Tax clampdown on Irish homes in Spain

10 July 2006
The Irish Times

Irish property-owners in Spain who fail to pay local and other taxes there are being named and shamed by the Spanish tax authorities as part of a clampdown, writes Siobhán Creaton , Finance Correspondent

It is estimated that 100,000 properties in Spain are now owned by Irish investors who are liable to local and other taxes.

Some sources estimate that about 75 per cent of Irish people with Spanish properties may not be fully tax-compliant.

Spanish authorities have begun to put names and addresses of homeowners who have not paid local taxes - levied to cover the cost of local amenities, rubbish collection and other services - in the government's daily newspaper, the Boletin Official.

In addition, the authorities will also post these details on the internet, putting them on each Spanish region's website. This is aimed at targeting the greatest possible number of tax offenders.

If those named during this trawl still do not discharge their outstanding tax liabilities, the authorities will then publish a statement signalling their intention to register a legal charge over the property.

In some circumstances, this has led to the seizure of the property.

Elaine Higgins, managing director of IFG Spain, a company that offers legal and tax advice to individuals buying or selling property in Spain, said homeowners who ignore these warnings will face hefty penalties and interest charges.

She said that local taxes typically range from between €500 to €1,000 per property and are generally paid annually.

"If these aren't paid, homeowners will face penalties of up to 300 per cent of the amount due, plus interest and a 20 per cent administration charge," she said. "This can amount to a very large liability."

In Spain, the taxes are levied against the property, rather than against the owner.

Sometimes, Ms Higgins said, it can take three or four years before these bills are sent to new properties. The current owner is liable for the full amount.

"Some Irish homeowners may not even know that they are not tax-compliant, due to language barriers and unfamiliarity with Spanish legal and tax systems."

She added that IFG Spain has been monitoring Spanish government newspapers and websites and has found that a significant number of Irish and English property-owners are already listed.

She said that apart from local taxes, a wealth tax - calculated as a percentage of the value of assets held in Spain - must also be paid by homeowners there.

© 2006 The Irish Times

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