The tax loophole – which was originally exposed by currency exchange brokers HiFX and Spanish lawyers, Costa, Alvarez, Manglano & Associates – came about after British non residents paid a Spanish Non Residents’ Income Tax rate of 35% on any capital gains, compared to a rate of 15% paid by Spanish nationals.
This 133% overpayment not only totals a profit somewhere in the region of an estimated £350million for the Spanish Government, but also contravenes European Community Treaty rules on discrimination and therefore was unduly charged by the Spanish Government.
British people applying for a refund are also set to add on missing interest at a rate of 6% to their reclaims from the date the reclaim is presented, making the total reclaim even higher.
Following the launch of the www.spanishtaxreclaim.co.uk website in March 2008, British people who believed they were affected came forward to highlight their plights. A Spanish Court then ruled in February this year that the initial case put forward by solicitors Costa, Alvarez, Manglano & Associates on behalf of Mr and Mrs Roy from the UK was so convincing that there was no need for it to be passed on to the European Courts of Justice (ECJ), which is the usual procedure.
The Court ruled that they should be refunded. Anyone else who believes they have been affected should come forward now with their cases.
However, while 260 Brits are in the process to put their cases before the Spanish High Courts and an additional 340 have registered their details, thousands more are still to come forward. At the same time people who have sold properties before July 2004 have already missed out on being able to make a reclaim on their overpaid tax as, under Spanish law, claims can only be made dating back over a four-year period, meaning thousands more have become victim to this tax trap.
Mark Bodega, Director of currency specialists HiFX said: "We launched the website www.spanishtaxreclaim.co.uk last year in a bid to help those British people affected by this CGT loophole to put their cases forward before the Spanish Government. It is fantastic news that the first British couple has been successful, and that a total of 600 other British claimants are now in the process of putting their cases forward.
"Between them they could reclaim £8.4million plus interest, based on the average reclaim figure at the moment of £14,100, but it is absolutely vital that anyone who believes they are affected comes forward to reclaim what they have wrongly been overcharged by the Spanish Government. The £8.4million is a lot of money but really just a small fraction of what could potentially be reclaimed by Brits, which could be as much as £140million."
Spanish Lawyer Emilio Alvarez said: "We have successfully put forward to the Spanish Government, and won, the first British case and we are now able to lead other British people forward and reclaim the money they were wrongly overcharged. However, as timings around reclaims are so tight under Spanish law then it is vital people come forward via the www.spanishtaxreclaim.co.uk website as soon as they can so their cases can be registered and put forward, or they could miss out."
For more information, and details of how to register your interest, visit www.spanishtaxreclaim.co.uk or call the helpline on 0845 680 3849.
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