Building that houses the Court of Justice of the European Union.
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Spaniards abroad who reside in countries outside the European Union (EU) and the European Economic Area (EEA) are exposing in Brussels the offense to which the current Spanish tax law subjects them, which contemplates for them taxes much higher than those established for those who settle in the aforementioned political communities.
Both parties have the obligation to tax the capital gains derived from the sale of a property that they own in Spanish territory, but residents of the EU or the EEA (the EU plus Iceland and Norway) will be exempt. to pay taxes in the event that they decide to invest in a new habitual residence the earnings from the transfer of what was their home in Spain.
Similar grievances are also detected in the taxation sections for urban properties for own use and for the performance of leased properties. In the first case, the tax rate for residents in the EU and the EEA will be 19%, while for the rest of residents abroad, it rises to 24%. In the second case, the same proportion is followed in the tax, but, in addition, community members may deduct the expenses incurred in said properties provided it is proven that they are related to income obtained in Spain and that they have a direct and inseparable economic link with the activity carried out in Spain. Thus, they will be able to deduct from the rents collected expenses such as amortization, the IBI (Real Estate Tax), community expenses or the repairs that may be presented, with which, they are taxed 19% on the net income, compared to 24 % of non-EU by gross income.
The legislation, which greatly harms Spaniards in non-EU countries, affects for the first time this year those settled in the United Kingdom who, as a result of Brexit, are forced to take advantage of a new scale when declaring to the Tax Agency . Their protests are being the majority among those that these days are received in Brussels denouncing the discrimination that is observed in these sections.
Inheritance tax and donations
The damages suffered in tax matters by Spaniards residing outside the countries of the EU and the European Common Area have already been made clear before the bodies that deal with issues related to Spanish citizenship abroad, both with regard to to the declaration of Income as in regard to the Inheritance and Donations Tax (ISD). On this matter, José Gil Doval, general counselor for Swiss emigration (one of the countries affected by what current Spanish legislation dictates on these two cases), sent at the time to the Permanent Commission of the VII General Council of Citizenship Spanish Abroad (CGCEE) a proposal so that residents in non-EU countries, as is their case, receive “the same treatment” as those who reside in the EU and in the European Common Area.
Gil Doval recalls in his letter that the judgment of the Court of Justice of the European Union (CJEU) of September 2014 already ruled that the Second Additional provision of the Spanish Inheritance and Donations Tax Law violates community legislation by excluding non residents of the benefits applicable to residents in this regard. State regulations were applied to these until that year and were denied the possibility of availing themselves of the important tax benefits that governed the different autonomous communities. Things changed for this group, but not for non-EU citizens, who also suffer discrimination, despite the fact that the General Directorate of Taxes (DGT) assumed the favorable criteria of the Supreme Court in rulings issued in February and March 2018 so that non-EU citizens could benefit from the resolution of the CJEU.
The Central Economic Administrative Court (TEAC) also ruled in 2019 in favor of the Second Additional provision of the ISD Law being applied equally in the case of residents in third countries. However, in practice, these resolutions are not being taken into account.
Gil Doval’s proposal, urging that his proposal be raised to the corresponding ministry, also asked the competent bodies to “take a definitive position on the issues that concern emigrants residing in Switzerland.”
The CGCEE plenary session, where these and other issues affecting the Spanish community living abroad should be discussed, has yet to meet since June 2018. In 2019 it did not hold a plenary session, nor in 2020 due to the coronavirus pandemic . As of April 2021, it is still unknown if the advisory body on emigration will meet this year and under what conditions.
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