3% retention tax

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DAVEYLAD
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3% retention tax

Postby DAVEYLAD » Mon Aug 21, 2017 4:12 pm

I have got notification from my lawyer that the tax office will not be returning the 3% retention on the sale of my apartment.
They are looking for an extra 14,000 euro which they say is due.The apartment sold for 130,000 but the tax office have put a value of 196,000 euros on the apartment.
We have set up a counter valuation which i hope will prove the true value.My question is have i any hope fighting the tax people on this.

El Cid
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Re: 3% retention tax

Postby El Cid » Mon Aug 21, 2017 5:14 pm

You can fight it, but it will take time and big legal fees.

Sid

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Re: 3% retention tax

Postby Miro » Mon Aug 21, 2017 6:12 pm

I think this is the first time I've heard of the tax office demanding more capital gains tax from a non-resident seller, based on their presumption that the property was sold for more than the declared price. Until now, I thought it was only buyers who were getting demands for additional transfer tax, based on the tax office's on-paper valuation - regardless of what was actually paid for the property. But demanding capital gains tax on a different value is basically the tax office stating that they believe the seller deliberately under-declared the sale price and accepted black money. So what next - criminal prosecutions for fraud and/or money laundering, despite a complete lack of any evidence? I find this rather worrying.

Daveylad - I can't quite work out the figures, but based on a sale price of 130K, presumably €3,900 was retained (3%); if they are now demanding a further €14,000 (a total therefore of €17,900) based on a (presumed) sale price of 196K, they must be assuming you paid around 100K for the property. If that's the case, then even on a sale price of 130k, the 3% would not have covered your CGT liability, so I could perhaps understand them wanting a couple of grand more. From your post, it seems you were expecting to get the 3% back though?
Last edited by Miro on Mon Aug 21, 2017 6:27 pm, edited 1 time in total.
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El Cid
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Re: 3% retention tax

Postby El Cid » Mon Aug 21, 2017 6:23 pm

They don't need evidence - they just use their archaic valuation.

It's up to you to provide evidence to the contrary.

Sid

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Re: 3% retention tax

Postby Miro » Mon Aug 21, 2017 6:29 pm

Sid, have you heard of this happening to sellers, though? Is it perhaps in response to the ruling that town halls can no longer collect plus valia from sellers where properties were sold at a loss? What they lose with the one hand they take with the other?
Don't worry about what people think, they don't do it very often

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Re: 3% retention tax

Postby El Cid » Mon Aug 21, 2017 6:38 pm

No, I haven't come across a specific case, but I can't see that it is in any way different from charging extra transfer tax on the basis of an official (higher) valuation.

In these cases (potential tax fraud) presumption of innocence does not always apply.

Sid

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Re: 3% retention tax

Postby Miro » Mon Aug 21, 2017 6:56 pm

I suppose in principal there isn't much difference, except that if a buyer genuinely picks up a bargain from a desperate seller, they perhaps can swallow the extra tax demanded, because, well, they know they got a bargain. If on the other a desperate seller lets his place go cheap only to get hit for tax on a gain he simply didn't make, well, that's a cruel blow.
I'm not quite sure what make of a country whose government can indiscriminately tax its citizens based on purely fictitious figures. It's hardly conducive to fostering an atmosphere of trust. Surely if anything it's going to encourage a black market culture, which isn't going to help the economy in the long run.
Don't worry about what people think, they don't do it very often

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DAVEYLAD
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Re: 3% retention tax

Postby DAVEYLAD » Mon Aug 21, 2017 7:11 pm

I bought for 150,000 so sold on at a loss.The procedure now is for me to get a Private valuation done.Then the tax office get an independant valuer to value the apartment.ALL at my expense.Then hopefully the true value will be seen.I am in shock after years of paying what was due and doing everything by the book.

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Re: 3% retention tax

Postby El Cid » Mon Aug 21, 2017 8:40 pm

The real problem lies with the estate agents and lawyers. The official valuations of property in Spain is well documented. For example, if you tell me your catastral value and your municipality, I will quickly tell you what the official valuation is.

Clearly any lawyer or gestate agent is equally aware of this and should advise their clients that there is a potential liability for an under declaration claim from Hacienda after the sale, both fron the point of view of CGT and transfer tax.

It really should not come as a surprise to anyone, buyer or seller, after the sale. It should have been called out prior to the sale by the lawyer or estate agent.

