Archive for March, 2009
A British couple who took the Spanish tax authorities to court, have won Â£10,000 after they had been illegally charged more than twice the amount of capital gains tax than was charged to Spanish residents when they sold a property in 2004. After a battle lasting more than a year, they have successfully reclaimed their overpayment and the case now paves the way for thousands of other foreigners to make similar claims from the Spanish government.
Until recently, foreign nationals had to pay 35pc of any gains made on Spanish properties as tax. This compared to just 15pc paid by Spanish nationals. The European Union challenged the rules, claiming they were discriminatory, and since the start of 2007 the Spanish tax authorities have levied the same 15pc tax rate on Spanish and overseas property owners.
The Spanish court ruled that the initial case put forward by solicitors Costa, Alvarez, Manglano & Associates on behalf of Mr and Mrs Roy from the UK was so convincing that there was no need for it to be passed on to the European Courts of Justice (ECJ), which is the usual procedure.
“Anyone else who believes they have been affected should come forward now with their cases,” said Emilio Alvarez, from the law firm. Six hundred other British couples are now putting cases forward, and all the cases will be decided separately by the Spanish court.
Taxpayers are also entitled to claim a refund for missing interest at a rate of 6pc from the date the reclaim is presented, making the total reclaim even higher. You are eligible if you sold a property in Spain between July 2004 and December 31 2006 and were not a fiscal resident in Spain when you sold it. You also have to have paid capital gains tax on the property to claim and need to have sold the property as an individual rather than a company.
Homeowners across Europe saw the value of their properties slide last year as demand for new homes plummeted because of the impact of the credit crisis on mortgage supply in the major economies.
House prices were falling in every European market by the end of 2008 when adjusted for inflation, according to the Royal Institution of Chartered Surveyors, although a few such as Greece and the Netherlands were still slightly positive for the year as a whole after initial growth.
Core markets are set to suffer “marked downturns” in 2009, according to he report, written by Professor Michael Ball, who blames significant falls in mortgage lending, coupled with the economic downturn.
Professor Ball said: “The world financial crisis and economic downswing have hit European housing markets badly. Some countries, like Ireland and the UK, led the decline but by the last quarter of 2008 the effects had spread across Europe.
“There is greater synchronisation of housing market decline in Europe than has been seen in the past and there are going to be some tough times before marked recovery occurs.”
Rics said that any future revival of European housing relies on the ability of European governments to cope with the mortgage credit shortage as well as the scale of the economic recession.
The UK was one of the worst performing markets, where house prices fell 16 per cent in 2008, second only to Baltic states such as Estonia, where prices dropped 23 per cent but which has a relatively small residential market.
The UK housing market continued to weaken last month according to the Halifax house price index yesterday. Prices fell by 2.3 per cent in February, more than reversing an upward bounce in January. In the three months to February, the decline was 3.6 per cent.
House prices also fell significantly in central and eastern Europe, Ireland, France and amongst the Nordic countries last year.
In contrast, previous years saw house prices in countries such as Estonia as well as Scandinavia, central and eastern Europe and parts of the Mediterranean outpace other European countries.
Rics said that even those economies that did not experience a boom in house prices have not been spared from the squeeze in the market. In Germany and Austria, it said, a lack of credit has hit demand and it predicts a further fall in house prices and activity in 2009. Sales also declined in Italy, where mortgage growth was negative in 2008 for the first time in more than a decade.
Spanish house prices surprisingly recorded only moderate price falls. In central and eastern Europe, Rics said that the worsening financial turmoil has hit residential markets very hard, with both transaction levels and prices down significantly.
From: Financial Times