Brussels investigates the Spanish law regarding the Statement of Assets abroad

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The Directorate General for Taxation and Customs sent a letter to the Spanish government last month informing  that the European Commission had opened an infringement procedure against Spain regarding the famous Form 720, a form designed to register the Statement of Assets abroad to avoid fraud. This form, created by the Spanish Inland Revenue service, requires taxpayers to report the assets they have in other countries. In the same letter the Commission grants Spain two months for claims.

The obligation to declare assets abroad came in 2012 after the government approved a rule which forced taxpayers to inform the tax authorities about the properties, accounts and investments abroad worth more than 50,000 euros. This obligation was issued at the same time as a tax amnesty, in a “carrot and stick” style: the government opened the window of the tax amnesty but hardened the situation for those who did not comply with it.

Taxpayers had to file Form 720 with this information before the 30th of April 2013. And ever since, if their assets abroad vary this must be communicated before 30 March each year.

However, the Tax Office contemplates sanctions of up to 150% on the undeclared amount and fines of up to 10,000 euros per item omitted. Also, in Form 720, obligations don`t prescribe ever; ie for assets abroad the normal expiration time of four years for tax matters does not apply.

For both these issues, immediately in 2013 a consulting office placed a complaint to the European Commission,  claiming the penalties contemplated in Form 720 are disproportionate, and that the unprescriptability is not allowed in European Community law.

Brussels is now following up on this complaint and has issued an infringement procedure against Spain.

 

 

 

 

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Bruselas investiga la declaración de bienes en el extranjero

Considera que las sanciones son desproporcionadas. Concede dos meses para alegaciones

La Comisión Europea ha abierto un procedimiento de infracción contra España por la declaración de bienes en el extranjero, el conocido Formo 720, por el que la Agencia Tributaria obliga a los contribuyentes a informar sobre el patrimonio que tengan en otros países. La Dirección General de Fiscalidad y Unión Aduanera de la Comisión Europea envió una carta al Ejecutivo español con fecha del pasado 19 de noviembre para informar de que “incoaba expediente”. La Comisión, señala la misiva, concede dos meses a España para alegaciones.

El inicio del proceso se produce tras la denuncia que presentó en 2013 el despacho DMS Consulting, de Palma de Mallorca, contra el Formo 720 por la desproporción del régimen sancionador. La norma que regula la declaración de bienes en el extranjero establecía una sanción de 10.000 euros por cada dato omitido y multas de hasta el 150% de las cantidades no declaradas.

Desde el Ministerio de Hacienda explican que estudiarán con detalle la carta de Bruselas y analizarán con detalle el asunto. Además, destaca que los objetivos de prevención del fraude de este Formo 720 son conforme a derecho comunitario. Y recalcan que este Formo es una de las medidas más ambiciosas de la lucha contra el fraude.

Alejandro del Campo, abogado del despacho DSM y el primero en denunciar la norma ante Bruselas, explica que otro de los puntos que investiga Bruselas es si es legal “la imputación como ganancias de patrimonio no justificadas los activos no declarados en plazo, sin posibilidad de alegar prescripción”. Hacienda considera que los bienes no declarados a tiempo son imprescriptibles, es decir que no se les aplicará la caducidad habitual de cuatro años para los asuntos tributarios. Precisamente la imprescriptibilidad y lo elevado de las sanciones son las cuestiones que investiga Bruselas.

La obligación de declarar el patrimonio en el exterior surgió en 2012 tras aprobar el Gobierno una norma por la que obligaba a los contribuyentes a informar al fisco sobre las propiedades, cuentas corrientes, inversiones y valores en el extranjero de más de 50.000 euros. Lo hizo en medio de la polvareda provocada por la amnistía fiscal en una decisión política que algunos expertos calificaron como el palo y la zanahoria: Abría la ventana de la amnistia pero endurecía la situación para los que no se acogieran a la misma.

 

Los contribuyentes tenían que presentar el Formo 720 con esta información antes del día 30 de abril de 2013. Y desde entonces si su patrimonio en el exterior sufre variaciones tienen que comunicarlo antes del 30 de marzo de cada año. En caso contrario Hacienda contempla unas sanciones de hasta el 150% de la cantidad no declarada. Multas de 10.000 euros por cada dato omitido. Y consideraba que los bienes correspondían al último año no prescrito por lo que también tendrían que pagar el impuesto correspondiente (IRPF o Sociedades). Ahora Bruselas investiga si algunos puntos de la norma que lo regula son legales.

 

 

@beanavarro: Bruselas expediente a España x su norma estrella contra fraude fiscal,el #Formo720 xa declarar bienes en extranjerohttps://t.co/TMfnMmU75u

Five Spanish Non-Resident Taxes

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If you own a property in Spain you should know that there are some taxes that apply, even if you are a non-resident.

