If we have learnt anything about Spain’s new prime minister, Mariano Rajoy, since he took power in December, it’s that his reputation for being anything but straightforward when conveying his intentions is well deserved. Rajoy has often been portrayed as the embodiment of retranca, a tendency his fellow Galicians are known for to answer questions with ambiguity and multiple meanings. The first two months of his tenure have seen Rajoy behave every bit like the stereotypical Galician. An early example of this was when the prime minister deployed his front-line ministers to announce a major tax increase, just days after himself announcing that “my intention is not to raise taxes.” And now … [Read more...] about Rajoy’s smoke and mirrors have worked – for now, at least
spain tax
Calculating complimentary tax on Spanish property
Of course, more research might have unearthed the possibility of this tax. But many purchasers expect the information to be given to them. Unfortunately, those keen to sell property are not always as keen to inform you of the taxes you can expect to pay. Ironically, this lack of transparency is one of the reasons so many possible purchasers are anxious about buying in the first place. However, complimentary tax need not be a skeleton in the closet, provided you prepare for it. This tax, levied on purchases up to five years after the purchase date, consists of 7% of the difference between what you declared you paid and what the Tax Authority claim it is worth. Plus interest, of course. It … [Read more...] about Calculating complimentary tax on Spanish property
Wave of complimentary tax hits home buyers
What is complimentary tax? During the property boom in Spain purchasers and sellers sometimes came to an agreement to pay some of the purchase price ‘unofficially.’ This meant that the amount declared was below what had actually been paid. The idea was that by doing this purchaser and seller could avoid higher capital gains tax and Spanish transfer tax payments. The Tax Authority wised up to this and as a result began to check the amount the property had been sold at against their own valuation. Complimentary tax represents the difference between what tax they considered should have been paid and what actually was. Unfortunately the drop in the market value of most property sold today … [Read more...] about Wave of complimentary tax hits home buyers
Spain’s tax hike threatens La Liga’s appeal
One of the first moves by Spain’s new Mariano Rajoy-lead Partido Popular government has been to increase the maximum personal income tax (IRPF) rate by seven percentage points to 52 percent for annual salaries over €300,000. Given the shocking state of the Spanish government finances this should not really have been a difficult decision to take, especially considering the small percentage of Spanish tax-payers affected. For most Spanish citizens the most visible losers (of this particular increase) will be the football teams they follow. Spain’s politicians have traditionally been keen to be seen to support football, and a past PP tax ‘incentive’ aimed at attracting higher earners from … [Read more...] about Spain’s tax hike threatens La Liga’s appeal
A letter from the Tax Authority
The imputed income tax is a tax on property payable by non-residents on the basis that if they wished they could receive rental income from their property. Spanish residents have to pay it too on any second property they own in Spain. For years Spanish property owners were largely unaware of the need to pay this tax. They were often not told about it at the time of purchase and without a similar tax in the UK they remained in luxurious ignorance. Until now. The Spanish Tax system tends to work according to the assumption that everyone knows what they should pay. Whereas in the UK you would expect to get a reminder of some kind for an unpaid bill, here it can go undetected for years until … [Read more...] about A letter from the Tax Authority
Spanish home prices fall faster on tax changes
The income tax filing season for the 2010 tax year, which began on April 4 and ends June 30, will be the last in which the vast majority of Spanish homeowners will be able to write off on their tax returns 15 percent of the interest and capital they pay on their mortgages up to a cap of €9,000. As of this year, only homeowners earning less than €17,000 per year will be able to benefit from the full extent of the tax break, while those earning up to €24,000 will find that the amount they can deduct has been progressively capped at much lower levels than before. Higher income earners will be able to deduct nothing. More than a third of tax payers will no longer benefit from the tax … [Read more...] about Spanish home prices fall faster on tax changes