2013. Time to invest in Property?

1st term of the year has been a very busy time, and shown a firm revival of the sales on property in Malaga from investors.

I was really puzzled about this, as it seemed hardly compatible with the housing crisis.

So I decided to look outside of Spain to be able to understand what was going on. 

I found that BNP Parisbas Real Estate, part of the French bank, listed ten good reasons for investing in Spanish property today, in a new guide to investing in Spain, aimed at foreign investors.

The main reason they give is prices, which have fallen to their lowest level since the crash began, and now represent a “unique opportunity,” they argue. 


Prices have fallen faster than rents, driving up rental yields on prime property. Forecasting that prime property prices will recover within the next 5 years, they conclude this is the time to invest.
The other factors they mention include Spain’s structural reforms, infrastructure, strategic position as a gateway to Europe from Latin America and Africa, world-class corporations and a well-trained workforce.

Also, Price Waterhose Cooper (PwC) & Urban Land Institute  issued a  report ‘Tendencias del mercado inmobiliario europeo 2013’ . They suggest investors to be alert to opportunities that may arise in connection with the sale of repossed properties in Spain. 

They also recommend to keep an eye open for secondary Spanish cities´ opportunities, and find partners  that can provide valuable information about where the real bargains lie, what assets should be considered and which ones are to be avoided, and what properties are about to come out to the market.

So, I come to the conclusion that we're getting closer to find  points where supply and demand are balanced. Don´t you think so?

Javier Herrera Llamas

New steps to increase the control over Spanish residents owning assets outside Spain.

Spain launches new national office for international taxation

The Spanish Official State Gazette (BOE) published a resolution last Friday creating a new National Office for International Taxation (ONFI), which is expected to enter into force on 1st April.


As announced in November by the State Secretary for the Treasury, Miguel Ferre, this new specialised unit will assume responsibility for producing a centralised plan of action and establishing uniform action criteria for the entire Spanish Tax Office in terms of international taxation.


The ONFI, based in Madrid, will functionally operate under the Department of Inspection, with approximately 50 people, initially, exclusively engaged in activities related to international taxation. It will be responsible for scheduling, promoting and coordinating the inspection activity related to international taxation carried out by the Spanish Tax Office’s specialised, central and regional units.

At the moment, the prevention of international tax fraud is the subject of growing attention, as is evidenced by the establishment of international cooperation standards backed by the G-20, the initiative on taxable base erosion and offshore profiting, and the recent EU Action Plan to strengthen the fight against fraud and tax evasion.

By launching the ONFI, the Spanish Tax Office is strengthening its resources for combating international tax fraud, in line with the priorities being set by the European Union and the OECD.

The activity to be carried out by the new office will be focused on international related-party transactions, or fixed transfer prices between entities belonging to multinational groups, and the correct taxation in Spain of income obtained by non-residents. It will also have a team specialised in economical-financial valuations of tax relevance (intangible assets, company valuations, unlisted securities, etc.).

This new unit will, certainly, have under it´s main duties, to investigate & check the correct use of the new rules for tax reporting for Spanish residents owning assets outside Spain worth over €50,000.



Javier Herrera Llamas

Time to revise your fiscal strategy if you are Spanish resident with assets outside Spain.

New Asset Reporting Law puts you under scrutiny if you are you resident in Spain, and you do own any assets outside Spain worth over €50,000, since you are subject to the Tax Authority new rules on tax reporting, designed to to strengthen action to prevent and combat fraud. 
Being Spanish resident, or if you live in Spain more than 183 days in Spain (even if you have not obtained residence permit) you will be taxed for your worldwide income. This is not new at all. 
But, the bad news is that now you will need to declare them before 30th April 2013 under a new reporting requirement. Failure to do so, or doing it unproperly, would have very costly consequences.

Reporting obligation

Reporting must be done on a new official form by the end of the first trimester each year, although the deadline has been extended for reporting assets held as at 31st December 2012, so that your first deadline is 30th April 2013. For future years, the deadline will be 31st March for the previous 31st December.

Assets to be declared

If you own any of the following assets outside Spain, valued at €50,000 or more, you need to declare them. You can find here a non - exhaustive list of assets that should be stated:

• Accounts held with financial institutions 
• All types of immovable property (real estate) and rights over such property 
• Shares and securities 
• Life insurance policies 
• Temporary or lifetime income generated from the lending of money, rights or other assets (including property) to foreign entities. 

You need to declare these assets if you are the owner, the beneficiary, or an authorised signatory. This includes assets held by a trust or fiduciary.
If the value of your total assets in each class is less than €50,000, you are not obliged to report.

Once you have reported the assets the first time, you do not need to report them again each year if the value of all your reportable assets increased by less than €20,000. Where their value has risen by €20,000 or more, you will need to report them again by the next annual deadline.

Information to be reported

The value to be reported for accounts with financial institutions, shares, securities, life

insurance policies and other assets is that at 31st December.

In the case of accounts with financial institutions, you also need to report the average balance over the last three months of the year. This category includes all types of bank accounts and deposits, including credit accounts, in all currencies, regardless of whether you have the right to withdraw the funds or not.
For immovable property, the value is the cost of acquisition. You also need to provide information on the type of property, its location, and date of acquisition.

Consequences of not reporting

If you fail to report any assets as required by the new law, the costs will be very high once discovered. The undeclared income arising from the asset will be deemed to arise in the last tax year which is not statute barred – four years in most cases. This effectively abolishes the statute of limitations.

You would have to pay all of the following: 

• Income tax at the income tax scale rates where the top rate is over 50% (so up to 52%, or 54% in Andalucía and 56% in Cataluña; even if the income would normally be taxed under the savings income regime). 
• Late payment interest for the last four years. 
• Penalties, which can be as high as 150% of the total tax due on the asset. 
• A fine of €5,000 per each piece of unreported data, with a minimum of €10,000. 

If the tax defrauded exceeds €120,000, it would be even considered a criminal offence. 

When you submit your declaration form by 30th April, you need to be sure you have filled it in correctly and included all the overseas assets that you should have, with the right values. Any mistakes or omissions, even accidental, could prove very costly.

So, clearly it is the time to revise your fiscal strategy if you are Spanish resident or you are planning to be.


Javier Herrera Llamas