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Author Topic: Non-resident retention on property sale retention

Offline Janet

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Non-resident retention on property sale retention
« on: Thu 20 Jun 2013, 15:09 »
The Daily Mail has published an article yesterday (I think) suggesting that there's a new tendency in Spain to hold onto taxes "grabbed" from Britons fleeing the country's economic crisis. The article is HERE, and says, among other things:

Quote
Expats fleeing recession-hit Spain are having thousands of pounds snatched by its cash-strapped government.

Britons who have sold Spanish homes are facing a four-year fight to get back refunds for tax charged on the sale of their property.

Under local law, anyone selling their home and moving overseas must automatically pay 3 per cent of the total price to the taxman.

This is known as a retention tax, and is taken in case sellers quit the country without paying other bills they may owe.

Once someone has paid their debts, they get the 3 per cent back. But reclaiming the tax is proving to be a near impossible task. And experts claim the Spanish government is routinely delaying refunds.

... Retention tax has been around for many years, but when the local economy was doing well refunds were paid back without a problem, even if they took several months to process.

For those moving today, though, delays of several years are creating additional stress. With their life savings drained and many already facing huge losses on the sale of their home, tax refunds worth thousands of pounds are desperately needed. (my bold)

As usual the paper is misleading. The only time a 3% retention is made is when a non-resident sells - not when "anyone sells and leaves the country". If these people were living in Spain they should not have been in the non-resident category - one has to presume there were reasons advantageous to them for not letting the Spanish authorities know they were fully resident here. If they had been properly recorded as resident, then no retention would have been made. Note that the article makes specific reference to selling their "home". So why were they non-res then??

Moreover, the retention is not held against "debts", but specifically against any capital gains tax that might be owed. It's true that before a retention is refunded if and when the CGT is properly paid checks are made for any further tax debts, but anyone up to date with their tax affairs here wouldn't have any tax outstanding to be a problem.

Just in case anyone sees it, and sees this, and was worried ...  :tiphat:
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