Tag archives for Equity Release Tax Fraud


Euan Armstrong, President and Founder of the Equity Release Victims’ Association, has finally succeeded in having his 2004 mortgage loan rendered illegal by a Spanish Court.

When in 2010 Danske Bank foreclosed on the loan and attempted to rob Euan of his Alhaurin home, he could not imagine what a long road lied ahead; immediately upon being served Court papers, Euan’s lawyers instituted criminal proceedings at the Fuengirola Court denouncing the scam he had been a victim of.

When 5 years later the Courts dismissed all criminal proceedings -as a result of a controversial decision by Spanish judiciary governing bodies to not pursue bank contracts criminally- and Danske Bank attempted to foreclose again, lawyers acting for Euan made an almost unheard -and very risky- legal decision: they filed a criminal case against a judge in Coin for admitting a loan foreclosure claim with blatantly insufficient documents.

The Granada High Court in charge of reviewing the case against the judge dismissed the allegations in 2018 -they were described as merely civil- but not before noting, in a short paragraph, that Euan’s allegation of a flawed civil procedure had merits in it. So whilst no charges were brought against the judge, a new Coin judge dealing with the case -who had replaced the previous one for unknow reasons- dismissed all foreclosure procedures on the basis of a technicality.

In 2019, with the threat of loan foreclosure all but eliminated, lawyers for Euan filed the definitive civil claim against Danske Bank International S.A. and The One Life Company S.A. for devising, promoting and selling a misleading and illegal complex financial product, requesting that both the mortgage loan contract and the insurance policies were ruled null and void by the Courts, which is exactly what the ruling has granted.

Lawbird Legal Services S.L.P. (Antonio Flores in the initial defensive actions and Juan Martinez Soler in the latter -and hopefully definitive- Coin Court of First Instance ruling) have acted for Euan Armstrong.

(to be continued)

Equity Release for Fiscal Planning is Tax Fraud, Confirmation in Writing Received

As explained on a previous post, the “Hacienda” has now confirmed what many believed: that attempting to mitigate inheritance and wealth taxes by taking out a mortgage loan on a property that was otherwise unencumbered is tax fraud.

What are the implications of this conclusion for the banks?

In principle, the consequences can vary enormously depending on whether banks misrepresented their clients by making them believe that they could mitigate taxes legally, when this is untrue, and this can be proven in a court of law. Where proven, the contracts can be declared void and the bank forced to lift the mortgage on the property, and by application of article 1.306 of the Civil Code, be prevented from claiming the draw downs.

Banks that have assisted inheritors in collecting life assurance/insurance payments on death of the policy holder, without demanding that taxes were paid, can become “substitute taxpayers” and end up footing the bill. Where the owed tax exceeds €120,000, this could constitute a crime under the Spanish Penal Code, punishable with prison terms.

And for property owners?

Taxpayers may have effectively mitigated taxes by declaring the charge to represent a “true” debt, in the belief that they were doing the right thing. The right of the Tax Office to demand unpaid taxes are not compromised by virtue of agreements between the cheating banks and their victims and so, they can pursue taxpayers.

One thing is now clearer: property owners are now in a far better position to pursue the declaration of voidness/nullity of the equity release agreement, as a single juridical contract, given the gross misrepresentations by banks, and their agents, when selling this fraudulent product.



Equity Release for Fiscal Planning is Tax Fraud, says Spanish “Hacienda”

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:

  1. 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.
  2. 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.
  3. That the capital of a mortgage loan granted to a non-resident by a foreign bank is not subject to IHT.
  4. 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:

  1. 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.


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.

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