(English) Monthly Newsletter - Arcos & Lamers Asociados

Permanent Residency in two Countries

As a continuation of previous articles of Arcos and Lamers Asociados relating to the fiscal residence in Spain, we proceed to analyze what happens when a person is resident in both States.

We are faced with a situation where should be avoided that, under the applicable rules, someone can be considered, for tax purposes, as resident in the two States.

To avoid that, it is necessary to follow the Agreement signed by the two Countries. We can say in general that, under the rules of these conventions, the person will be resident:

1.- At the State where he has a permanent home. If you have a permanent home in both States, you will be resident of the one where you have closer personal and economic relations.

Capital gains tax in Spain. The keys to the fiscal reform 2015

For the purposes of informing on the main novelties introduced in the Law 26/2014, which amends the Income Tax Law and the Non Resident Income Ta Law in Spain, we set out below the following points to be taken into account, for the calculation of the capital gains tax in Spain arising in the transfer of real estate property.

Elimination of monetary correction coefficients in Spain.

The application of the coefficients of update, to correct the acquisition value of the property based on the date of purchase, has been removed.

2.- The coefficient of “abatement” (abatimiento) are maintained.

In order to apply these reduction coefficients, it is stated a maximum sale price of the property in Spain of 400,000 €.

This limitation of 400,000 € applies, not to the sale of each asset individually, but all of them, regardless of the sale of each one of them occurring at different times.

3.-Exemption of capital gain tax in Spain for individuals over 65 years.

Judgment Court of Justice of the Europan Union and adaptation of the Spanish Inheritance and Donation Tax Law, for non residents

The Judgment of the Court of Justice of the European Union dated 3rd September 2014, Case C-127/12 (http://curia.europa.eu/juris/document/document.jsf?docid=157285&doclang=ES) states contrary to the principle of free movement of capital, the different tax treatment of donations and inheritance between inheritors and donees residents and non-residents in Spain, between grantors residents and non-residents in Spain and between donations and similar provisions of Real Estates situated in Spain and outside.

The judgment does not refer to the powers attributed to the Autonomous Communities (generally with a more favourable fiscal impact to the taxpayer), but rather to national legislation which was applicable to non-residents in this matter.

By Spanish Law 26/2014 of 27 November (published in the Official Gazette of 28th November 2014), is adjusted the legislation of Inheritance and Donations (Law 29/1989) to the premises stated in the Court of Justice of the European Union.