Obligation to autoliquidate/submit for the overcome loss of tax benefits

Complementary Settlement

Our English-speaking Lawyers in Marbella inform their clients that there is an obligation to make a Complementary Settlement (self-assessment) when there is a sudden loss of tax benefits from which the client initially benefited.

When there is a breach of the requirements demanded in the regulation of the benefits, it determines the obligation to pay the part of the tax that would have ceased to be paid as a result of the application of the tax benefit, by presenting a complementary settlement/ supplementary tax (“Liquidación complementaria” in Spanish).

As an example, suppose that in 2018 a person buys a second-hand property applying the reduced rate of 3.5% on transfer tax for acquiring a property considered as “habitual dwelling”, and at that time it met all the requirements to apply tax benefits.

Our team of specialist Tax Lawyers in Marbella will calculate all the expenses and taxes involved at the time of buying a property in Spain.

But the following year, that is in the year 2,019 that person sells the property to buy another one.

It should be taken into account that the Spanish tax authorities consider:

In order to be “habitual dwelling” the following requirements must be met

That it constitutes the residence of the taxpayer for a continuous term of at least three years. However, it will be understood that the dwelling had the habitual character, when, in spite of not having elapsed said period, the death of the taxpayer occurs or other circumstances that necessarily require the change of address, such as celebration of marriage, separation marriage, labour move, obtaining first job or change of employment or other justified analogues.

That the taxpayer inhabits it effectively and permanently, within a period not exceeding twelve months, counted from the date of acquisition or completion of the works. However, it will be understood that the acquired dwelling does not lose the usual character, when the circumstances established in the Tax Regulation occur.

Thus, if the house is sold before those three years have elapsed, then the house loses the condition of “habitual dwelling” and therefore the person who bought it in the year 2018, will have to submit a self-assessment (I mean, the tax payer must voluntarily submit another tax) for the corresponding quota that did not apply when applying the reduced rate and not the general one.

Do not hesitate to contact our law firm in Marbella if you have any questions regarding the Andalusian transfer tax and stamp duty or at the time of buying a property.

Our team of Tax Lawyers in Marbella will be happy to advise you and carry out all the relevant procedures of the purchase.