Property Taxes Articles
The New Obligation of Gibraltar Financial Institutions to Provide Automatic Exchange of Tax Information to The Spanish Tax Office
As part of the recent agreements of exchange of tax information subscribed by Gibraltar for cooperation in tax matters, the Gibraltar financial institutions will be reporting to the Spanish tax office the relevant tax information of all their account holders, including income on earnings, tax withheld and tax residency status. The first reporting will take place before the end of 2017 related to the tax year 2016. The world is getting smaller...
Picture the scene: with youth unemployment in Spain currently hovering around the 50 per cent mark for under 25s (source Eurostat), you decide to give your son a helping hand by letting him set up business in an empty shop you happen to own.
Those of you who have lived in Spain for many years will probably have been regaled in the past with tales of how people had managed to escape tax liabilities by buying their properties through 'holding companies.'
Spain is very active in signing new tax treaties and updating some old treaties, unfortunately not necessarily for the benefit of the individuals investing in Spain.
A few weeks ago the Spanish Government introduced another important tax incentive for property purchasers in a bid to kick start the moribund property market and help the banks get rid of their stock of repossessed properties. It is worth comparing Spain's property tax incentives to the massive French tax increases on foreign property owners. If there was ever a time to buy in Spain, this is it.
Many will remember that happy day in December 2008 when the Spanish Government eliminated Wealth Tax, or so it was thought!
The idea in 2008 was to make Spain a more attractive economy and do away with an archaic tax that has its roots in 1977 when inflation and interest rates were in double figures, the fledgling Spanish democratic state was crying for financial air and so an 'extraordinary tax' was born.
From 1 January 2010, EU residents (whether individuals or companies) who rent their Spanish properties will pay 24% tax on the net rental income, instead of 24% tax on the gross rental income.
The Spanish Government intends to approve a number of changes in legislation to strengthen the tax office's armoury against the black economy and tax fraud. They propose to modify the Penal Code so that substantial tax fraud may be penalised with up to 6 years (currently four years) in jail.