HUNDREDS OF Irish citizens who sold their holiday homes in Spain before 2007 have been urged to take action against the Spanish authorities to reclaim a substantial portion of capital gains tax paid at the time of sale.
The Spanish government is bracing itself for a flood of claims from European Union nationals as momentum gathers in a number of countries for class action proceedings to claim rebates.
According to initial estimates, the total amount overcharged could run into several hundred million euro, and individual claimants could stand to receive an average refund of €23,000, considerably more in the case of high-end properties.
Up to January 1st, 2007, Spain taxed the gains on sales of property by non-residents at 35 per cent, compared to just 15 per cent for residents.
Following pressure from the European Commission, which brought infringement proceedings against Spain on the grounds that its domestic law discriminated against non-resident EU nationals, the rule was changed and now all sales are subject to the same flat rate of 18 per cent.
However, no statutory provisions were made to correct the discriminatory regime applied to non-residents up to December 31st, 2006.
More than 300 British sellers who fell foul of the overpayments have joined forces on a website set up recently to register claims for refunds (www.spanishtaxreclaim. co.uk).
Property experts believe reckon that as many as 5,000 people in the UK may be affected, in addition to several thousand more in other EU countries, particularly Ireland, Sweden and Germany.
Legal experts say that only people who sold their properties after 2004 have a good chance of success if they file a claim, given that, under Spain's tax laws, claims can only be made dating back over a four-year period, a technicality that could save the Spanish government hundreds of millions of euro.
Firms specialising in tax law throughout Spain, particularly on the Costa del Sol and the Canary Islands - both of which are hugely popular with Irish holidaymakers - are encouraging non-residents who sold their properties to register their claims for rebates as soon as possible, and help increase the pressure on the country's authorities to resolve the matter quickly.
They warn that the Spanish tax agency does not intend to contact the non-residents who were overcharged to alert them to the possibility of a refund, so it is up to anyone who feels they have been victim of the pre-2007 rule to initiate proceedings as soon as possible.
Some firms are so confident of winning individual cases that they are offering their services on a "no-win, no-fee" basis.