Sold a property between 2004 and 2006? Claim back your capital gains tax in spain

As foreigners in Spain, many of you now reading this article may have recently owned and sold property in Spain without actually having ever taken up Spanish residency. But for those of you who owned and sold property before the change in Spanish Tax Law in 2007, and specifically those of you who sold between 2004 and 2006, you will probably have been left with a severe bitter aftertaste when you got hit by the Capital Gains Tax Bill.

Set at a rate of 35% of the profits for non residents, this tax will have sunk deeply into your finances and will probably have left you feeling robbed, especially when you were informed that for residents the tax rate was more than halved to a mere 15%. That’s over 20% extra of your profit syphoned off just because an unfair and discriminatory tax law allowed it.

In effect, many of you will have likened this to state sanctioned theft, and will have felt powerless to do anything but swallow the pill and move on.

However, this is all set to change: the Thief has been caught, tried, sentenced and found guilty.

Europe had its sights set on Spain due to this discrimination for some time, having even cautioned Spain on this issue, which inevitably led to the change in Tax Law in 2007; good news for those who sold after this date. But what about those who sold previously, under the regime of an unfair tax system? Well, the Courts of law have spoken, and it’s not good new for the Spanish State; an everyday Joe took on the State and won, obtaining reimbursement of the unfair 20% overpayment.

The almighty state has been beaten at its own game and it has been proven that at times justice does prevail. What was an obvious discrimination has been struck down and it is now evident for those sellers overcharged in their Capital Gains Tax that it is possible to claim back the overpayments, and obtain reassessment of the tax liability at the reduced 15% tax rate.

The practical implication of this is that if you sold real estate property in Spain between 2004 and 2006 and either paid capital gains tax or did not get full reimbursement of the withholding tax, you may be eligible to apply for reassessment of your Tax Liability to claim back from the State your overpayment.

But the clock is ticking, and time is running out. You only have four years to present a claim, so even if you sold in 2004 and your file was processed quickly at the time, it may already be too late for you. However, for many there is still a chance to get back your money. So don’t leave this unattended, take action now before it is too late, make a claim and get back what’s rightfully yours.

Jason Rivero
Tax Advisor - Lexland