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Expat Investor : May June 2009
EXPAT TAX British couple win Spanish CGT claim A British couple’s success in reclaiming Spanish capital gains tax has paved the way for a £140m British tax rebate, as currency expert HiFX explains. Courts to reclaim the money which they were illegally overcharged. The tax loophole – which was originally exposed by currency exchange brokers HiFX and Spanish lawyers Costa, Alvarez, Manglano & Associates – 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. This 133% overpayment not only totals a profit somewhere in the region of an estimated £350m for the Spanish government, but also contravenes European Community Treaty rules on discrimination and, therefore, was unduly charged by the Spanish government. Brits applying for a refund are also set to add on missing interest at a rate of 6% to their claims from the date they are presented, making the total reclaim even higher. Following the launch of the A British couple have become the first successful claimants against the Spanish government, after they and thousands of other British and European home owners were illegally charged more than twice the amount of Capital Gains Tax charged to Spanish residents on properties they sold in Spain. After more than a year-long battle, they have successfully reclaimed their overpayment and the case now paves the way for thousands of other British people who have been affected to make similar reclaims from the Spanish government. Hundreds of Britons who sold a property in Spain between approximately July 2004 and the end of December 2006 will now put their cases before the Spanish www.spanishtaxreclaim.co.uk website in March 2008, Brits who believed they were affected came forward to highlight their plights. A Spanish Court then ruled in February this year 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. The Court ruled that they should be refunded. Anyone else who believes they have been affected should come forward now with their cases. However, whilst 260 Brits are in the process of putting their claims before a Spanish Court and an additional 340 have registered their details, thousands more have still to come forward. At the same time, people who have sold properties previous to July 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, meaning thousands more have become victim to this tax trap. Mark Bodega, Director of currency specialists HiFX, tells Expat Investor,“We launched the website www.spanishtaxreclaim.co.uk last year in a bid to help those British people affected by this CGT loophole to put their cases forward before the Spanish government. It is fantastic news that the first British couple has been successful, and that a total of 600 other British claimants are now in the process of putting their cases forward. “Between them they could reclaim £8.4 million plus interest, based on the average reclaim figure at the moment of £14,100, but it is absolutely vital that anyone who believes they are affected comes forward to reclaim what they have wrongly been overcharged by the Spanish government. £8.4 million is a lot of money but really just a small fraction of what could potentially be reclaimed by Brits, which could be as much as £140 million.” Nationwide drops overseas debit/ credit card no-fee policy Nationwide has dealt a blow to millions of FlexAccount customers by scrapping its no-fee overseas transaction policy on debit and credit cards. Up until this announcement, Nationwide won 8 EXPAT INVESTOR ● expat attention and favour for its refusal to pass on any extra overseas charges to cardholders. However, from this month (May), it will be passing on fees charged by Visa for transactions abroad. May/June 2009 However, when comparing what Nationwide now charges against competing card offers, this provider still looks cheaper when it comes to overseas charges. Initially the fee is 0.84% (rising to 1% in expatinvestor.com July), which is much less than the run-of-the-mill charge incurred with other card providers at a standard rate of 2.75%. Expats are offered some cheer on transactions made within Europe, as here the old no-fees policy stays in place. So for online shoppers buying from a European website, or paying for goods on the Continent, there will be no charges for any additional fees. For the time being, for shoppers paying with a Nationwide’s cash card, as opposed to a debit card, the changes also won’t apply, as these cards are issued by MasterCard. However, be warned. Nationwide has announced that cash cards will soon follow in Visa’s footsteps. Bargain hunters might want to check out the credit card offer from the UK’s Post Office, which doesn’t slap on any additional fees when used abroad. Or cost-saving expats might want to consider an overseas pre-paid card – available from most foreign currency specialist companies. These providers use market exchange rates for calculating currency exchange ensuring customers are offered improved rates. Purchasers of pre-paid cards then buy the cards in the currency which eliminates the risk of commission fees being paid on top.
March April 2009