Chapter VIII of RDL 5/2204 informs us of the various situations covered and what the effects for non-resident taxpayers are:
-In the case of inheritance tax art.47 RDL 5/2004 states that the heirs to the estate will be liable for the outstanding tax debt, but not the sanctions that may have been accrued. The Spanish Tax authorities have taken note of the numbers of non-residents who fail to initiate probate within the first 4.5 years following the date of death in order to avoid paying inheritance tax. We understand that the tax authorities are focusing their resources on this issue in order to correct the balance.
-In the case of couples in the regime of shared community of property (usually established through marriage), Art.48 RDL 5/2004 and art.1365 of the Civil Code set out that the entirety of the shared property is liable for the tax debts of either, or both, of the taxpayers regardless of the percentage owned by either party. i.e. a property equally owned 50/50 by the two parties can have the tax debt of one of the parties applied to the entire property, and either embargoed or seized.
The regime of offences and penalties are included in the General Tax Law 58/2003 in Title IV. The most common cases are:
-Infractions for breach of obligation to pay the tax debt: depending on the amount of debt and other factors, the penalty can range from -150% to 50% of the tax liability (art.191 LGT)
-Infraction for breach of obligations relating to the use and application of the NIE: monetary fine of 150 €.
There is a framework of mutual assistance in place as set out by art.177 bis of the LGT, Directive 2010/24 / EU and the Implementing Regulation 1189/2011, the Tax Administration may require mutual assistance for the recovery of tax debts from other States and exchange relevant information, so that the Spanish authorities can recover tax debts owed by non-residents living other countries.
The Spanish Tax authority has the right to demand the payment of tax debts (inheritance and gift tax, Income Tax, Non-Residents, and VAT) for a limited period of 4 years as stated in the art.66-70 of LGT.
The 4-year limit is calculated from the end of the period for submission of taxes, which would mean that currently the Tax Agency has the authority to request the tax debt generated from 2011 onwards.
Therefore we advise all residents and non-residents to bring their tax situation up to date as soon as possible to avoid costly sanctions. If you have been presented with a tax bill, or the Spanish authorities have begun recovery procedures against you, please contact GB, our experienced team will conduct a detailed study of your case and seek to remedy the situation in the most effective way according to your circumstances and needs.
For more information and a no-obligation consultation, please contact us.