Income Tax
All non-resident owners of a Spanish property have to pay an annual tax to account for their “share” of the property. Even though it is called an “income tax”, it is not actually based on your level of income, but on a “deemed” or “notional” income, which is a percentage of the rateable value of the property multiplied by the non-resident tax rate of 24.75%.
This tax is based on the calendar year and it is always due within 12 months of the end of the tax year. So, for the 2014 tax year, tax needs to be paid before 31st December 2015.

Property or IBI Tax
Property Tax in Spain is referred to as IBI and, like the United Kingdom, this tax will be levied by your local council in Spain. The council will assign a rateable value to your property and then, your rates or property tax will be a percentage of this amount. The percentage will depend on your council, but in most cases it will be somewhere between 0.5% and 1%. So, if you had a rateable value of €50,000 and your local percentage was 0.75%, then, your annual rates bill would be €375.
This tax is also based on a calendar year,and will normally be payable between June and September each year; again, this will depend on your local council.

Rental Income Tax
Up until the end of 2009, Rental Income Tax was 24% of the gross income you received on any rentals. So, if you generated €1000 by renting out your property, then, you would have to pay €240 in tax. You could not offset any expenses – i.e. cleaning, utilities, insurance, mortgage interest, marketing, management fees etc.
However, since January 2010, the rules have changed, which means that you can now offset expenditure when calculating what income, or effectively profit, will be subject to tax of 24.75%.
In theory, rental income tax returns need to be submitted each quarter, to account for income received in the preceding 3 months.

Capital Gains Tax
When non-resident owners sell aproperty, they make a capital gain or a loss upon the sale, which is the difference between what they paid for the property and the proceeds of the sale. The buyer of the property should always withhold 3% of the sales value and pay this to the Spanish tax office, as an “advance” of the buyer’s potential capital gains tax. It is then up to the buyer to calculate their gain or loss, and, if a gain has been made,it will be subject to 21% tax. The buyer should pay the 3% within 1 month of the sale date, and the seller then has an additional month to submit their calculation of a gain or loss and the corresponding tax returns.
Inheritance Tax
Inheritance Tax for non-residents is a tax on the beneficiaries and not on the deceased, as it is in the United Kingdom. The tax rates themselves can vary depending on the relationship of the beneficiaries to the deceased, the amount that is being gifted, their age, and even their wealth in Spain. In the very worst situationtax rates can reach levels of 81%!
The other major issue for Britishcitizens is that transfers between husband and wife in Spain are not tax exempt as they are in the United Kingdom. So, if a spouse were to die, then the surviving spouse, in most cases, will need to pay inheritance tax (as well as probate), in order to take on the additional 50% share of the property.
It will normally take about6 months to deal with the probate issues in Spain and pay any outstanding inheritance tax, before the property deeds can be altered.
No Inheritance Tax is payable if the property is owned by a British company, since even if a shareholder dies, the company can continue in existence and the shares passed on to a beneficiary under British rules. Please be advised that this requires SPECIALIST advice.

Give up your US Citizenship to Save Taxes

It is well known in the international tax forums that US citizens tax planning is an impossible mission.

As reported in the LA Times: Facebook’s Eduardo Saverin gives up citizenship: Shrewd tax move?

“Here’s a tax tip for Mark Zuckerberg: Give up your U.S. citizenship. The 27-year-old Facebook Inc. founder could face a tax bill of more than $1 billion after the company’s initial public offering, expected next week. His former Harvard classmate who is known as “the other Facebook founder” may have found a way to cut the bill. Eduardo Saverin, who now lives in Singapore, has given up his U.S. citizenship. Tax experts say it’s a shrewd move. Saverin, who was immortalized in the film “The Social Network” as Zuckerberg’s contentious former friend and business partner, has a 4% stake in the company, according to the Who Owns Facebook? website. His stake could be worth nearly $4 billion after the IPO.

“It’s definitely savvy tax planning,” said Edward D. Kleinbard, a professor of law at USC who specializes in federal tax policy and international taxation. “He can argue that the value of the Facebook shares in September, when he gave up his citizenship, were significantly less than the value that will be set at the IPO next week.”
Saverin’s spokeswoman said his decision to jump ship had nothing to do with the upcoming IPO and the potential tax liability. Continue Reading

UK Tax Budget 2012

UK Tax Budget 2012 – The Association of Taxation Technicians has produced a Special Report on the March Budget in their April 2012 Newsletter. The full Report is detailed below:

The contents of George Osborne’s third Budget were so well rehearsed that the real thing threatened to be an anti-climax. Was there anything left that the Chancellor could surprise us with, especially as he had such little fiscal room for manoeuvre?

