NEW 100% MORTGAGES TO BOOST SPANISH MARKET

(From OPP News)

Buyers in Spain could be able to secure 100% mortgages for the first time during the downturn thanks to a new developer-bank partnership.

Customers buying from UK-based developer Almanzora Group will be able to apply for 100% loan-to-value finance through the Bank of Andalusia on properties with discounts of up to 55% off peak price.

The developer has been selling around three properties per week since the start of the year and hopes the new mortgage offer will provide an extra boost to the market. The large discounts make the properties more affordable and so the bank can feel more confident about buyers’ ability to repay the loan, said Almanzora’s sales and marketing manager Simon Coaker.

“In some cases, the mortgage available is larger than the amount actually payable by the purchaser,” he said. “This is because, following last year’s price reductions, current prices of a number of properties are actually lower than the bank valuations.”

Bank incentives

Although the number of mortgages issued in Spain rose year-on-year for the first time in two years in November 2009, such high loan-to-value rates have become almost unheard of in Spain due to increased conservatism among lenders. However, banks are more likely to lend to customers buying repossessed properties or from developers backed by bank funding.

“There are some 85% loan-to-value loans available for bank-owned properties but generally there is still little movement in the market,” said Clare Nessling, operations director for international mortgage broker Conti.

Coaker told OPP that Almanzora was in partnership with the Bank of Andalusia to fund certain elements of its projects, but that the bank also wanted to take advantage of the sales opportunity.

“The banks have seen us doing well and are interested in dealing with our clients,” he said. “Some of our own mortgages are with the Bank of Andalusia but they have competed against other banks for our customers’ business.”

Addressing the long-term sustainability of such large price reductions, he said: “We wanted to create real interest in the property so have allied a mortgage product to selective discounts that will incentivise the market. But we think the 55% discounted stock will sell very quickly and we anticipate raising prices hopefully by mid-year.”

I am a Russian long term resident in Spain; can my Russian wife get her residence permit automatically?

It is not that automatic. First of all you must apply for her legal reunion with you in Spain at the Spanish authorities of your place of residence, then after you get an official permission for her, your wife must request a Visa at the Spanish consulate or embassy of her place of residence in Russia, and finally your wife is given a term of two months since the date of her Visa to request her residence permit in Spain. You and your wife will need to prove you have sufficient economic resources to live in Spain during your initial residence term, including a home and medical insurance. Your wife must bring a official certificate from her Country’s authorities showing she has no criminal records.

My brother married to a polish citizen is living in Spain for more than one and half year. When can he apply for nationality?

In order that any non Spanish national becomes a Spanish national they must reside in Spain for a period of ten years minimum (there are a few exceptions like oficial refugees or nationals of Spanish South America, Andorra, Philippines, Republic of Equatorial Guiena, Portugal, Sephardies…all of them needing a term of five year’s residence).
There are other exceptions (needing one year’s term) for other persons such as the ones who have born in Spain, people married to a Spanish national, etc, etc.
Therefore, in your case, and with the details you mentioned, you cannot at this time apply for the Spanish nationality.

Do the beneficiaries of a Trust created abroad by a grandmother, non Spanish resident, have to pay tax in Spain for the funds or assets they are from time to time receiving in Spain from that trust, why, how and when? (01/12/2009)

The legal arrangement of the Trust is not recognized as such by the Spanish legal system. The Convention of The Hague internationally applicable to the Trust and its recognition has not been ratified by Spain. Therefore, in what refers to the Spanish legal system, the relations between the bequeather and his assignees through the Trust are considered as made directly between them directly.

The grandmother of the consulting parties, of Panamanian nationality, passed away in Madrid. Although she resided in that city for at least the last four years previous to her death, it does not show that she changed her fiscal address or that she formalized her domicile there. The bequeather had constituted a “trust” more than ten years ago in the island of Guernesey (United Kingdom), appointing her grandsons as beneficiaries of a series of assets of complicated quantification, being the grandmother the only beneficiary of that trust until her death. Up until this moment, her grandsons (the consulting parties) have not received any amount or asset from the trust.

In what refers to the trust, the faculties of the so-called “trustee” (administrator of the trust) are limited to the administration and safeguard of the funds received for the interest of the beneficiaries, he cannot have the funds for purposes different than the ones mentioned in the trust’s constitutional document (i.e. attention for the beneficiaries), also, in order to carry out certain acts of distribution he needs the authorization from certain people (“protectors”), and any positive or negative outcome obtained by the investment of the deposited funds is to be held on account of the trust. The “Trustee” turns out to be the formal proprietor of the funds, but he must keep them separated from his own patrimony.

Concerning the described facts, two questions are to be considered:

1. If the fact that the consulting parties have been appointed as beneficiaries of the trust by their grandmother with effects from her death constitutes a mortis causae acquisition, taxable by the Spanish Inheritance Tax – as the consulting parties understand – or if, on the other hand, they will have to pay tax for the amounts or assets that they are from time to time receiving from the trust like inter vivos gift acquisitions, which will be taxed with no favorable consideration about any existing kinship, since those amounts or assets come from the trust.

