CAPITAL GAIN ON SALE OF SPANISH PROPERTY

My Client has sold Spanish property. Does he complete CGT pages and Foreign Income pages?

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Client has sold Spanish property and had 3% withholding tax deducted in Spain. I believe he needs to complete the CGT pages on his SA return, along with the Foreign Income pages to show the 3% foreign tax to be offset/claimed.

CGT in Spain is at 19%, while in the UK it is 18%.

Does he just pay the 18% CGT to UK tax authorities (less the 3% already deducted)? Does Spain receive any tax on this transaction, as their tax is 1% more, or does it all stay with UK Authorities?

 

Replies (6)

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paddle steamer
By DJKL
25th May 2017 16:43
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paddle steamer
By DJKL
25th May 2017 16:47

Is the 3% not on the whole sale price rather than just the gain, so the 3% could be more or less than the CGT due if reported in Spain?

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Replying to DJKL:
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By KELVINSMITH
25th May 2017 17:16

Yes, you're correct. The 3% is based on the total sales value, and is paid directly by the purchaser, so the vendor doesn't even see it!

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By Ruddles
25th May 2017 17:01

In theory, the tax payable in Spain will be 19%, or whatever the prevailing rate is, of the gain. The 3% is effectively a payment on accoount. The tax payable in the UK will be 18% (or 28%) less the tax paid in Spain. Again in theory, then, there should be no tax payable in the UK if 18% is the relevant rate. I'm not sure how the relief actually works given that the 3% is not the actual tax payable in Spain - which will be determined only when the gain is reported there.

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Replying to Ruddles:
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By KELVINSMITH
25th May 2017 17:23

As I understand it, the gain is only reported on the UK tax return and paid to HMRC. No Spanish tax return is completed?

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Replying to KELVINSMITH:
By Ruddles
25th May 2017 17:50

I have no idea how the gain is dealt with in Spain - nor for that matter what evidence of Spanish tax having been paid is required for a claim against the UK liability.

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