According to Spanish Legal Reclaims, more than 40,000 UK families are owed around €492m from the Spanish government in overpaid inheritance tax, .
The group, whics is led by lawyer Luis Cuervo, successfully won overpaid Capital Gains Tax back from the Spanish government to the tune of £283m in the European Courts. They believe that, due to a tax loop hole, Britons have been overcharged “almost 100% IHT” by the Spanish tax authorities on properties or assets inherited in Spain.
Anyone who has inherited a Spanish property and who is not a Spanish resident will have been a victim of discriminatory IHT, which has seen non residents pay higher IHT bills,
We believe this tax discrimination has affected up to 60,000 UK families alone, as well as thousands of people in other European countries. They may have believed they were fortunate to inherit a property in Spain, but in the process they have been scammed out of a lot of money.
Spanish Legal Reclaims explains that, while 60,000 people are believed to have been affected, only 40,000 are eligible to reclaim the overpaid tax.
According to Cuervo, the different treatment of Spanish residents and non-residents, under which Spanish citizens pay between 0% and 0.9% IHT, led the European Commission to take Spain before the European Court of Justice on March 7 2012.
He added that a “positive ruling from the ECJ is expected and such decision may force the Spanish Tax Authorities not only to amend the discriminatory Inheritance tax laws but to reimburse those clients that have filed correct reclaims according to the Spanish legal system.”
According to Spanish Legal Reclaim, the Spanish IHT system is complex, with non residents paying according to a scale that could reach up to 34% of the inherited property value without any tax deduction. Currently, 99% tax exemption applies to Spanish residents. For example for a property worth €150,000 non residents will pay approximately 9% IHT, whereas Spanish residents will pay 0 % in the majority of cases or a maximum of 0.9%. For a €500,000 property non residents will pay 20% IHT whilst Spanish residents would again pay between 0% – 0.9%.
However, Cuervo warns quick action should be taken by those who believe they may be eligible to make a claim.
We have successfully represented more than a thousand UK citizens in the CGT reclaim and we are currently starting to represent again UK families in their bid to reclaim the money that has been wrongly taken from them, and we urge anyone else who believes they have been affected by this tax discrimination to come forward. Taking quick action is important as the right to claim may expire.