Non-domiciled Spanish property owners should not assume they will automatically get excess tax back from the Spanish government and should look before leaping on to the bandwagon, according to accountancy firm Baker Tilly.
The European Court of Justice may have ruled that Spain was wrong to charge non-residents 35% tax on gains on property in Spain between July 2004 and December 2006, as opposed to the 15% paid by residents, but that does not mean those who have overpaid Spanish tax can expect a swift windfall, if any. For a UK taxpayer, the Spanish tax would be available as a credit against UK capital gains tax (CGT) and therefore anyone who has also returned a Spanish gain in the UK should have set off the Spanish tax against their UK liability. As Spain deducted 35% but UK tax rates could vary between 0%...
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