscal) discrimination.

Who can claim: Non-resident heirs of assets located in Spain.

Timeframe to claim: 4 years, mostly time-barred now.

Amount claimed: Substantial, by its own nature.

Success outcome: Excellent.

Related articles on the matter:

 

How to Claim

Most law firms will request a trail of paperwork to justify the payments you made. They will offer to assess your case free-of-charge in most cases.

If you have a strong case, they will let you know and offer in some cases a no win, no fee yet in others they will simply request legal fees upfront depending on the matter and the client’s financial situation. Careful not to get stung signing off huge percentages!

I would be cautious on getting caught up litigating on some of the matters I list above which, currently, may have bleak success odds despite the fuzzy warm feeling that some litigation ads exude.

You should also know that on losing a case in Spain, a judge may rule that the plaintiff (the actor or person who files a lawsuit) must pay all costs, which may include the defendant’s lawyers. In plain English, on losing, a plaintiff would end up paying two sets of legal fees: his own lawyers as well as those of the defendant. It’s all good and well that lawyers make it clear that on no win, no fee a client does not have to pay them; albeit likewise they should also disclose to a client that they will not be held liable either for a defendant’s legal costs should they lose!

 

Word of Advice

My advice is to contact established Spanish law firms specialized in litigation. You should steer clear from fly-by-night recently setup operations run by expat intruders (with no legal qualifications whatsoever) who meddle in legal matters in exchange of sizeable commissions (that you pay out of your own hard-earned money, don’t forget). These ads are now proliferating like mushrooms in newspapers, radio and internet. So be warned because there are choppy waters up ahead (with sharks!).

If you don´t want to get stung twice, play it safe and deal only with qualified and registered lawyers. Yes, their English might not be the best in the world but you want to play your cards right.

You will only get one chance and one chance alone to recover your lost money; choosing wisely a reputable law firm is now perhaps more important than ever in Spain.

You won’t get a second chance.

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

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

 

Article originally published at Spanish Property Insight: Recap of Legal Actions in Spain against Banks & Others.

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

 

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Spain’s Constitutional Court rules ‘Plusvalia’ tax is illegal if property is sold at a loss

Raymundo Larraín Nesbitt, March, 3. 2017

EDITOR'S NOTE: Lawyer Raymundo Larraín Nesbitt explains the recent Constitutional Court ruling that the Plusvalia tax cannot be charged when a vendor sells a Spanish property a loss, and advice for vendors affected by the change.

Credit photo: Flickr, by Phillip Ingham

By Raymundo Larraín Nesbitt
Lawyer – Abogado
Friday 3rd of March 2017

 

Spain’s Constitutional court in a landmark ruling from last 16th of February declared that ‘Plusvalia’ tax cannot be charged when a vendor sells property at a loss. In plain English; no profit, no taxation.

After a long property boom that lasted eight years, 2008 bank meltdown delivered a lethal blow which caused property prices to tailspin overnight. This property implosion drove many vendors to sell properties below what they had actually paid for them during the heyday of the property bubble (Below Market Value or BMV properties).

As a recap, on selling property in Spain a vendor is liable for two taxes (you can read further in my article Taxes on Selling Spanish Property):

  1. Capital gains tax (paid to regional Authorities).
  2. ‘Plusvalia’ tax (levied by town halls).

Regarding the first tax, capital gains tax, I had already covered in a detailed article the consequences of receiving a ‘Complementaria’ or Bargain-Hunter tax and how to appeal it successfully. 

Today´s blog post will focus however on the second tax I list above; the so-called ‘Plusvalia’ tax. On selling, property vendors need to pay this tax as a result of the increase of value in the land to the town hall where the property conveyed is located. If there is no increase in value it stands to logic no tax should be collected, right? Wrong! Town halls have fought tooth and nail to avoid this as they are overdependent on this local tax. This tax constitutes in most cases their main source of income. Only last year over 140 million euros were collected in Malaga province alone.

