IRISH PEOPLE who made a profit on holiday home investments in Spain in recent years could benefit from major windfalls after being overcharged by Spanish tax authorities.
Legal experts have warned, however, that people should ensure their other Spanish tax affairs are in order before proceeding with claims.
Until 2007 the Spanish tax authorities had a policy of charging overseas property investors a higher rate of capital gains tax than applied to Spanish citizens.
While Spanish citizens paid the tax at a rate of 15 per cent, non-residents were taxed on profits made on the sale of property at a rate of 35 per cent.
Last year, following an action taken by a British couple, the European Court of Justice ruled that this two-tiered taxation policy was in breach of EU rules. The ruling forced the Spanish government to set up a fund to compensate non-resident property investors who had paid the higher tax.
As part of the reimbursement programme, claimants who paid too much tax will also be entitled to a 6 per cent annual interest on all the tax paid at the higher rate.
People who sold properties in Spain before 2007 will need to start the reclaim process before October 31st.
“Before people can file a legal claim for a rebate they need to begin what is known as an economic administrative procedure with the tax officials in the region where the property was sold,” said Alvaro Blasco, a Spanish solicitor based in Kildare.
He said the initial steps could be done by individuals but once the process got under way, legal representation in Spain would be needed. He warned however, that people who applied for the rebate may have all their tax affairs examined by the Spanish authorities to make sure that taxes were paid on all rental income.