By Antonio Flores
INDECENT, immoral and unjust…these are just some of the words that have been used to describe the tax amnesty proposed by Spain’s conservative government to flush out black money.
The newly adopted measure has been criticised largely by socialist parties who see it as an opportunity for the rich to be forgiven for their tax-evasion practices by allowing a single one-off tax payment of 10 per cent of the unreported funds and assets.
The PP proponents of the initiative however see in it an opportunity to normalise the economic activity and rid it of the traditionally strong submerged economy.
Whatever opinion we may have from an ethical point of view, the reality is there is once again plenty of political opportunism: Spain already has a statutory four-year period for fiscal amnesty which is, in fact, considered one of the principles of Spanish tax law and is one mechanism widely employed by foreigners who inherit property but cannot pay the exorbitant tax.
According to the statute of limitation, the Tax Office cannot request payment of taxes after this time has elapsed, and so what the Government has done here is shorten the period but charge tax on these amounts to help the state’s drying coffers.
And the statute of limitations on tax is so protected that, according to Spanish Supreme Court case law (STS 12 November 1998), the recognition and enforcement of the prescripcion, as it is called in Spain, is an obligation of the Spanish authorities that cannot even be waived by payment of the tax, after the period has elapsed (not that anyone would want to, but it has happened, by mistake!).
The above court ruling says that once you win the prescripcion the authorities will have to accept it ex officio, or as an official obligation. This applies whether you owed them 10 euros or 10 million euros, even if they missed you by one day… (that is, four years and one day counting from the last day to voluntarily pay the tax).
The second measure implemented by the government is that tax residents in Spain will have to declare any bank accounts they hold, abroad.
This is going over old ground and seems more like a reminder because once again, one of the principles of international taxation is that a fiscal resident of a country has the obligation to declare any money he/she may have, worldwide (unless it is a tax haven and subject to double-taxation arrangements).
We shall now see if taxpayers take any notice of this new reminder.
Let Antonio answer your queries
Q. Does a community of owners of an apartment block need an ‘administrator’?
A. By law, this is not necessary as the role of administrator can be performed by the president. Generally however, it is more convenient for the owners to rely on a qualified administrator to ensure this role is properly carried out, particularly where the development comprises many units or the job it time-consuming and requires having knowledge of accounting.
Q. I bought my property 15 years ago and have lost my escritura. Is my property at risk?
A. Not at all. You do not lose ownership if you lose your escritura, as this document only serves as proof that you purchased the property at a given time. If you wish to know you are the owner, you need to go to the land registry, as long as the escritura was registered. Given the amount of time passed I suggest you check with the land registry to confirm your ownership. If you cannot find any record of it, you can go to the notary where you signed the deeds and ask that a second set of deeds are printed. We always recommend that all deeds are properly registered. Where a purchase takes place with a mortgage loan, this is a mandatory requirement and the bank takes care of it.