11 September, 2015

By VIVA Team

Thousands of Brits who have been unfairly taxed could now be due compensation from the Spanish authorities.

British people who inherited a holiday home in Spain between 2011 and 2014 were unfairly charged a high rate of inheritance tax (IHT), the European Court of Justice ruled last year, and now thousands of Britons may be eligible to claim back the charges that they were forced to pay…

The charges deemed unfair and illegal apply to an estimated 30,000 Brits who were classed at the time of inheritance as non-residents in Spain. This even applied, erroneously, to spouses of deceased property owners who lived more than half of the calendar year in Spain.

Under EU rulings, Spain has been forced to change its IHT law that previously levied punitive charges – sometimes by as much as a third of the property’s value – when a home was inherited by an EU citizen who was classed as a non-resident.

With the law now changed, legal proceedings are underway to reclaim monies paid to the Spanish tax authorities, although experts say that the process of getting money back is far from simple. The compensation procedure is yet to officially begin, even though the Spanish government has set a five-year window in which claims can be made.

According to Spanish legal experts, a typical claim is likely to take around six to eight months to file and for compensation to be received. For many Brits, the wait will be worth it: the previous law meant that Spanish residents were exempt from paying as much as 99 per cent of the IHT, whereas people deemed non-residents were hit with the full bill – which often amounted to around a third of the property’s value.

The Spanish authorities demanded that the bill be paid within six months of inheriting, and with Britons the largest group of property-owning nationalities in Spain, they were hit hardest. The law was changed in September 2014. The Spanish authorities have now at least set the ball rolling, and it seems that average repayment could ostensibly amount to around €25,000.

The authorities in Spain concede that non-residents inheriting a Spanish property during the past four-and-a-half years can claim back the tax they paid, although homeowners only get one opportunity to lodge a bid for compensation.