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Following the directives of the European Union a New Royal Decree 235/2013 was approved on the 5th of April 2013, establishing the obligation to make available to the buyers or tenants of buildings a certificate setting out information on the energetic efficiency of a building in order to promote properties with high energy efficiency and also encourage energy saving investments. The obtention of this certificate which was already required for new buildings is now also requested in case of transfer or rental of an existing building.

What is the energy efficiency certificate?

The energy efficiency certificate is an official document drawn up by a competent technician (Architect, Technical Architect or engineer) that includes information on the energetic characteristics of a building or house and reference values such as minimum energy efficiency requirements.

Information to be included in the energy efficiency certificate.

The certificate must contain amongst others data of the property including catastral reference, procedure used to obtain the energy efficiency rating, regulations on energy efficiency savings applicable at the time of the construction of the building, its energy characteristics, tests, etc. For existing buildings it should have also recommendations to improve the energy efficiency.

Properties that must have an energy efficiency certificate.

a) New buildings.

b) Buildings or parts of buildings which are sold or rented to a new tenant, if a valid certificate is not available.

c) Buildings of more than 250 m2 occupied by a public authority and that are frequently visited by the public.

Exceptions: Properties that do not require an energy efficiency certificate.

It is not required to obtain an energy efficiency certificate in the following cases:

a) Buildings and Monuments officially protected.

b) Buildings used solely as places of worship and for religious activities.

c) Temporary buildings to be used for less than two years.

d) Industrial, defence or agriculture buildings.

e) Buildings with a surface of less than 50 m2.

f) Building purchased for major refurbishing works or demolition.

g) Residential buildings, that are used for less than four months a year, or for a limited time with an expected energy consumption of less than 25 percent of a normal annual use, providing the owner signs a declaration confirming this.

Who has to obtain the energy efficiency certificate?

The developer or owner of both new and existing buildings will be responsible for commissioning a technician to issue this certificate of the building or part of same and keep the relevant documentation. In case of apartments or properties in a building, one can obtain one certificate for the whole building or a certificate for various apartments and premises with the same energy characteristics. Premises that have an independent use not described in the building project must obtain a certificate when they start their activity. In case of an industrial activity no certificate is required. The energy efficiency certificate of the building must be submitted by the developer or owner in its case to the appropriate body of the Autonomous community for registration. Energy efficiency certificates will be made available to the authorities in case of inspection or for other requirements, either incorporated in the Book of the building or through the owner of the building, or president of the community who have to keep same.

Validity.

The energy certificate will be valid for ten years, and after this period it will have to be renewed. The obtention of this certificate grants the right to use an energy efficiency label to be included in any offer, promotion and sale or lease advertisement of the building or building unit. The public buildings or private property that is frequented by public generally must display this label.

Properties with zero energy consumption from 31/12/2020

Also the Royal Decree provides for that any constructions built from 31-12-2020 must be of almost zero energy consumption and in the case of public buildings, this requirement will be applicable two years before.

Body Control, Offences and Penalties.

The Autonomous Communities may carry out such inspections deemed necessary to verify the compliance with the requirement of the energy efficiency certificate.

The breach of the provisions of the Royal Decree will in any case be considered as an infringement of the regulations relating to obtention of energy efficiency certificate, but it may, however also constitute an offense in the consumers and users rights.

As far as the rules of the latter are concerned, penalties could be imposed on owners of properties for sale or rent with advertisements published which do not show the degree of energy efficiency of the property of up to 3,005.06 Euros assuming that these are considered minor offences. Anyway the regional goverments will be responsible to establish the fines.

Since when will the energy efficiency certificate be required?

The presentation to the buyers or tenants of the energy efficiency certificate for all or part of the building, as appropriate, will be required for the sale or rental of properties that are signed from next 1st of June 2013 onwards. Prior to this date, the Ministry of Industry, Energy and Tourism, will publicly make available software of energy efficiency rating for existing buildings, which will be applied throughout Spain and develop a formation and information plan for the affected sectors.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

The new legislation (law 7/2012) passed by the Spanish Government in October 2012 aimed to prevent tax fraud establishes a limitation of cash payments.

Amount of the limitation

No cash payments of 2.500 Euros or more can be effected in transactions when at least one of the parties involved is a company or professional. This means that the limitation does not apply to private transactions. Also this limitation of the use of cash goes up to 15.000 Euros when the payer is not a resident in Spain.