The significance of the Constitutional Court’s ruling is that, for the first time ever, it gives the reason to vendors who had complained bitterly over the years that it made no sense to pay taxes on a property they were making a loss on selling. Town halls had turn a blind eye on this new phenomenon and adamantly refused to reimburse vendors the collected tax walking away scot free – until now.

In a nutshell, the reason of the discrepancy is because town halls calculate the ‘Plusvalia’ tax using the rateable value of property (cadastral value) they have on their books. Most town halls have not updated these values in line with today’s market downturn and these, in most cases, still reflect the outdated values fetched at the peak of the property bubble. That is why vendors are still being charged this tax despite making a loss on selling.

It is estimated this ruling affects over 500,000 vendors.

The new ruling confirms similar rulings from regional Supreme Courts across Spain.

Timeframe to Claim

Unfortunately, vendors can only claim back tax dating the last four years as any tax collected before February 2013 is now time-barred. In other words, any vendor who’s sold a property at a loss since February 2013, and has paid ‘Plusvalia’ tax, is now entitled to a full refund. For the vast majority of people the tax paid averages 1,000 euros or less. 

Selling Property Now

It is a principle in Spanish law that you first have to pay the requested tax (or fine) and then file a complaint (appeal). So, if you are selling property now – at a loss – you cannot refuse to pay the ‘Plusvalia’ tax. Only once you pay it can you then raise a complaint seeking a full refund.

The New Ruling Spells Trouble for Town Halls

It is no secret town halls in the wake of the property bubble struggle to make ends meet as tax revenues have taken their toll due to the low volume in property transactions. The new ruling poses a serious setback to council finances which in most cases will translate into significantly denting their coffers and in others will throw local finances into disarray. Vendors can reasonably expect serious delays in paybacks if vendors start appealing en masse for a tax refund.

How to Claim

The process is not straightforward and is somewhat convoluted (always the red tape!). It requires the input of professionals. It does not suffice to show the difference between the buying and selling price in the Title deeds as it will be turned down by the Administration. You need to appoint a competent law firm to act on your behalf to claw back this tax. To appeal the tax successfully a technical report must be commanded to back the legal recourse.

As written, for most people this tax will be in the hundreds of euros yet in other cases the amounts can be quite substantial warranting the support of a law firm.

Only a case-by-case approach can discern on whether it is worthwhile or not for a client to file a complaint employing lawyers.

 

Original blog post published at Spanish Property Insight: Spain’s Constitutional Court rules ‘Plusvalia’ tax is illegal if property is sold at a loss.

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

Larraín Nesbitt Lawyers is a law firm specialized in conveyancing, taxation, 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 services Larraín Nesbitt Lawyers can offer you

 

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

 

 

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Lenders to Pay for Mortgage Setup Costs

Raymundo Larraín Nesbitt, January, 27. 2017

Solicitor Raymundo Larraín Nesbitt examines the Supreme Court’s latest ruling on mortgage abusive clauses, urging would-be plaintiffs caution.

By Raymundo Larraín Nesbitt
Lawyer – Abogado
27th of January 2017

 

 

Lenders to Pay for Mortgage Setup Costs

 

Spanish lenders are of late besieged by the number of court cases being brought against them as a result of the mortgage abusive clauses they added during Spain’s long lasting property boom:

 

A recent Supreme Court ruling has declared null and void 32 abusive mortgage clauses with retroactive affects. I had been warning on such abusive clauses for over a decade: Spanish Mortgage Loans – Beware of Abusive Clauses.

The latest chapter in this ongoing bank saga is a Supreme Court ruling from last December 2015 which establishes that lenders ought to pay for borrower’s mortgage setup costs. You can read further here: Banks now also on the hook for mortgage setup costs.