Sid

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Re: 3% retention tax

Postby AkoAko » Mon Aug 21, 2017 10:47 pm

Buyers will often ask for a recommendation for a lawyer or the agents will push a particular one . Even if the buyer finds their own Lawyer the Lawyer will do all he can for the sale to go through as they know if it doesn't then the agent will steer future buyers away from them . They wont bite the hand that feeds them . Many things are not mentioned for fear of loosing the sale plus theres always the additional work later to sort out the problems , you will be surprised how long it is before the new property owner gets wise and looks elsewhere for another Lawyer .

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Re: 3% retention tax

Postby scotty » Mon Aug 21, 2017 11:57 pm

Davey, have you another property in Spain or do you reside there ? If not do you feel they will pursue you back in Ireland ?

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gerryh
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Re: 3% retention tax

Postby gerryh » Tue Aug 22, 2017 7:54 am

El Cid wrote: if you tell me your catastral value and your municipality, I will quickly tell you what the official valuation is.

Sid


Is this done by a table lookup of the municipality "multiplier"
If so, where is the table?
I have a very low catastral value, far far below a realistic sale/ purchase price.
Cheers
Gerry
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Re: 3% retention tax

Postby elusive » Tue Aug 22, 2017 8:04 am

You think many of these tinpot unqualified lets set up an estate agent in spain and cash in brits/expats even have a clue about such a law.

I fail to see how you are supposed to prove you didnt take black money. They are the ones making the allegation so should have to provide the evidence. You cant prove a negative. . Only a un democratic junta could/would act in such a way. Fail to see how the euro courts would allow them to get away with it.

As above. If you have no other dealings in spain let them sing for it

El Cid
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Re: 3% retention tax

Postby El Cid » Tue Aug 22, 2017 8:25 am

gerryh wrote: .
Is this done by a table lookup of the municipality "multiplier"
If so, where is the table?
I have a very low catastral value, far far below a realistic sale/ purchase price.
Cheers
Gerry


There is a calculator here for Andalucia

http://www.juntadeandalucia.es/economia ... aResultado

If you have a very low value then you could have tax issues as described above, but the upside is that IHT is based on the same valuation method.

Sid

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Re: 3% retention tax

Postby Free at Last » Tue Aug 22, 2017 8:38 am

[quote="El Cid"]

If you have a very low value then you could have tax issues as described above, but the upside is that IHT is based on the same valuation method.

Sid[/quote}

Wouldn't the problems be more likely to arise if the property has a higher catastral value than the sale/purchase price, not a lower one?
Last edited by Free at Last on Tue Aug 22, 2017 8:47 am, edited 2 times in total.

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gerryh
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Re: 3% retention tax

Postby gerryh » Tue Aug 22, 2017 8:44 am

That link give a "Estado HTTP 405 – Method Not Allowed" error.
What is the multiplier for Velez-Malaga?
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Gerry
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Re: 3% retention tax

Postby El Cid » Tue Aug 22, 2017 9:51 am

Free at Last wrote:
El Cid wrote:

Wouldn't the problems be more likely to arise if the property has a higher catastral value than the sale/purchase price, not a lower one?


If the value is lower then the IHT will be lower. The tax is based on the official value at the time of death.

Sid

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Re: 3% retention tax

Postby Wicksey » Tue Aug 22, 2017 11:46 am

So the CGT rate is almost 39%, based on the alleged gain of 46.000€ (17.900€ as a % of 196.000 - 150.000€)?? I would be interested to know if the buyer has had an additional purchase tax bill for the difference between the 130k he paid and the alleged selling price of 196k. It all seems a bit odd to me!

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Re: 3% retention tax

Postby El Cid » Tue Aug 22, 2017 12:15 pm

gerryh wrote:
What is the multiplier for Velez-Malaga?
Cheers
Gerry


It's very low - 1.1 is the factor. In other words a catastral value of 100000 would yield a valuation of 110000

Try this link

http://www.juntadeandalucia.es/agenciat ... r_real.htm

Sid

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gerryh
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Re: 3% retention tax

Postby gerryh » Tue Aug 22, 2017 1:19 pm

So the alleged official value of my property is €8,120.01, no I haven't got the decimal point in the wrong place.
I would hope I could sell it for at least €120,000 which would give me an, alleged, huge profit. :think: :think:
Cheers
Gerry
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