Selling Process?

[LiLoLil]

I am selling a property in Spain but there seems to be some confusion, even with my lawyer, as to how much tax I have to pay and when it is payable!

My understanding is that CGT used to be 35% for non residents and a lesser % for residents.

I believe this has now changed and the CGT payable is 18% for non residents and zero for residents provided that the money is used to purchase a new property within two years.

Even though this is still against EU guidelines the discrimination is as expected in Spain it is better than the 35% of last year!

However, my laywer is suggesting that the CGT payable is STILL 35% and that I need to pay 3% on completion PLUS pay a 5% 'retention' payable within 30 days of completion but I may be able to claim it back??

The agent selling my house doesnt know, the lawyer is 'uncertain'.

Is there someone here who can clarify the situation for me?

Thanks

[Bongtrees]

You should name and shame this ¨lawyer¨

Go to a gestor its cheaper and you will usually get the right answer, this subject has been discussed in recent weeks, use the search to find the thread.

Good luck

[El Cid]

I believe this has now changed and the CGT payable is 18% for non residents and zero for residents provided that the money is used to purchase a new property within two years.

Even though this is still against EU guidelines the discrimination is as expected in Spain it is better than the 35% of last year!

The rates have changed to 18% for residents and non residents.
As you say, residents can avoid this if they reinvest but this only applies to their habitual dwelling. As non residents, by definition, cannot have a Habitual Dwelling in Spain it is not discriminatory at all. Residents who sell a second home pay the full 18%.

The retention is now 3%.

As Bongtrees said - get a new lawyer or use a gestor.

Sid

[LiLoLil]

Thanks Sid

Where, how and when is the retention taken?

Is it taken by the lawyer, Notary?

[Beachcomber]

You may like to suggest to your lawyer that he reads this:

http://www.boe.es/boe/dias/2006/11/29/p ... -41810.pdf

The retention is deducted from the purchase price at the time of signing in the Notary's office. The amount of the retention must be paid to AEAT within one month by the purchaser who should then give you the receipt for payment. You should then submit a tax return within a further three months reflecting the actual capital gain and either pay the difference or reclaim the balance on form 212.

[LiLoLil]

Thanks Beachcomber.

I think that clears up the situation.

As a continuation of this I do believe that this IS discrimination under EU law.

As an EU born, EU passport holder living in an EU country I do have the same rights as a resident.

It is unfortunate that Spain, amongst other countries, is a little slow in following EU laws laid down.

I should have the same rights as a Spanish resident in every aspect, especially where tax is concerned.

As the current, new law stands, a Spanish resident can put off paying CGT provided that the money is reinvested into property in Spain within 2 years.

As an EU member I should have the same rights.

My house in Spain is my ONLY residence. It is NOT a holiday home and has provided me with a good home for a few years. It is time to move on and buy something a little bigger in Spain.

As far as my paperwork is concerned I am a resident as far as my town council is concerned I just do not have that dreaded residency card, which is being phased out anyway!

Discrimination? I think so!

[katy]

Perhaps you should have thought about taking out residencia if it is your only home.

[julian]

why is the residency card "dreaded"???

[masterob]

Surely in that case you are resident in Spain for tax purposes. I thought the decision as to whether or not someone is tax resident did not require them to also have applied for residencia?

[El Cid]

[ As a continuation of this I do believe that this IS discrimination under EU law.

As an EU born, EU passport holder living in an EU country I do have the same rights as a resident.

It is unfortunate that Spain, amongst other countries, is a little slow in following EU laws laid down.

I should have the same rights as a Spanish resident in every aspect, especially where tax is concerned.

As the current, new law stands, a Spanish resident can put off paying CGT provided that the money is reinvested into property in Spain within 2 years.

As an EU member I should have the same rights.

My house in Spain is my ONLY residence. It is NOT a holiday home and has provided me with a good home for a few years. It is time to move on and buy something a little bigger in Spain.

As far as my paperwork is concerned I am a resident as far as my town council is concerned I just do not have that dreaded residency card, which is being phased out anyway!

Discrimination? I think so!

From what you have said, you seem to be living in Spain so you would be classed as a tax resident and entitled to the same advantages as a Spanish resident when it come to taxes.

However if you are living in Spain and not registered as being tax resident and paying any relevant taxes, you can hardly expect the same rights as those that are.

Sid

[Beachcomber]

You should bear in mind that a non-resident Spaniard is in exactly the same position as a non-resident foreigner.

If a Spaniard is non-resident he get no tax concessions on the sale of a property because, obviously, it is not his primary residence and he is obliged to submit annual non-resident tax returns in just the same way as a non-resident foreigner.

The residence card is more correctly known as a 'tarjeta comunitaria' and whether it is being phased out or not is open to some doubt. It is more likely going to take a different form and be issued from the Town Hall in a more extended version of the padrón certificate rather than by the Ministry of the Interior. In my opinion it is far easier to show a small plastic card when asked for some proof of identification than a tatty sheet of A4 paper which will become a little more tatty each time it is produced.

The possession or otherwise of a 'tarjeta comunitaria' does not determine your fiscal status. In order to be treated as a tax resident when you sell, regardless of how long you have been on the padrón or held a community card, you have to obtain a certificate of fiscal domicile from the tax authorities and either prove that you have been paying taxes during your period of residency or that your income has been below the threshold at which taxes should be paid bearing in mind that your declared income should be reflected in your lifestyle and the value of the property which you are selling.