This is a ground-breaking ruling from a legal point of view as the financial repercussions would ripple across the finance sector. It could potentially affect thousands of borrowers (including scores of non-resident borrowers) as its effects are retroactive. Borrowers stand to claw back a significant amount of what they paid when they bought a property in Spain:

  • Notary and Land Registry fees.
  • Bank charges (gestoría fees).
  • Associated Transfer tax (Stamp Duty).

 

On average, we could be talking of several thousand euros per borrower. Billions of euros in total.

The Damper

Despite the warm fuzzy feeling this news exudes, I advise borrowers to take it with a pinch of salt (or two) and adopt a cautious approach.

For starters, this ruling blatantly contradicts prior Supreme Court rulings which established it was a borrower´s responsibility to pay for said costs. So, it does not set jurisprudence. Meaning lower courts are not bound by it. Moreover, this new ruling is from the Civil section when the line of jurisprudence had been set by a different section, the Contentious-Administrative one. Perhaps I venture the Supreme Court would do well in getting their act together as disjointed rulings from different sections on the same matter add confusion and take away credibility.   

Secondly, and not least important, is the fact that our existing tax laws (such as the Stamp Duty Act) expressly rule that the taxpayer on mortgage setup costs is the borrower, period. No grey areas here, carry on.

And finally, the Tax Office has also made it clear in its binding replies for over two decades now that it is the borrower who is responsible for paying the 1.5% Stamp Duty on a mortgage setup.  

Lower Court Rulings

Unsurprisingly, the latest rulings have been a bit of a mix bag. Some eager young judges favour borrowers, yet others, perhaps more conservative, clearly rule in favour of lenders.

Judges cannot blatantly go against existing (tax) laws, creating new ones. Laws need to be repealed first, formally.

Que Sera, Sera

In this particular case, I see strong arguments against indulging in reckless litigation that could leave borrowers seriously out-of-pocket. I am of the opinion that borrowers should just sit tight and wait for events to unfold. At least until there is a clear discernible pattern before entering into reckless litigation.

One thing is litigating when you have a European Court of Justice ruling backing you (which cannot be appealed) such as the ‘floor clauses’ or recovering off-plan deposits and another very different is litigating in the face of existing decades-old tax laws which clearly point at whose responsible for paying mortgage setup costs (borrower). The latter simply reminds me of the infamous charge of the Light Brigade at the Battle of Balaclava.

On the former I understand law firms’ eagerness to press on with enticing no win, no fee structures in newspaper advertisements (as they are bound to win). Yet are these law firms so bold as to also apply a no win, no fee structure to the mortgage setup cost fiasco? I think not, and with good reason!

So borrower, caveat emptor. I urge you to resist the siren songs of many a law firm luring you to take on your bank from glossy newspaper ads – at your own cost. At least for the time being until the dust settles and there is a clear court stance on the matter of mortgage setup costs; one way or another.  

 

“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 taxation, inheritance, conveyancing, and litigation. We will be very pleased to discuss your matter with you. Please contact us for a free initial consultation. You can contact us by e-mail at info@larrainnesbitt.com, by telephone on (+34) 952 19 22 88 or by completing our contact form.

 

Legal services Larraín Nesbitt Lawyers can offer you

 

Related articles

 

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

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Renting in Spain: Non-Resident Landlord's Rental Tax Relief

Raymundo Larraín Nesbitt, January, 14. 2017

EDITOR'S NOTE: Marbella-based solicitor Raymond Nesbitt explains the rental reliefs non-resident landlords may now benefit from, following a recent European Court of Justice ruling.

 

 

By Raymundo Larraín Nesbitt
Lawyer – Abogado
13th of January 2017

Following a recent European Court of Justice ruling, non-resident landlords may now benefit from the same tax allowances that were previously earmarked for Spanish residents. This will greatly mitigate your tax bill on renting out your Spanish property.

You can read a long unabridged article on the matter here which explains the changes in more detail, or else continue reading for the short version.

