Plus valia refund

We waited over two years for ours and only received it by keep badgering our lawyer, they must have got fed up with me and decided to pay up. Keep at them or they will never return the money.

Hi D P Dance,

PlusValia is the tax a seller pays on any increase, (between buying and selling) in the land value on which their property sits, so you cannot have this refunded.

I think you're talking about a refund of the 3% retention which purchasers' lawyers have to make at the point of completion, until such time that the AEAT (tax office) decides there is no outstanding tax liability for the seller. 

 I'm afraid that it seems to be normal for this refund to take around a year to materialise, but I agree with Mr Chips, keep at 'em.  Do you know whether your buyers used an independent lawyer, or one recommended by Wincham?  In your position, I'd be asking Wincham for the lawyers' contact details and approaching them direct.  More than 2 years without a refund is ridiculous.

Good luck!

Kind regards, 

Kim

Thank you, I am talking about the retention, I will keep my eye on the ball..  

I have now received a reply from Wincham UK which contradicts everything I have read,  I attach their letter and my reply 

Further to your letter received in the post today regarding a refund of the Plusvalia retention.

I would advise that no refund is due.  The Retention made was an amount of €1982.00 based on the calculations attached.  As you can see the figure retained was the exact amount of the town hall calculations therefore no refund is due.  The amount is held by the purchaser and Siesta Property Limited to cover the period of time from when you Invested the property into the Company up until the date the company was sold from your ownership.

I aim sure that you are wrong on both counts. I have done extensive research and my understanding of the position is as follows,

The 3% retention is a tax which is payable when a non-resident sells a property in Spain. The buyer of the property is required to retain 3% of the purchase price and deliver it to the tax office. The non-resident seller is able to make a claim to have the 3% returned to them.

I assume that, as Wincham also acted for the buyer, you paid this amount to the tax office,.  Therefore I require that you ask the tax authorities for a refund

Please also note that the retention was £1982 and not €1982 as you  state.

dpd

Hi dpd,

As I've advised previously, Plusvalia is a Municipal tax levied by your Ayuntamiento (Town Hall).  It's based on any increase in the value of the land on which your property is built.  The calculation is based on the Cadastral value of your property, the number of years you lived in it and a co-eficient advised by your Town Hall.  I don't know the details of your purchase/sale, but it's also worth noting that, in February 2017, the Constitutional Court annulled the Plusvalia Tax and in a further ruling in May that year, it established that taxpayers should not pay the tax if the property has generated losses - so for anyone who has sold their property in the last 3 years at a LOSS, they shouldn't have paid Plusvalia at all.  (The only time a seller would be entitled to a refund of Plusvalia is if it had been incorrectly applied in the first place.)

However, the "3% Retention" is a tax levied by the AEAT (Spanish tax office, colloquially known as the "Hacienda") in respect of non-residents who sell their property, to ensure they don't leave the country without paying national taxes, such as Capital Gains, Income tax, etc.  This is the tax that you can reclaim, provided you have no outstanding taxes in Spain. 

Wincham's letter could be correct, if you sold your property at a profit, for the reason I've already explained.  The refund you should be querying is the 3% retention.  The buyer must submit the 3% to the AEAT, via tax form Modelo 211, within the first month of buying your property and this would usually be done by their lawyer.  Once that has been done, you (the seller) can reclaim the 3% retained via your Modelo 210 non-resident tax return and you need to do this within 3 months of the buyer submitting the Modelo 211.  Even then, it can take as much as a year to receive your refund.

Wincham's letter suggests to me that you're still confusing "Plusvalia" with the "3% Retention" - they are different taxes.  When you owned the property, did you submit your non-resident tax returns yourself (Modelo 210), or did you pay a professional to do them on your behalf?  If the latter, did you instruct them (or the lawyer acting for you in the sale) to claim the 3% retention refund on your Modelo 210?

Kind regards,

Kim

Thank you, that is very helpful.

I sold the property at a loss for £215,000, 3% of that would be £6450 .  All of my tax returns were handled by Vives Consultores 

Calpe who are in partnership with Wincham.  

  FWIIW, i was told that by Wincham the I was  entitled to a refund after about 2 years, unfortunately I have no proof of this, 

Hi dpd,

On that basis, I'd go back to Wincham and explain that you're actually expecting a refund of both, because:

-  Plusvalia: you're aware that the Constitutional Court annulled the Plusvalia Tax in February 2017, with a further ruling in May which established that taxpayers should not pay Plusvalia if the property has generated losses, so you shouldn't have paid Plusvalia at all.  (Just to be sure, you said you've been waiting "2 years" for a refund, so did you sell your property after May 2017?)

-  3% Retention: can Wincham ask the buyers' lawyers to confirm the date that the Modelo 211 was submitted and the 3% retention paid to AEAT?  And can Vives Consultores confirm that they submitted the Modelo 210 refund request within the 3 months' timeframe stipulated?

I've known people (e.g. the vendor of our house) having to wait a year for a refund, but 2 years seems too long.

The only thing I don't understand is Wincham's comment, "The amount is held by the purchaser and Siesta Property Limited to cover the period of time from when you Invested the property into the Company up until the date the company was sold from your ownership."  What is Siesta Property Ltd and how are they related to the sale of your property?

Kind regards,

Kim

I am confused.

I sold the flat in May 2018.  The sum of £1985 was withheld.  As this is considerably less than 3% kf the selling price how then is it plusvalia as Wincham says it is?

Siesta Property was a UK limited company which I purchased from Wincham in 2009 into which I donated the apartment. to avoid IBI.  In 2018 I sold the company, (including the apartment), at a loss   AFAIAA Vives acted for both the buyer and seller.

The PlusValia could be €1,982 and, presumably,  on the attachment Wincham references in the extract you quoted, the calculation includes the coefficient which your Town Hall used to arrive at that sum?

The 3% Retention, if you sold your property for €215,000 is the €6,450 you have already stated.

As I've previously advised, these are two different taxes, paid to two different authorities.  There is no relationship between how they are calculated because PlusValia is based on Land value and the 3% Retention is based on Sale value.

By the way, "IBI" is Spain's equivalent of the UK's Council Tax, although much cheaper than the UK.  Whilst setting up a company to own assets is a useful way of mitigating Capital Gains and/or Inheritance tax, I've never heard of anyone using this mechanism to avoid what would probably have been around €200 Council Tax, especially as this is a local tax.

I've tried my best to explain the difference, but you still seem to be confused, so I think it would be best if you take professional advice.

Regards,

Kim