Selling as a non-resident you are very likely to be asked to produce receipts for payment of non-resident taxes during your period of ownership. In the future this is likely to take to form of a certificate from AEAT similar to the certificate of fiscal domicile.

Ensuring that everyone pays their taxes is not discrimination is a matter of sound economic common sense.

[BENIDORM]

This topic is extremely difficult to understand, the basic qualifications seem very straightforward, but then as everyone seems to have different circumstances it becomes fraught with problems....
So , what is a Regimen Comunitario card, stamped with Extranjeros Espana on the front, with the nie number and photo,and on the reverse, a fingerprint with the word observaciones..residente......Perhaps one of our learned friends could advice ........

[LiLoLil]

Perhaps you should have thought about taking out residencia if it is your only home.

As an EU Resident there is no requirement for me to take residencia!

[LiLoLil]

Surely in that case you are resident in Spain for tax purposes. I thought the decision as to whether or not someone is tax resident did not require them to also have applied for residencia?

Yes I am a tax resident and as an EU citizen have no requiremet to apply for residency.

[katy]

Ther used to be a requirement, I agree that its not necessary now. It is necessary to pay taxes the same as a spanish national and not as a non-resident though (if you live here). I do not understand all the antagonism towards the card, I find it useful to carry around and at least you are treat a little more seriously when you are dealing with officials etc.

[LiLoLil]

You should bear in mind that a non-resident Spaniard is in exactly the same position as a non-resident foreigner.

If a Spaniard is non-resident he get no tax concessions on the sale of a property because, obviously, it is not his primary residence and he is obliged to submit annual non-resident tax returns in just the same way as a non-resident foreigner.

The residence card is more correctly known as a 'tarjeta comunitaria' and whether it is being phased out or not is open to some doubt. It is more likely going to take a different form and be issued from the Town Hall in a more extended version of the padrón certificate rather than by the Ministry of the Interior. In my opinion it is far easier to show a small plastic card when asked for some proof of identification than a tatty sheet of A4 paper which will become a little more tatty each time it is produced.

The possession or otherwise of a 'tarjeta comunitaria' does not determine your fiscal status. In order to be treated as a tax resident when you sell, regardless of how long you have been on the padrón or held a community card, you have to obtain a certificate of fiscal domicile from the tax authorities and either prove that you have been paying taxes during your period of residency or that your income has been below the threshold at which taxes should be paid bearing in mind that your declared income should be reflected in your lifestyle and the value of the property which you are selling.

Selling as a non-resident you are very likely to be asked to produce receipts for payment of non-resident taxes during your period of ownership. In the future this is likely to take to form of a certificate from AEAT similar to the certificate of fiscal domicile.

Ensuring that everyone pays their taxes is not discrimination is a matter of sound economic common sense.

I quite accept the 'resident' 'non-resident' scenario for both Spanish and Foreign citizens.

However, it does seem that even if you are a tax paying resident if you do not have the 'tarjeta comunitaria' then you you are treated as a non resident as far as paying tax on a house is concerned.

Totally agree that ensuring that everyone pays their taxes is not discrimination provided the playing field is level for everyone no matter where they were born!

[LiLoLil]

Ther used to be a requirement, I agree that its not necessary now. It is necessary to pay taxes the same as a spanish national and not as a non-resident though (if you live here). I do not understand all the antagonism towards the card, I find it useful to carry around and at least you are treat a little more seriously when you are dealing with officials etc.

Of course it is necessary to pay taxes as a Spaniard whilst living here goes without saying.

I do not have antagonism toward the card but to the way that anyone who does not have a card is treated differently to a card holder!

As there is no requirement to hold the card then provided I pay my taxes as a Spaniard would there should be no difference in the way a non card holder should be treated.

[Colinm]

As there is no requirement to hold the card then provided I pay my taxes as a Spaniard would there should be no difference in the way a non card holder should be treated.

nor should you be treated any differently if your skin is a different colour, or if you pray to Mecca or Rome, etc , etc..........this is the dream scenario, as professed by 'do gooders' and 'tree hugger' etc. Strange, but true, it is not reality. (ask Jade Goody)

[Bongtrees]

As an EU Resident there is no requirement for me to take residencia!

Taken from British Embassy web site today.

Who Must Obtain a Residence Card?
Pensioners who have retired to Spain.
People of independent means.
Non-EU national dependants of an EU or Spanish national, are still required to apply for a residence card.

They must apply for one of the following two types of card:
Temporary residence card: intended stay of more than three months but less than one year.
Ordinary residence card: intended stay of more than one year with a maximum validity of five years and renewable.

Who Doesn't Need To Obtain a Residence Card?

UK nationals who are employees, self-employed, students.
EU national dependants of an EU or Spanish national or pensioners who have worked in Spain and receive their pension from the Spanish Social Security system no longer need to hold a residence card, and can live in Spain with a valid passport. (Dependants who are non-EU nationals still require a residence card.)

[El Cid]

Yes I am a tax resident and as an EU citizen have no requiremet to apply for residency.

If you are a tax resident then I don't know why you have a problem. You will get the usual roll-over relief on your gain and probably pay no tax.

Having a resident's card makes no difference. The notary should be quite happy to accept your last tax return as proof of tax residency or you can get a certificate of tax residency from the tax office.

As for there being no requirement to apply for a resident's card, that is only true in certain cases as Bongtrees has pointed out. The majority of ex-pats living in Spain still need to apply for one.

Sid