What is required by a non-resident landlord to deduct Spanish rental expenses?

  • Currently only residents in the EU or EEA qualify to benefit from rental allowances.
  • You will need to produce a certificate of tax residency in the corresponding State issued by the tax authorities of that State which will be required on filing the tax return.
  • Proof must be supplied that the following (deductible) expenses are directly related to rental income earned in Spain and have a direct economic connection that is inseparable from the activity carried out in Spain.

 

 List of expenses that can be deducted from your rental income

 

This is a closed list. In addition to the letting reliefs listed below some regions in Spain may offer additional rental deductions.

  • 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.

 

Examples of maintenance costs (deductible): repainting over flaky paint, plumbing, debugging, tennis court green mold cleaning, swimming pool pump replacement, annual lift maintenance, leaking faucet.

Examples of refurbishment expenses (non-deductible): glass curtains, double-glazed windows, parquet, marble floor, extension to property (outbuilding), tennis court, swimming pool, private lift.

Notwithstanding the above, refurbishment expenses (improvements) may be claimed on selling the property by offsetting them against your Capital Gains Tax liability. Please read my article: Taxes on Selling Spanish Property.

  • Home insurance premiums (theft, fire, civil liability etc.). Please read my articles Home Insurance in Spain, Community of Owners’ Insurance Policies and How to Cancel your Home Insurance Policy in Spain. However claims arising from events that diminish the value of a dwelling are non-deductible i.e. fire.
  • Utility invoices (electricity, water, gas and landline).
  • Concierge, gardening & security services (i.e. gated communities).
  • Rental publicity 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.

 

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 services Larraín Nesbitt Lawyers can offer you

 

 Related articles

 

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

2.017 © Raymundo Larraín Nesbitt. All rights reserved.

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European Court of Justice Slams Floor Clauses

Raymundo Larraín Nesbitt, December, 27. 2016

By Raymundo Larraín Nesbitt
Lawyer – Abogado
27th of December 2016

The ECJ ruled last 21st of December 2016 that 'floor clauses' (which I call collar clauses in my articles) are null and void. This ruling is final and cannot be appealed. It is estimated mortgage borrowers are owed €3,000 for every year as from 2009 onwards. On average borrowers, can expect an average payout to the tune of €15,000 after this landmark ECJ ruling. It is estimated Spanish banks will fork out between four to seven billion euros to honour the High Court’s decision.   

This key decision taken by Europe’s High Court is a much-anticipated ruling that puts an end to a long winding saga that started over a decade ago. Wind back the clock ten years to the boom times, and when no one had even heard about floor clauses, I was ramming against them in my articles and blog posts as these collar clauses were clearly abusive and biased in favour of lenders. Today´s warnings make tomorrow's newspaper headlines.

As example of my articles at the time warning consumers on them:


•    10 Common Abusive Clauses in Spanish Mortgage Loans – June 2009
•    Spain’s Senate Petitions Government to Suppress “Floor Clauses” – September 2009
•    Spanish Mortgage Loans: Beware of Abusive Clauses – January 2012
•    Mortgage Collar Clauses Revisited (‘Cláusulas Suelo’) – December 2013

 

Basically, these clauses only came into effect when the Euribor (which is the financial benchmark most Spanish lenders take to set variable mortgage interest rates) dropped sharply in 2009. It was only then that consumers began noticing that despite the huge drops in interest rates the savings did not pass on to them. Lenders were in fact (unjustly) pocketing the difference thanks to these collar clauses.

Spain´s Supreme Court in 2013, in a very controversial and much-criticised ruling, only partially ruled against them limiting their effects as from the 9th of May 2013 onwards – which was nonsensical and fell short for a number of reasons.

For starters, from a practical point of view, the overwhelming majority of these clauses had been signed in the boom times; almost none were signed as from 2013 onwards. So, this ruling made no sense at all on limiting their effects at a time when none were being signed as Spain was in the midst of a severe recession when almost no houses were being bought.

