Spain: Expats Reclaim Overcharged Tax

Hundreds of Britons have joined forces to bring a class action against the Spanish Government in a bid to reclaim an estimated £86m in overpaid capital gains tax (CGT). This is Money reported back in April that Britons who sold a Spanish property between June 2004 and December 2006 could be owed cash as a result of a Spanish Government’s capital gains tax ’scam’.

However, where as initial conservative estimates put the total amount to be reclaimed at £11,000 per person – over the past three months hundreds of Britons have registered average reclaims of more than £19,300 each – totalling more than an estimated £86m.

The tax error came about after British non residents paid a Spanish Non Residents’ Income Tax rate of 35% on any capital gains, compared to a rate of 15% paid by Spanish nationals.

The 20% overpayment not only totals a profit somewhere in the region of an estimated £86m, but also contravenes European Community Treaty rules on discrimination and therefore was unfairly charged by the Spanish Government.

British people applying for a refund will also receive missing interest at a compound rate of 6% to their reclaims, meaning payouts could be on average 26% larger than first thought. But while hundreds have already joined forces in a bid to reclaim their tax, thousands more are still to come forward.

But those who sold property previous to June 2004 have already missed out on being able to make a reclaim on their overpaid tax, as under Spanish law, claims can only be made dating back over a four year period.