THE SUPREME COURT DELIMITS MORTGAGE CHARGES DEDUCTIBLE BY NON-RESIDENTS

by with No Comment ActualityInvestSpain

In the recent ruling 167/2013, of 13 February, the Supreme Court (SC) establishes that non-residents who own real estate located in Spain can only deduct from Wealth Tax (IP), and therefore, in the Temporary Solidarity Tax of Great Fortunes (ITSGF), the mortgages constituted for the acquisition or refurbishment of said real estate.

The Supreme Court stresses that in the case of taxpayers under real obligation, the delimitation of the taxable base of the tax is linked to the property and/or right located in Spain itself, so that the deductible debts are limited to the mortgage charges incurred to acquire or reform the property.

Consequently, if the taxpayer subsequently grants a loan secured by a mortgage on the property located in Spain (i.e. the loan is not linked to the acquisition or refurbishment), it will not be deductible, since, although the two debts are secured by the same property, the mortgage taken out to acquire or refurbish the property is a security interest, whereas a mortgage taken out subsequently and not used for the acquisition or refurbishment of the property is a personal debt secured by a mortgage on the property itself.

Therefore, non-resident taxpayers owning real estate located in Spanish territory must take this ruling into account in their investment and indebtedness strategies on real estate they own located in Spanish territory.

Expatfeliu can advise and support you in analysing the tax impact of your investment and debt strategies on your property located in Spain.

 

UPDATES THAT WILL BE INTRODUCED BY THE FUTURE “START UPS” LAW ON THE IMPATRIATES TAX REGIME

by with No Comment InternationalInvestSpain

The future «Start Ups» Law, which has already passed the first-step of the approval by the Spanish Parliament and that now needs the approbation by the Senate, introduces important modifications in regards to the Special Tax Regime for those workers who have been posted to the Spanish territory (onwards, impatriates).

 

What’s new in the future law:
  • It facilitates the fulfilment of some requirements and includes a few options in order to attract entrepreneurs and digital nomads.
  • One of the biggest changes is the reduction of non-residence period in Spain prior to the year of transfer that goes from ten to five years.
  • Also, so far the reasons that used to justify the displacement only were physical transfers due to the beginning of an employment relationship or the acquisition of the status of company director (with participation to the share capital of less than 25%).
  • Besides, the new text of the Law, aiming to attract the “digital nomads», contemplate the case of work activity provided remotely (telework) by the exclusive use of IT and telematics systems.
  • Entities’ directors are also allowed whatever their participation to the share capital is, whilst the limit of 25% on the share capital is kept for company’s directors. It also introduces the possibility to carry out an entrepreneurial activity (innovative with special economic interest for Spain).
  • Finally, it will allow to extend the application of the special regime for impatriates to the spouse and children under 25 years of age (or any age if they are disabled) whom move with the taxpayer or will do so afterwards but within the year in which the taxpayer pays for the special tax regime.

 

If you are interested in Start Ups or in the news about them, do not hesitate to contact us. Our team will inform you about the tax regime for impatriates in the new future law.