The law will also consider cash payments of more than 2.500 Euros, the different cash payments of less than 2.500 Euros used in a particular transaction with added together result in a payment of more than the said figure.

Implications

This has certain implications for everyone who is involved in transactions of more than 2.500 € or 15.000 € in the case of non residents, because they must keep proof of payments made for a period of five years to demonstrate that the payment was not made in cash. The parties will be required to present such proof of payment upon request by the Spanish Tax Office.

Exceptions

The limitation of cash payments is not applicable to payments and deposits made with financial institutions.

What is considered as cash payments?

The cash payments comprises paper money and coins in Euros or the equivalent in any other currency, bearer cheques in any currency and any other physical means, including electronic, designed to be used as payment in cash.

Fines

Anyone failing to comply with this limitation will face fines of 25% of the cash payment. Both parties involved in the transaction will be individually liable for any such breach, meaning that the Spanish Tax Authorities can act against any of them or against both.

There will be no fines for the party involved that reports the transaction in the term of 3 months to the Tax office with information as to amount and identity of the other party. However, if both parties report, only the first one will be fine exempt. If the parties report simultaneously they will both be subject to fines.

Statute of Limitation period

The statute of limitation period for the tax office to follow proceedings against the parties to put a fine will elapse after 5 years since the transaction took place and the payment was effected.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

The Spanish government has passed new legislation to prevent tax fraud whereby amongst other provisions any person, residing in Spain, who owns assets and rights located abroad on the 31st of December 2012 (bank accounts, values, real estate, insurance, etcetera) must present an informative tax declaration and give detailed information about these assets to the Spanish tax office. The Spanish residents have to fulfil this new obligation for the first time for the fiscal exercise 2012 in 2013. In case of non-fulfilment, the fines and consequences could be very serious.

What information has to be provided to the tax office?

The information to be provided to the tax officer refers to three different groups of assets and rights, located abroad, if the value of the assets belonging to each group exceeds jointly the amount of 50.000 euros.

1) Accounts in financial institutions, i.e. current accounts, saving accounts, fixed term deposits, etc. These must be identified completely, indicating also the opening and closing date, the balance on the 31st of December and the average balance of the last three-month period.

2) Values, rights, insurances and income owned or received abroad. Detailed information of such assets or rights has to be given, and especially the balance or value as of the 31st of December.

3) Real estate and rights on real estate. Information as to the: type, situation (country, city, street and number) and date and acquisition value has to be provided.

This information will include assets owned at any time of the year, even if they have been transferred before 31/12/2012.

Who has to present the tax declaration?

Any resident company or individual who owns assets abroad, or is the ultimate beneficiary even though they maybe registered in the name of someone else, i.e. a trustee has to present the declaration.

With regards to the first group of assets, i.e. accounts, etc, information will also have to be provided by any representatives, authorised persons or anyone who has power of attorney to operate and dispose of the money in the accounts.

No declaration has to be made with regards to assets which have been clearly identified in official accounts with detailed information of the Spanish resident owner (representative, beneficiary, etc), company or individual.

How can I lodge the assessment?

The assessment must be made solely online providing the tax payer has a digital certificate granted by the Revenue or does it through a representative who has such certificate.

When is the deadline to present the tax declaration?

The tax declaration hast to be presented exceptionally this year between the 1st of February and 30th of April 2013. In future years the declaration will have to be presented between 1st of January and 31st of March of each year.

Is this an annual tax declaration?

If the informative declaration has been presented one year, for the assets and rights of one group (because they exceed 50.000€), the Spanish resident will ONLY have to present the declaration in the following years, if there has been an increase of more than 20.000€ in relation to the declared value in the former declaration.

What are the consequences if the tax payer affected does not regularise now?

There will be serious sanctions and fines if the Spanish tax payer does not comply with this obligation, i.e. not presenting the declaration or presenting it incomplete, inexact or with false data, is a very serious infraction, which will be sanctioned with a fine of 5.000 Euros for each data or group of data omitted, with a minimum of 10.000 Euros. Moreover, if some assets or rights, located abroad, are not declared, and are later discovered by the Spanish Inland Revenue, they will be considered as capital gains in the last exercise where the statutory limitation period has not elapsed yet. Therefore the tax office can always enforce payment of tax for non declared assets with no statute of limitation.

