By Humphrey Carter

A British couple in Valencia has become the first successful reclaimants in a capital gains tax case against the Spanish government and the landmark ruling by the High Court has paved the way for a possible 140 million pound tax rebate for a large number of non-Spanish resident Britons who sold a home in Spain between the approximate dates of July 2004 and the end of December 206.

According to the international tax law firm Costa, Alvarez, Manglano & Associates which represented Mr and Mrs Roy, the Valencia High court has instructed the Spanish tax office to repay the Roys for being charged a capital gains tax levied at 35% instead of 15% paid by Spanish nationals.

The root of the case lodged against the Spanish authorities was that Britons were charged more tax than Spaniards when they sold their property in contravention of European Union rules on discrimination.

The Roys will now receive a rebate of £14'100, plus interest of around six percent, and the ruling not only opens the door to thousands of other Britons but also other European home owners who may have been illegally overcharged capital gains tax by 20% on properties bought and sold during the disputed period.

According to the Valencia law firm, the case hinges on a change made to the Spanish tax law in December 2006.
Until then, non-residents were taxed at 35% of their profits when selling a property, over double the 15% tax rate which applied to Spanish nationals.

The law was eventually changed after the European Commission, unhappy that the Spanish government was enforcing discriminatory tax laws, challenged the Spanish authorities.

Having finally won the yearlong court case, the Valencia law firm estimates that there could be as many as 10'000 British citizens who sold their homes between July 2004 and December 2006 and still have an opportunity to claim for a tax rebate because there is apparently a four year limit on making reclaims from the time when the tax is paid.

However, whilst 260 Britons are in the process of putting their cases before the Spanish High Courts and an additional 340 have registered their details, thousands more are still to come forward.

At the same time people who have sold properties previous to July 2004 have already missed out on being able to make a reclaim on their overpaid tax, as under Spanish law claims can only be made dating back over a four year period, meaning thousands more have become victim to this tax trap.

Emilio Alvarez, partner and Managing Director of Costa, Alvarez, Manglano & Associates said: “We have successfully put forward to the Spanish Government, and won, the first British case and we are now able to lead other British and EU people forward and reclaim the money they were wrongly overcharged. “However, as timings around reclaims are so tight under Spanish law then it is vital people come forward via the www.spanishtaxreclaim.co.uk web site as soon as they can so their cases can be registered and put forward, or they could miss out”.