The Spanish Tax Office has finally ruled on the validity of using mortgage loans to avoid wealth and inheritance taxes.
ERVA will post the original binding consultation letter, named as CONSULTA VINCULANTE Patrimonio -01347-13, in the next couple of days.
Meanwhile, this is what they had to say about this dodgy set up:
- That a calculation for wealth tax cannot take into account, and be reduced by, the value of the mortgage loan, unless the loan is used for the purpose of financing the acquisition of the property, as it is not otherwise considered to be charge on the property, but a personal debt.
- That according to article 7 of the Inheritance and Gift Tax Act, non-residents for tax purposes will have to pay taxes on any sums received from life insurance policies signed by Spanish companies or foreign companies operating in Spain.
- That the capital of a mortgage loan granted to a non-resident by a foreign bank is not subject to IHT.
- That attempting to offset a mortgage as described above would constitute tax fraud, pursuant to the General Tax Act 58/2003
Further to the above, we received a clarification email stating the following:
- That a calculation for IHT cannot take into account, and be reduced by, the value of the mortgage loan as logically, the mortgage loan is not considered to be a charge on the property but a personal loan.
Email sent to ERVA:
From: S.G. de Impuestos Patrimoniales, Tasas y Precios Públicos
Sent: miércoles, 06 de marzo de 2013 12:26
To: Fatima Izquierdo
Subject: RV: A/A D. José Javier Pérez-Fadón Martínez_Consulta vinculante_Patrimonio 01347-13
Estimada Sra. Izquierdo: La contestación V0590-13, fechada el 25 de febrero pasado, establece la no deducibilidad en la base imponible del Impuesto sobre el Patrimonio, para supuestos de obligación real de contribuir, del préstamo hipotecario extranjero en cuanto no es carga o gravamen de la vivienda, sino deuda. En el ámbito del Impuesto sobre Sucesiones y Donaciones y para la misma hipótesis de obligación real de contribuir, como decíamos en la mencionada contestación, el causahabiente no tributará por el capital del préstamo y, como es lógico y resulta de no tratarse de carga o gravamen sobre la misma, tampoco podrá minorar el valor de la adquisición de dicha vivienda en el importe del préstamo.
Confío en que quede así aclarada la cuestión planteada.
Saludos.
Javier Pérez-Fadón Martínez.
Subdirector General de Impuestos Patrimoniales, Tasas y Precios Públicos.
Finally, we have requested from the Tax Office that the email below is incorporated to a binding letter.
Well done ERVA on getting this definitive statement from the Hacienda. So now it is official- we have all been conned! How long now before the Banks have to own up and pay us back. I suppose they will now all be huddled together to find some excuse for saying it was our fault we entered the schemes and nothing to do with them!!!
Well I guess that just about sums it all up. How many of us were not only told, but have documents from the banks stating that by taking out this equity release scheme we woulod be exempt from paying wealth tax and that our beneficiaries would either not pay Inheritance Tax or that it would be mitigagted/reduced. Guess what though it is us who have committed the fraud. I imagine that the Hacienda will now investigate the banks that sold these fraudulent equity release schemes and coerced us into signing these contracts. Well done to the erva investigating team and their lawyers at Lawbird Legal Services Marbella, headed by Antonio Flores. No doubt erva will be posting something as to what our next step is.
Needless to say we are very happy about this, it is good news for many of our members. Especially those who were sold the scheme by Nordea Bank SA Luxembourg through their office in Marbella, Danske Bank SA Luxembourg, Rothschild Bank and their Spanish Agents. We have much evidence to show that their schemes were sold with the express purpose of avoiding/evading taxes. We shall be meeting with Antonio Flores (erva’s) lawyers shortly to discuss our next step. In the meantime, all clients of Lawbird Legal Services should get in touch with them.