Conclusion

It is very important that the persons, resident in Spain for tax purposes present the tax declaration about assets and rights, located abroad because, the consequences can be very serious and burdensome. Also the exchange of information and the assistance in matters of collection, mainly in the European Union, but also with the United States and other countries like Switzerland is working very efficiently and better each time and the Spanish tax office will have more capacity to investigate the ownership of assets in other countries.

The tax declaration in any case will provide information to the tax office as to the assets and income to be declared in the wealth and income tax declaration to be presented in June each year and will help to control the existence of fraud.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

The Spanish government has passed a Regulation mainly aimed at clearing the accumulation of real estate properties repossessed by banks which declares exempt from CGT 50% of the gains from the future sale of Real Estate Property which may be acquired from the 12.05 till the 31.12.2012.

This decision will certainly push those potential purchasers who may be discerning on purchasing property in Spain to finally carry out their investments. Although the main decision factor that a purchaser will bear in mind when purchasing a property will be to enjoy same and experience the culture and way of living in this unique part of the world, the 50% exemption on Capital Gains Tax when they sell the property gives an added value to his investment.

The circumstances could not be better for those thinking about purchasing a property in Spain: property prices are at possibly the lowest level since the last recession, therefore the perspective to have a good return in the investment after enjoying the property for a few years is more than real and in addition 50% of the Capital Gains Tax exempted.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

What are the taxes affected?

Income Tax for both residents and non residents in Spain and the Corporate Tax for the exercises 2007-2010. No mention is made to VAT, Wealth Tax which was reinstated by the government for the 2011 Fiscal year or to the Gift and Death Duty Tax. The wealth tax was suspended from the 2008 fiscal year, however the 2007 and 2011 fiscal years are still open to possible tax inspection. Therefore if the assets were owned by the tax payer in 2007 and or 2011, even though they may accept to regularise under the new Regulation they would have to make a complementary Wealth Tax Assessment for 2007 and present the tax declaration for 2011. Similar approach should be taken by owners of assets acquired by way of gift or inheritance in the years 2007-2010.

What conditions must be met to obtain the benefit of the new Regulation?

The Tax payer must proof ownership of the assets before the closing of the last fiscal year, whose tax return had to be presented before the Regulation became into force, generally 31.12.2010. Proof of the ownership of assets before such time must be provided to the Revenue in addition to the regularisation assessment and can take place by any legal mean accepted.

As far as cash is concerned the order foresees that proof of the ownership is achieved making a statement that the tax payer was the owner of same before 31.12.2010 in the assessment providing the cash is deposited prior to lodging the assessment in a bank account in Spain or in a country of the UE or a country belonging to the European Economical Area (EEA) with which Spain has signed a double convention agreement with a clause for exchange of information or simply an exchange of information agreement, unless they are considered of high risk, faulty or non cooperative by the financial Action Task Force in money laundering (FATF).

The tax payer which is under tax inspection proceedings initiated by the Spanish Revenue before the new Regulation came into force (31.3.2012) cannot take advantage of the extraordinary tax regularisation for the taxes and fiscal exercises affected by the regularisation.

What assets are excluded from the extraordinary regularisation?

The assets or rights acquired by the tax payer before 2007, since the statute of limitation for the Revenue to enforce payment of the taxes subject of the regularisation has expired.

What is the tax rate and on which amount it must be calculated?

The tax payer must pay 10% on the value of acquisition of the said assets irrespective of what the value these assets might be worth now.

As far as bank accounts, the tax is worked out on the balance showing at 31.12.2010 and for the cash on the amount deposited in a bank account prior to the assessment.

When is the deadline to obtain the benefit of the regularisation?

The deadline will be the 30th November, 2012.

How can I lodge the assessment?

The assessment and any information to be supplied to complement this as for example the documentation proving ownership of the assets must be made solely online providing the tax payer has a digital certificate granted by the Revenue or does it through a representative who has such certificate.

What are the consequences if tax payer affected does not regularise now?

Some sources have commented that the government will intensify the fight against tax defaulters upon the elapse of the said deadline. In fact, the new draft Law on Measures to Fight the Tax Fraud provides for the obligation for all taxpayers to give information on accounts and securities situated abroad which belong to them or they are beneficiaries or authorised persons thereto. Included are all types of titles, assets, accounts in financial institutions and securities or life insurance. The non furnishing of a data or group of data in respect of the accounts and security abroad can result in a fine of 5.000 Euros for data or group of data with a minimum of 10.000 Euros. In addition to this, there will be no statute of limitation for the authorities to enforce payment of the tax on the income produced by the accounts or securities abroad.

