It is considered that the different tax treatment of the two categories of tax payers, in so far as it results in a higher tax burden on non-resident individuals in situations objectively similar to those of residents, constitutes indirect discrimination on the grounds of nationality prohibited by the Treaty.
Under the threat by the EU to impose sanctions (Infringement procedure of the European Commission against Spain for the tax treatment of Capital Gains Tax for nonresidents) the Spanish Government modified the Tax Laws with effect from the 1st of January 2007 onwards.
But this doesn’t change the underlying issue of the prior discrimination in the treatment received by EU citizens non resident in Spain. Furthermore, a regional High Court has upheld this argument and issued judgement ruling that the overpayment infringes the European Treaty and the diverse tax rates obey solely to the different nationalities of the tax payers, imposing a higher tax burden on foreigners, constituting discrimination prohibited by this European Treaty. Although not binding, this judgement is good evidence of the strength of the case.
Consequently, citizens of the UE who sold a property in Spain before the 31st of December 2006 whilst non tax resident in Spain may be entitled to file a claim to obtain reimbursement of the overpayment of the Capital Gains Tax. Albeit it is imperative to act quickly since there is a statute of limitations to take action. Dead line: November 2.010.
Post a Comment