Legal News

British expats who are being wrongly charged inheritance tax (IHT) on their Spanish properties are planning to take up legal action to reclaim the charges.

It is believed that around 60,000 British families have been affected because of the Spanish government’s levy of up to 35 percent of IHT on non residents who have inherited properties or assets in Spain. It is estimated that the charges could be in the region of £400 million (€490 million).
The levy was all the more hurting as the Spanish counterparts were either spared of the charges or paid close to zero percent IHT.
The European Commission also thinks it is an unfair tax treatment with regard to EU citizens. It brought a legal case to the European Court of Justice (ECJ) in March arguing that Spain was infringing EU treaty freedoms. A verdict was expected from the ECJ which could open the floodgate to thousands of Brits reclaiming their tax, and force Spain to amend its IHT tax laws.
While 60,000 Brits are believed to have wrongly paid IHT, only 40,000 are still able to make a claim due to the Spanish legal time limits. In Spain the limitation to make a claim is four years from the date of tax payments.
An action group, Spanish Legal Reclaims, has been set up to represent those who are affected by the policy. It is being led by the same lawyer who won a Capital Gains Tax (CGT) reclaim against the Spanish government. More than £280 million was returned to 90,000 British families after the European court case.
Luis Cuervo, CEO at Spanish Legal Reclaims, said the belief that they were fortunate to inherit a property in Spain had only left them scammed out of a lot of money.
The group was feeling confident that the verdict would go their way, as the EU normally do not bring cases to the ECJ unless it believed they were legally sound.
British expat Peter Jackson, 62, who inherited a Spanish property from his mother and paid more than €10,000 (£8,000) in IHT said that he paid the tax for the property in Moraira as he was told to pay and he did not think any different from those who were following suit. But after knowing that they were overcharged by a good sum they felt it was worth trying to reclaim it.
He said it seemed people not living in Spain were not treated equally in this matter, and something has gone a bit awry.