In addition to this, the government is working on a modification of the Criminal Code which contemplates a new type of aggravated tax fraud when the amount defrauded exceeds 600.000 Euros or it is generated in a criminal organisation or using companies, businesses or places which hides or makes difficult the identification of the tax payer or the defrauded amount. The penalties are increased for Tax Fraud from 1-6 years now to 2-6 years and the statute of limitation to pursue Tax Fraud is increased from 5 to 10 years since the Fraud was committed.

Polemical decision

Widespread criticism has been received by the new Regulation as it prejudices the normal tax payer who has paid tax each year at the corresponding rate in respect of the defaulter who can now receive the benefit of the regularisation for any assets acquired in the fiscal years still open to tax inspection (2007-2010) at a reduced cost.

The regularisation will exonerate the tax payer who receives the benefit of same from the Tax Fraud crime as this is already foreseen in the Spanish Criminal Code. However, this does not exclude responsibilities from other type of crimes or money laundering should the money comes from other crimes different than Tax Fraud. Especially there will be consequences from money laundering in case the origin of the regularised assets cannot be properly proved.

Although the decision is polemical it will be an opportunity for those who find themselves captive with hidden assets and with a permanent threat that the Revenue falls on them with a huge tax bill to release them from the said situation. On the other hand from the government view point it will allow an extraordinary income and the possibility to count with new assets within the system which may be used for business or ordinary expenditure and which not only will help improve the depressed economy but also contribute, if new income is generated with it, to the payment of further taxes.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

The Decree foresees three type of cases: isolated properties, settlements of properties which demand public services and Rural settlements which also demands certain services.

The isolated properties are divided into different categories for the recognition of their status:

A) Properties which are in compliance with existing planning.

Legal properties built with a licence need doing nothing. There are also properties which can be legalised which are those which were built without a licence or with one but having contravened its provisions which are in compliance with the existing territorial or local planning. These could be legalised providing a building licence is applied for even though the statute of limitation for the authorities to reinstate the legal order has expired. Once the licence is obtained the owner could apply for the Occupation Licence. This licence, which in the past would only serve to contract the services and supplies, has become the closing document to certify that the property is fully legal. The Occupation Licence means that the property has been built in accordance with the project for which the building licence was granted. If these properties did not count with a Deed for the Building, this can be taken out and registered in the Land Registry.

B) Properties which do not comply with the existing planning.

These are vaious cases:

B.1. Properties built with a licence in compliance with the planning at the time it was granted but not now. They are considered as Out of Planning. This means that the owner can only carry out maintenance works to keep same safe and in healthy and inhabitable condition but cannot carry out any improvements works.

A first occupation licence could be obtained providing the existing use is compatible with the planning. A deed for the building can also be taken out.

B.2. Properties which have been completed and for which the statute of limitation to reinstate the legal order has expired. They can be recognised as Assimilated to Out of Planning.

At present a property built illegally in rural land not specially protected cannot be demolished or sanctioned if the authorities have not carried out any measures to protect and reinstate the legal order within four years from its completion.

In the resolution recognising them as Assimilated to Out of Planning, the possibility that the services and supplies can be connected to these properties can be granted if those were accessible and they do not lead to the erection of more buildings in the area.

These properties cannot obtain the Occupation Licence and a Deed for the building with the said status can be registered in the Land Registry.

B.3. Properties that has been built in specially protected areas, public areas or which are in areas prone to natural risks.

These properties cannot be recognised as Assimilated to Out of Planning, except if they had been built prior to the declaration of special protection to the area involved and the statute of limitation to reinstate the legal order had expired before declaring the area of special protection.

For these properties the Authorities should adopt the necessary measures to protect and reinstate the legal order.

B.4. Properties for which the statute of limitation to reinstate and protect the legal order has not expired.

The Authorities must adopt the necessary measures to protect and reinstate the legal order.

How can one obtain the recognition of Assimilated Out of Planning Statute?

The Local Council can initiate the procedure or the owner. In this latter case, the owner must submit an application with a plan and the registration number of the property and proof of the date the property was completed by way of Certificate issued by Council, Architect or the Rates Office (Catastro), proof that the property is qualified for the use to be given as inhabitable place and description of the necessary works to furnish the property with the basic services in an autonomous and sustainable way or if possible by connection to nearby infrastructure networks.