Strictly from a technical legal point of view, this was one of the few instances where a legal matter is black or white. Roman Empire iurisconsults had already coined a millennia ago the latin expression: “Quod nullum est nullum producit effectum”. Loosely translated as what is null and void produces no legal effects and therefore must be annulled ab initio (from the outset). In plain English after a clause is declared null and void by a judge the effects should be retroactive; the practical significance this has is the difference between having to pay (or not) billions of euros to consumers in settlements.

This legal tradition admitted no exceptions and had been followed uninterruptedly for centuries by our judges; that is, until Spain´s Supreme Court, the highest court in the land, decided unwisely otherwise in its 2013 time-gating the effects as from May 2013 onwards albeit not retroactively. This was clearly a legal aberration justified only "in the greater good of the (Spanish) economy" (read lenders).

The controversial ruling from Spain's Supreme Court was clearly biased towards lenders with only one much-lauded dissenting vote from a brave magistrate that spoke up against them. The magistrate that broke rank from his peers was the only one who in fact had NOT worked for lenders in the past nor had any professional ties to them; Mr. Francisco Javier Orduña Moreno. So, kudos to this bold magistrate for his forward-thinking and making a stand.

The ECJs ruling corrects this glaring mistake from Spain's Supreme Court and sets the record straight for consumers at large.

What happens now?

Fast-forward to today: Consumer Associations are vying with the newly-appointed Government to streamline the payout procedure and avoid thousands of consumers having to go to court over these huge payouts (which would clog Spanish courts furthermore).

In the meantime, consumers that are entitled to payouts require the assistance of a lawyer as lenders will be highly reluctant to pay out these large sums.

Spanish Tax Office

Additionally, it should be noted that the Spanish Tax Office will be owed tax on these payouts. They can only claim back the last 4 years.

Who can claim?

Not all mortgages signed over the last decade included collar clauses; a case-by-case approach must be taken.

If you signed a mortgage loan over the last decade in Spain, chances are high a collar clause was worded into your mortgage contract. In which case, you would be entitled to an average payout exceeding £10,000 following this new ECJ ruling which binds Spanish lenders.

Thousands of non-residents (the majority British) that bought second homes in Spain during the boom times are now entitled to these huge payouts.

Do I need to appoint a lawyer?

As written above, for the time being yes, you do need to appoint one if you want your money back. Only if the Government and Consumer Associations manage to reach a consensual decision over the matter would the use of lawyers be overridden. However, the negotiations could drag on for months if not longer.

Deadline to claim?

If your mortgage was fully paid up, you only have 4 years to claim as from the last instalment.

In other cases, it is not time-limited.

Fast track out-of-court settlements

In order to avoid protracted litigation (which ultimately, lenders are bound to lose following this new ruling), it is reasonable to expect that some lenders will offer clients out-of-court agreements. The downside is that these payments will be significantly less than what a consumer is really owed given the time elapsed and the delay interests accrued on top.

It will fall on each consumer to decide individually on whether they want a substantially smaller amount now (as in a year or less) or else a significantly higher amount in some years’ time (with additional compounded interests on top).

It should be noted that on signing such an agreement you waive your right to go to court and file a claim. I mention this because lenders, on seeing that chances were high they would lose before the (unbiased) ECJ, have been busy over the last months in 2016 offering their mortgage clients lacklustre settlements in lieu of litigation.

Whatever the case may be, Larraín Nesbitt Lawyers can assist you in your decision-making finding the best solution for your individual needs. Ask us, we will examine your case free of compromise.

 

“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain” – Mark Twain.

American writer, entrepreneur, publisher and lecturer. Among his novels are The Adventures of Tom Sawyer and its sequel, Adventures of Huckleberry Finn.

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

 

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.

2.016 © Raymundo Larraín Nesbitt. All rights reserved.

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