Spanish Tax Authorities Clamping Down On Foreign Property Owners

by Amanda Banks, Tax-News.com, London

11 July 2006

Foreign property investors who have invested in Spanish real estate have been warned that the country's authorities are taking a tough new stand on the non-payment of local property taxes.

Reports in the Irish media have revealed that the Spanish tax authorities are planning to 'name and shame' all property owners who are not up to date with their taxes. Their names will first be published in the government's daily newspaper, the Boletin Official. Investors' details will also be placed on local government websites in the regions.

It was estimated last week that 100,000 properties in Spain are now owned by Irish investors, but it is thought that as many as three quarters of these owners have not been compliant with Spanish tax regulations. Reasons for this include a general lack of awareness of Spanish tax laws by foreign investors, in addition to the language barrier.

Local taxes typically range from between EUR500 to EUR1,000 per property and are generally paid annually. However, homeowners face penalties of up to 300% of any outstanding taxes.

Failure by investors to pay their taxes can result in the Spanish authorities putting a charge on the property, and in certain circumstances, some investors have had their properties seized by the authorities.

Foreign buyers of Spanish properties are urged by professional advisors to seek out the services of an independent lawyer to check whether there are any outstanding taxes owing on the property.

Such taxes are levied against the property rather than against the owner, and it has been reported that the tax authorities may take up to three years to issue bills to new owners.

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