Spanish Capital Gains Tax cut

As of January, 2007, Spanish CGT for non-residents will be reduced by almost half, down from 35% to just 18%.The new legislation means that Britons planning on selling their Spanish property can achieve greater profits, making more capital available to be reinvested elsewhere.

They also approved a reduction in the withholding provision that non-residents pay when selling property in Spain from 5% to 3%.

The withholding provision is paid to the Spanish tax authorities upon completion and covers any debts the seller may have accrued which could be difficult to recover once they have left the country.

Nicola Goldsmith, Senior Adviser, Tax Advisory Service at Blevins Frank, said that while sellers could take advantage of the changes by waiting until the new year, they needed to be aware of other issues. “UK capital gains tax will still be due on any gain arising, but you can offset any Spanish tax paid to avoid double taxation.”