January 22, 20 17
In his letter (January 6-12, 20 17), Mr Cumberland alleged, “The taxes I paid having sold my house in Spain were pure unfair extortion compared to if I were Spanish.”
Mr Kendall responded in his missive (January 20-26, 2017), “The unfair tax treatment he (Mr Cumberland) received on selling his property here was down to the Spanish government – since outlawed as discriminatory by, oh guess who, that wicked EU. You may well have a case to reclaim tax, thanks entirely to that elitist private club in Brussels.”
Both gentlemen err when it comes to taxation of the conveyance of property between individuals.
To shed some light on this subject I cite from a letter by the European Commission Directorate General, Taxation and Customs Union, in which Mr Momchil Sabev, a Bulgarian national, stated:
“The EU member states are largely competent to design their own tax systems, and to decide what to tax, when to tax it and at what rate. However, Member States have to respect their obligations under the TFEU (Treaty on the Functioning of the EU). They are not allowed to discriminate on the basis of nationality or residence against nationals of any Member State, including their own, or against anyone who exercises the freedoms granted under the TFEU. Nor can they apply unjustified restrictions on these freedoms.”
However, the EU during the past 26 years, and lately a patronising EU president Jean Claud Juncker, have been lenient toward Spain regarding her unhampered violation of Article 63 TFEU, which prohibits any arbitrary discrimination or concealed measures of restriction of the free movement of capital between EU Member States and between EU Member States and third countries.
Twenty-six years ago the Real Decreto 1080/1991 was implemented. Even a non-jurist was able to perceive the decree’s discrimination on the basis of nationality and residence against non-resident companies owning immovables in this country. Clumsily, Spanish lawmakers based the decree on an attached list stigmatising 48 countries as “fiscal paradises”, for instance Bahrein, United Arab Emirates, the sultanate Oman, etc. Countries where the gallon of water is more expensive than a gallon of petrol! Potential petrodollar investors and others are being taxed in violation of Article 63 TFEU in a country apparently staggering on the verge of bankruptcy: An annual five, later reduced to three per cent “special tax” of the property’s rateable value.
In 2013 tax exemptions previously conceded by the finance ministry upon revelation of the identity of a foreign company’s shareholders were declared void in order to rescue Spanish banks using taxpayers’ money totaling up to 60,7 billion euros. Politicians deceived the public by calling the bailout money a “repayable loan”.
Several EU institutions not only turn a blind eye on Spain’s 26-year-long infringement of Article 63 TFEU, but last year’s prerogative treatment reached the zenith when EU Commission president Jean Claude Juncker’s office ordered the EU Commission to squash the two billion euro fine imposed on Spain for violating the EU’s deficit rule.