The local council will verify that all requirements are met specially that the property has been completed and it is not subject to proceedings aimed to reinstate the legal order. The Council may demand the owner the carrying out of the necessary works to connect the property to the basic services. To this effect will give the owner the term in which he must present a project for such works. The owners will have to subscribe in a public document an undertaking to execute the said works, which will enable them to obtain the recognition of their property as Assimilated to Out of Planning. This resolution will identify the property, will recognise the property for the use it was built. It will recognise that the statute of limitation to reinstate the legal order has elapsed, will specify the works that can be authorised in the property and the basic services the property can count and the conditions of the supplies. The lapse of six months without an answer from the Council will mean that the status of Assimilated Out of Planning has been denied. If there is an express resolution denying such status it has to express the reasons and will warn the owner that the property cannot be used. The Local Council will in this case adopt whatever measures are necessary to reinstate and protect the legal order.

With regard to the Urban settlements and Rural Settlements the Decree refers to the Town Plan which should identify them and set out the conditions and procedure for their legalisation, providing the owners face the costs of the basic infrastructure and urbanisation.

Which are the advantages of the Decree?

In our opinion it will serve to identify, clarify the status and give a way out to properties which were built illegally in the country side with the possibility that these property can count with the basic services. This will certainly help the transaction of this type of properties although they will continue suffering the restriction from banks to give mortgages to the purchaser of these properties.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.

The tax office is remitting by recorded delivery service to all owners the new ratable value of property in Marbella. There is one month to file a complaint before the Tax Office or the Economical-administrative Court of Andalucía.

23 years have elapsed since the last revision of the ratable value of property in Marbella which has put to light a clear difference between the market and the ratable value of properties. In accordance with the report of the revision, the ratable value approximately represents now 20% of the market value of properties. Furthermore, the Local Council of Marbella has approved a new Town Plan in 2010 which modifies the zoning of land therefore is demanding that the ratable value of this is adapted to reflect such modifications. These are sufficient reasons to revise the ratable values of property but this has arrived in a bad time when most citizens are hit by the recession and find themselves fighting to pay their debts and their economies cannot stretch anymore.

The ratable value is used to calculate a number of taxes such as the Rates (IBI), the Income Tax relating to the ownership of real estate property not used for commercial or professional purposes or as home, the Non Resident Income Tax, the Plusvalia Tax. It furthermore serves to check the value of real estate for death duty, gift tax and transfer tax.

In the cases we have professionally acted we have detected differences in the land surface, land attributed to persons who are not owners of same, land attributed to one owner when is communal ground shared by a group of owners, valuation of properties which exceeds more than 50% of the market value which in accordance with the report of the revision is the limit set for the revision of the ratable value. This latter case is going to appear in a big number of cases due to the financial recession and the drop in property value. All these reasons would be enough grounds to support an appeal.

¿Can the citizens with their battered economies let the ratable value go unchecked? In a serious and responsible exercise taking into consideration their own personal assets they should carefully check out that the ratable value has been correctly assessed. It is true that the service received is full of references, coefficients and data difficult to understand or which one has to resort to vast and complex legal and technical documentation and regulations to do so. However, there are professionals that have studied and have become acquainted with such legislation and documentation and who can do such work for an economical fee which, in case of reduction of the value, might as well be paid with one year on tax savings.

Checking the ratable value is crucial as same will be the base for the above mentioned taxes for the next decades until a further revision takes place.

In some cases property values will rise by up to five times! Some property owners naively think they can protest at the town hall when their taxes come due. Nothing could be further from the truth. This tax is regulated by the national government and the only way to contest new property values is at the proper agencies and within one month of receiving notification. Other property owners will ask for a reduction of local property tax rates to the Local Council – and this might help – but only for one tax, the IBI. The key is to be sure the property value itself has been impeccably calculated so that all the taxes that depend on it will be fairly figured. Once again, there is just one month to file complaints, and then everything is set in stone.

Therefore, our recommendation as law professionals is not to complaint and do nothing which might have a negative bearing in the tax burden for the coming years but it is worthwhile using a professional adviser to check that the new value has been correctly assessed. If this is not the case, he will advise you to lodge an appeal in the corresponding office to put the value right. If there is an error, you can get it fixed and save yourself money in the future. If everything is right, at least your conscience will rest easy knowing you did everything you could.

Please note the information provided in this article is of general knowledge only and is not to be construed or intended as substitute for professional legal advice.