Big bill for Spanish property owners
November 23rd, 2007
A TAX bill of up to €650 million could be facing thousands of Irish people who own property in Spain. It is estimated that close to 100,000 Irish people own a Spanish property on which local taxes and rates are payable. Up to 50% of these property owners, however, do not pay the required taxes, according to Dublin-based IFG mortgages. Irish names are now beginning to appear on newspapers and local authority websites which is part of a campaign by the Spanish government to name and shame those who have failed to pay taxes.
Paul Connolly of IFG said: “It appears to be only a matter of time before thousands of Irish property owners are faced with significant tax penalties.
“The issue that we are finding is that people don’t realise that they are not tax compliant or that the person who sold them the property was not tax compliant which burdens them with the tax.”
Offenders can be investigated for the last four years of tax returns and authorities can penalise people up to 300% of the liability. IFG estimates that on a €300,000 property, tax could amount to €1,000 a year.
If this bill is left unpaid they said the bill can hit up to €13,000 over four years. In severe cases if people still have not paid their property taxes, the property can be seized.
In Spain, tax is also payable on rental value even if it is not rented out. Irish people thinking of purchasing a property in Spain have been warned that if the previous owner failed to pay local tax, the purchaser is liable to cover this cost.
“Buyers should always seek independent legal advice as some Irish investors may not even know that they are not tax compliant due to unfamiliarity with legal and tax systems,” said Mr Connolly.
The Department of Foreign Affairs said 78,000 Irish people are registered as living in Spain but the figure could be higher as there are no obligations to register with embassy staff.
IFG estimates that 100,000 Irish people own properties in Spain but neither the Central Statistics Office nor the Revenue Commissioners have figures on Irish-owned properties in Spain.
Earlier this week the Irish Examiner reported that Revenue officials are focusing on Spain in particular, where they believe a large number of tax dodgers have invested in property.
Full story from irishexaminer.com
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