The answer was both yes and no. After all the income tax rumours, Mr Osborne decided to make the change to 45% from April 2013. His 2013/14 increase in the personal allowance allowed him to start phasing out the age allowance – an unexpected revenue-raising ploy.

Income tax bands, rates and personal allowances All income tax rates for 2012/13 will remain at their 2011/12 levels. For 2013/14 the personal allowance will rise from £8,105 to £9,205 and there will be a £2,125 reduction in the basic rate limit from £34,370 to £32,245.

From 2013/14, there will be no increase in the age-related personal allowances and their availability will be restricted to people born before 6 April 1948 for the allowance worth £10,500, and 6 April 1938 for the allowance worth £10,660. The aim is to phase out the age-related allowances within a few years. For 2013/14 the additional rate of tax will be reduced from 50% to 45% (from 42.5% to 37.5% for dividends). The rates of tax for trusts will be similarly reduced.

A cap on unlimited income tax reliefs will apply to income tax reliefs that individuals will be able to claim from 6 April 2013. The cap will apply only to reliefs that are currently unlimited – e.g. qualifying interest payments. For anyone seeking to claim more than £50,000 in reliefs, a cap will be set at 25% of income (or £50,000, whichever is greater). Continue Reading

Significant Tax Changes Announced in Spain 2012 Budget

On March 30, 2012, the Spanish government announced the 2012 budget. At the same time, the government approved Royal Decree-Law 12/2012, which introduces a number of relevant changes in the corporate tax area, including new limitations on the deductibility of interest expense.

Interest-capping rule

Following a trend started by other European governments, the Spanish government has introduced an interest-capping rule that replaces the existing thin capitalization provisions. The new interest-capping rule, which will apply to both related- and unrelated-party debt, limits tax relief for net interest expense to 30 percent of the taxpayer’s earnings before interest, taxes, depreciation, and amortization (“EBITDA”), with some adjustments. For entities that are part of a tax consolidated group, this 30-percent limit will apply to the EBITDA of the group. Continue Reading

US Non Resident Green Card Holders Must Revisit Their Position

As discussed in a number of previous Tax Alerts from www.Venable.com, since 2009 the Internal Revenue Service has created three separate tax amnesty programs in order to encourage U.S. taxpayers to properly report and pay taxes on assets held abroad. These amnesty programs require U.S. taxpayers to pay any overdue tax, penalties and interest on unreported income, and pay an additional “in lieu” penalty (the “FBAR penalty”) based upon the amount of unreported funds held abroad. The cost of the FBAR penalty has increased successively with each of the three programs such that those who have waited until the current 2012 amnesty program to report their offshore income and assets pay an FBAR penalty of up to 27.5% of those assets as compared to the 20% FBAR penalty paid by participants in the 2009 amnesty program. Continue Reading

Spanish Tax Paradise

The Spanish Government has approved a special incentive to disclose untaxed cash amounts (black money) at a special 10% rate, without further interest, penalty and/or tax investigations.

This will allow residents and non residents alike to bring into the Spanish system any amount of undisclosed cash held anywhere in the world.

The constitutionality of this measure is to be seen and I personally have many other questions such as the procedure to be followed, KYC and compliance with international anti money laundering regulations.

An interesting way to open the Pandora box. Keep watching this space!

Spanish Law on Mediation

The Spanish Real Decreto-Ley (Royal Decree-Law) 5/2012, of 5th March, on Civil and Commercial Mediation is already in force. This provision incorporates into Spanish law the Directive 2008/52/EC of the European Parliament and the Council of 21 May 2008 on certain aspects of mediation in civil and commercial matters (just for the record, deadline for transposition expired on 5/20/2011). Following aspects are of interest for PIL (arts. 2, 3, 27):

The Royal Decree-Law applies to mediation in civil or commercial cases, including cross-border disputes provided they do not affect rights and obligations that are non-disposable under the applicable law. “Cross-border conflict” implies that at least one party is domiciled or habitually resident in a State other than that of the domicile/habitual residence of any of the other parties. For parties residing in different Member States of the European Union, domicile will be determined in accordance with Articles 59 and 60 of Regulation (EC). No 44/2001 of 22 December 2000 concerning jurisdiction and the recognition and enforcement of judgments in civil and commercial matters. Continue Reading

A Guide for Foreign Companies Setting Up a Business in Britain and Overseas Employees Working Here.

Our UK associates, LEA member firm HW Fisher has published A Guide for Foreign Companies Setting Up a Business in Britain and Overseas Employees Working Here.

The report includes information related to trading in the UK, setting up a subsidiary and permanent establishment. Tax information including VAT and personal Tax are also covered.

The full Guide can be found here: US to UK – for citizens and companies 2012