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?
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This looks interesting, no idea if correct:
https://www.spanishpropertyinsight.com/tax-and-pensions/spanish-capital-...
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?
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.
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.