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Nonresidents. The European Court of Justice rules in your Favour in Relation to Inheritance Taxes

Posted in: Myra's Blog
Author: Myra Cecilia Azzopardi
Tags: , , , ,

I personally abhor injustices of all types but my foremost concern focuses on what occurs in Spain and how certain rulings which are imposed affect our migrant community.

The laws relating to taxes have often been prejudicial to the nonresident. The nonresident has just as the residents invested in Spain. They holiday here therefore spending less time using the facilities available. This does not allow a discount on the rates, lighting, rubbish, and other town hall services. They are not entitled to a large discount on the annual IBI bills. Spain is not  their habitual residence so are obviously not permitted to register on the padron which is the benchmark used for entitlement for a discount on the annual rates. The majority of this community live in urbanizations. No discount on the monthly fees either. One could argue that they do not contribute to the wear and tear, rarely use the sports facilities and may only spend a month here to enjoy the amenities provided. No discount here either. All these rules are accepted by the nonresident.

As if the above were not enough, the scales are and have been tilted against them in other much more important areas. Taxes. The nonresident has to pay annual taxes for the privilege of owning a property in Spain. No discount here. It was not so many years ago that these homeowners were made to pay a higher rate of taxes on the sale of their property. The difference was enormous, around 15% for the resident whilst the nonresident paid a  higher proportion at 35%. This unfair practice was challenged and the outcome was that it was ruled as discriminatory and since, both resident and nonresident pay the same. All those who had sold in the previous four years to the new ruling were able to reclaim the differences in taxes paid. Thousands did and millions were returned. It was at that moment when I and the lawyers who I collaborated with commenced to advise the heirs of nonresidents of the chances of reclaiming excessive IHT paid. This will now be a certainty.

At last we have some excellent news for nonresidents.. Last week the European Court of Justice ruled against Spain charging it with using discriminatory laws against nonresident who were not able to benefit from the often huge discounts allowed to residents in many autonomous regions. The ruling also relates to assets and gift taxes inherited out of Spain in other EU countries and of course the UK:

This news will have further implications. THOSE WHO INHERITED FROM NONRESIDENTS AND NON RESIDENT HEIRS WHO DID NOT RECEIVE THE GENEROUS DEDUCTIONS IN SOME AUTONOMOUS REGIONS IN THE LAST FOUR YEARS, CAN NOW APPLY FOR THE EXTRA TAXES PAID TO BE RETURNED. For anyone in this position or have friends or family who may be have been affected by the discriminatory law and wish to have further information or a free consultancy with our lawyers, myra@citizensadvice.org.es

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September 4th 2015.

Please note: The information provided is based upon our understanding of current legislation. It is not legal advice but is provided freely to enable you to be properly informed. We recommend that if you are considering taking action, you should seek professional advice.

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