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Taxpayers Granted Special Tax Return

24 Oct 2012

There is currently an opportunity in Spain for taxpayers to file a special tax return that, in return for paying a limited amount, would put an end to any existing income tax contingencies. The particular manner in which this measure has been crafted, allowing for the effects of the statute of limitations to be fully respected, makes it quite an attractive option to consider. Taxand Spain discusses what the special tax return will entail for non-resident taxpayers.

Many foreign taxpayers have not been taxed in Spain on income from capital held in foreign-based institutions, and materialising in various forms of investment, directly or through a variety of entities such as trusts. Under the terms of the amnesty, so long as the capital was already held at 31 December 2007 (or 2006, in certain circumstances), the special tax will be limited to 10% of the increase in the realised value of such holdings.

If some of the capital was earned after those dates, then the 10% tax should instead be assessed on the amount of the capital. Only income tax ( including tax on capital gains), and not inheritance or gift taxes, is affected by this special regularisation.

The deadline for the special regularisation is 30 November 2012.

Your Taxand contact for further queries is:
Pedro Fernandez
T. +34 95 207 55 25

Taxand's Take

Filing this special tax return has indirect consequences worth considering. Once the assets and income earned on them have been reported, they will have to continue to be reported going forward; therefore appropriate tax planning measures ought to be put in place. Taxpayers should note that filing this tax return should not result in a special tax audit, however those who have had or still have to subsequently amend their 2011 return may wish to reconsider.

Taxand's Take Author