Many, many thanks erva, you have come up trumps yet again. I am sure every victim connected with these schemes will want to thank you also for your dedication in getting to the root of the matter. Let us hope that the banks will now see that perhaps they were given the wrong advice by their Spanish lawyers/advisors when dreaming up these schemes. Perhaps these banks should now be looking to their advisors, if they had any of course and issue proceedings against them. I am hopeful that this is now the beginning of the end for me and lots of others and the banks will now start to talk to their victims and settle the matter once and for all. I will do as you suggest and contact my lawyer to see what the next step is. Finally I can have some hope get out of this terrible mess.
This is fantastic news.
I now for the first time in five years have a positive attitude and so glad i got in touch with Antonio Flores when i did. We may have some way to go yet but i think i can see the light .
Well done ! Well done.
Just the news we all have been waiting for. I think I will open a bottle of “bubbly” and go to bed early. Although I think we all knew as a matter of logic what the Tax Office would rule. I cannot think how these banks could have go it so wrong, either they were too intent on getting some big fat bonuses and could not have cared less or as Sarah said their advisors did not investigate the regulations sufficiently. It is not as though these are new regulations as these seemed to have been in place long before these sharks preyed on the Costa del Sol. Perhaps they did not count on the tenacity of erva for getting to the truth. I have a feeling that this is just the beginning of the end. No doubt these banks will come up with some excuse as we have seen in the past. Such as, you should not have listened to us but checked out our advice. I am afraid banks that their is no point trying to close the stable door after the horse has bolted. Perhaps the best advice I can give you as well is. Sue your advisors. In fact you should not have taken their advice but checked it out elsewhere like the Tax Office as erva has done.
What a result !! No doubt the banks will be wandering around like headless chickens, wondering what other pack of lies they can dream up to get themselves out of this mess. A difficult one for them, I suspect Nordea Bank can hardly argue that their clients did not have to believe them but seek alternative advice. As has been mentioned they should not have believed their lawyers or tax advisers, but contacted the Hacienda themselves to find out if, what they were saying to their clients and publishing in their advertising literature and sales brochures was true. The truth of the matter is they never even sought advice. Rothschild and Hamiltons have the same problem, all you have to do is go through the many posts that erva has commented on to realise for yourself. The question now is will the banks themselves realise that the game is up and start some dialogue with their victims. Perhaps it may save them a lot of time, effort, publicity and money. Are they man enough to admit their mistakes. Vamos a ver.
Thank you members for all your comments. We can see that for the first time in a number of years that all our members and victims can finally see a light at the end of the tunnel. We are not there yet, but this news is certainly positive and gives some comfort to all who have been caught out and suffered through these fraudulent schemes. We should give a thought to those victims which the banks have foreclosed and wish those others under threat of foreclosure a happy ending to their plight. We are aware that Nordea Bank have foreclosed on some properties in the Alicante area and are taking action elsewhere to do the same. Perhaps they will now cease their foreclosure programme until such time as these matters are resolved. We at erva can see no sense in any foreclosure be it Nordea Bank, Rothschild Bank, Danske Bank and Landsbanki. Lawbird Legal Services no doubt will commence proceedings in various courts against several banks to have the mortgage loan made “null & void” as the purpose it was entered into was to avoid/evade tax. When this happens surely the banks who have foreclosed or about to foreclose, will financially be in a far worse position. We at erva ask all banks to stop all foreclosure proceedings, come to the negotiating table and let these pensioners get on with what years they have left.
Looks like it is not only the Spanish Tax Authorities that will be examining, individuals and banks in their efforts to incite people to commit tax fraud. No doubt someone will send details of the Spanish Tax Authorities ruling. Someone mentioned to me that Nordea Bank actually started their equity release scheme for Scandinavians for their holiday homnes in Spain, then realised they had some rich pickings in the British retirees who never had a mortgage on their property. On another note the information from the tax office is worthy of some National Press coverage. Is it the intention to send out a press release.
m.investmenteurope.net/investment-europe/news/2253508/nordic-council-assembles-elit-squad-to-tackle-international-tax-avoidance?WT.rss_f=&WT.rss_a=Nordic+Council+assembles+elit+squad+to+tackle+international+tax+avoidance