Brussels investigates the Spanish law regarding the Statement of Assets abroad

eu

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.

 

 

 

 

….

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

Euro_coins_and_banknotes
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.

Tax Evasion: Pressure to End Tax Evasion Grows as the Global Forum Publishes New Reviews

05/04/2012 – The Global Forum on Transparency and Exchange of Information for Tax Purposes has just completed peer reviews of another 11 jurisdictions.

Reports on BrazilChileCosta RicaCyprusthe Czech RepublicGuatemalaMaltaMexicoSaint Vincent and the Grenadines and the Slovak Republic evaluate whether their national laws allow transparency and international exchange of tax information (Phase 1). The review of Korea also looked at the effectiveness of Korea’s exchange of information in practice (Phase 1 plus Phase 2). These reports bring to a total of 70 the number of peer review the Global Forum has completed since March 2010.

The Global Forum also issued 3 supplementary reports – for BarbadosBermuda and Qatar – which assess the whether these jurisdictions have acted upon the Forum’s recommendations to improve agreements and legislation. All three jurisdictions’ compliance with the international standards has progressing significantly. The Phase 2 reviews for Bermuda and Qatar will take place in the second half of 2012 and for Barbados in the first half of 2013. Continue Reading

OECD Recommends Action on International Tax Loopholes

Aggressive tax planning – untaxed income, multiple deductions and other forms of international tax arbitrage – is a growing concern for all governments.

OECD’s new report Hybrid Mismatch Arrangements: Tax Policy and Compliance Issues describes arrangements that exploit national differences in the tax treatment of instruments, entities or transfers to deduct the same expense in several different countries, to make income “disappear” between countries or to artificially generate several tax credits for the same foreign tax. Continue Reading

Taxation Could Promote Equality?

Addressing growing inequalities is now at the centre of the political debate and all countries are taking different actions to address it. Increasing inequality reaches far beyond economic implications, raising a number of political and ethical questions which have wide-ranging consequences for the future of all societies.

Globalisation and the sustainable growth path of many economies in transition and developed countries have produced impressive results in terms of economic growth, social development and poverty reduction. However, the benefits of stronger growth have not always been shared equally and income inequality has remained at very high levels. Achieving greater equality as a key to social cohesion remains a priority for every society. Continue Reading

UK non dom update

The consultation issued by the Government outlining proposed changes to the taxation of non-UK domiciled individuals, increases the remittance basis charge but encourage foreign investments in the UK. The remittance basis charge goes from the current £30k to £50k, only applied to those resident in the UK for 12 years or more.

Continue Reading

Questions regarding the prevalent Tax Law of the European Union

Once again the Campus of Jerez was the centre point for a development framework of a special forum which involved tax advisors, students, university professors and personnel from the Tax Office.  On this occasion, a new conference took place on questions of the prevalent taxation within the European Union which the University of Cadiz imparts within its Tax Advisory Master in conjunction with the Financial and Tax Law given at this University.

Continue Reading

Qatar Tax Policy

As part of a delegation of the Bar Council, I just returned from Qatar and was very pleased with the visit. We saw an energetic and enthusiastic country with a great vision. After doing my research and visiting the country, it is clear to me that Qatar has done the homework to become a recognized international player.

Qatar has a wide network of double taxation conventions with 40 jurisdictions, including many OECD and G20 countries as well as important regional partners. These DTCs generally include the old wording of article 26 of the OECD Model Tax Convention. Qatar’s DTCs with France, UK and Singapore contain the current version of article 26. These agreements apply equally to Qatar generally as well as to the QFC.

Qatar is focusing on further developing businesses and investments that will allow the country to continue being competitive beyond their current dependency on fossil energies. The Qatar Vision 2030 outlines clear steps to that end, which are clearly being executed. The 2022 world cup was not in the agenda some years ago, but will definitively help the country to achieve its goals.

In the tax arena Qatar is moving in the right direction as supported by the Law No. (21) of 2009, creating a corporation tax rate of 10% for all companies. According to the OECD report on Qatar

Continue Reading

From KYC to KY3.- The new anti bribery and corruption regulations in the US and the UK

Know Your Customer or KYC, predominated on the hyper regulated financial and legal profession in the 90s. Now that you Know Your Customers, it is time to start thinking in Knowing Your “Third Party” or KY3, and what are they doing for you.

As prosecution on acts of bribery and corruption is top in the agenda for the UK and the USA, a new compliance framework is being developed, specially for those trading in emerging markets, or in well established markets with sophisticated corruptions systems.

Bribery and corruption are rapidly establishing themselves as a permanent part of the financial crime portfolio as the UK and US begin to lock-step both legal practice and enforcement. Keith Korenchuk and Oliver Kerridge of Arnold & Porter LLP talk to MLB editor Timon Molloy about the transatlantic lessons and risks. Continue Reading

Gibraltar Road Toll and good neighborhood with La Linea

Does La Linea’s mayor care about good neighborhood with Gibraltar?

It is a shame that some Spaniards tackle a XXI Century issue with XIV Century measures. See The Guardian article on the most ridiculous initiative from a local mayor we have seen in decades, the establishment of an international border road toll between Gibraltar and La Linea.

This issue is not an isolated one and unfortunately there are still some Spaniards not recognizing the sovereign rights of Gibraltar as determined by its people and the United Kingdom. The Spanish Socialist government has been advocating for dialogue with Gibraltar and the UK, however talks these days seem to be lost in translation.

Why is the Spanish Government so reticent to conclude a treaty with Gibraltar? why is Gibraltar not removed from the Spanish taxhaven blacklist?

Continue Reading