In this respect, although in the Anglo-American Legal system the trust is a typical institution that keeps a close relation not only with the Law of obligations and the one of property but, even, with the Family and Inheritance Law, the traditional legal areas for which the trust exists, the arrangement of the trust is not recognized by the Spanish legal System. Even so when there is an international legal text regarding this institution such as the Agreement or Convention of The Hague of 1-7-1985, about the law applicable to the trust and its recognition, that tries to eliminate or, at least, to simplify the problems derived from the ignorance of this institution in many legal systems. This Agreement had effect from 1-1-1992, but the number of ratifications by the different Countries has been very little. At the present time, only ten countries have ratified the Agreement, and, among them, it is not Spain. Therefore, in what refers to the Spanish legal system, the relations through the trust between the consulting parties and their grandmother are considered as made directly between one and others. For that reason, the appointment of the consulting parties as beneficiaries of the trust incorporated by their grandmother with effects from her death conforms the taxable deed regulated in the Inheritance and Donations Tax Law art.3.1.a, since it constitutes an acquisition of goods and rights through inheritance, legacy or any other inheritance title. The accrued income of the taxable deed is taking place at the moment of the death of the bequeather (art.24.1).

1. If the fact that the grandmother was not having her fiscal formal residency in Madrid, nor was she registered as having her domicile in that city, is a determining factor about the condition of fiscal resident in this territory in what refers to the Inheritances and Donations Tax.

In relation to this question, the Law establishes that the tax due to personal obligation is requested from the contributors who have their habitual residence in Spain, this one being determined according to, among other assumptions, the fact that the contributor has her habitual residence in Spanish territory when she remains in this territory more than 183 days during the natural year, computing the sporadic absences, unless the contributor credits her fiscal residence in another country. Therefore, the question about being or not habitual resident in Spain is a question that can really be proven by means of any permissible evidence accepted by Law. In this sense, the fact of the contributor having declared the fiscal address in Madrid or the fact of being registered in this municipality can constitute evidence in favor of the fiscal residence, and the absence of these circumstances, an evidence otherwise; but the indicated circumstances are neither necessary nor sufficient to credit the habitual residence, that can be justified by other means, and that will be determined in agreement with the joint valuation of the evidences contributed by the interested parties and the ones carried out by the Public Administration.

(From a recent binding official reply to a formal consultation made to the Spanish Central Tax Office)

Trademarks are now cheaper and easier to get in Spain

The Spanish ministry of industry, tourism and commerce is considering a reduction of around 13% of the rate paid for the request of registering a trademark, a measure that will bring an annual saving of 2.7 million Euros to the users of these services. The minister also indicated that during the last year in Spain there has been a reduction from eight months to five and a half months in the average period for the concession of a trademark. The government has approved a set of measures for companies to facilitate access for the protection of their trademarks, electronic requests, renewal of trademarks and the streamlining of the payment system.

Spanish Tax Authorities to repay discriminatory tax to UK citizens

A court decision in Spain has opened the way for thousands of UK citizens to reclaim some of the tax they paid when they sold their homes here. The High Court in the province of Valencia has ruled in favour of a British couple, Mr and Mrs Roy. The verdict forces the Spanish tax authorities to refund them the difference, they were charged a capital gains tax levied at 35% instead of 15%.

The court considered the law which was in force for many years was “discriminatory”. This verdict could be a first step in favour of people who sold their homes in Spain but who were officially non-resident, they were taxed at 35% of their profits rather than at the 15% rate applied to Spanish nationals.

New coefficients to update the acquisition value of Spanish Real Estate assets

New Coefficients to update the acquisition value of Spanish Real Estate assets. For the transfers of real estate (not linked to economic activities) that take place during year 2009, the coefficients of update of the value of acquisition of such assets will be the following ones:

Spanish Wealth Tax Abolished

Spanish ‘Wealth Tax’ has been abolished with effect from 1 January 2008.

Since this tax was imposed, based on assets held on 31 December of a given year, the tax for 2007 will hence be payable as usual in 2008. Anyhow no wealth tax will be payable for 2008 itself during 2009.The tax treatment for residents and non-residents is different. Residents pay this tax on their worldwide assets, less various exemptions. Non-residents pay the tax only on assets held in Spain, but there are no exemptions. Without doubt the move, made known after the re-election of the Spanish PSOE administration, is intended to alleviate the damage to the Spanish construction business and housing market in the current economic decline.

Even though Wealth Tax has been abolished, the other property owners’ tax called the Attributed Income Tax, also yearly, shall remain valid. Non residents and residents alike pay 2% of the “valor catastral”, an officially rated value, of their second-home property attributed to them as a sort of made-up income. In case the property rated value has been recently raised property owners pay 1.1 percent.

Even though Wealth Tax has been abolished, the other property owners’ tax called the Attributed Income Tax, also yearly, shall remain valid. Non residents and residents alike pay 2% of the “valor catastral”, an officially rated value, of their second-home property attributed to them as a sort of made-up income. In case the property rated value has been recently raised property owners pay 1.1 percent.

SPANISH GOVT THROWS DEVELOPERS A €3BN LIFELINE

Companies offered assistance if they rent out their unsold stock

The Spanish Prime Minister, Mr. Rodriguez Zapatero announced several measures to alleviate the real estate market situation. In his speech at parliament Mr. Zapatero stated: Firstly, stock exchange-listed investment companies in the real estate market will be authorised. These companies will enjoy a favourable tax regime, will promote the rental market, will facilitate the access of investment in buildings to the small and medium investor, will provide flexibility to real estate investments of companies, will contribute liquidity to real estate investments and therefore will contribute in making the real estate market more dynamic. Secondly, we will start up a new line of mediation by the Institute of Official Credit, whose objective will also be to encourage the supply of real estate rental and to facilitate the adjustment in the sector. In particular, the transformation of loans for the construction of houses in longer term loans will be facilitated to real estate promoters and in exchange those will be committed to incorporate the houses to the rental market during a determined period of time. This performance will be financed initially with three billion euros, which may be increased based on the response of the market.