SPANISH TAXES UPSET BRUSSELS

DISCRIMINATING AGAINST NON-RESIDENT EU CITIZENS BY TAXING THEM AT DIFFERENT RATES ON BOTH INCOME AND CAPITAL GAINS IS GETTING SPAIN INTO TROUBLE WITH BRUSSELS.

The European Commission has filed a complaint with the European Court of Justice accusing Spain of financial discrimination.

Non-residents pay a flat rate of 25 per cent income tax while residents pay on a salary-dependent progressive scale from 15 to 45 per cent.

A spokesman for the EC said, “The different treatment is especially significant in the case of taxpayers with relatively low incomes.”

Capital gains on real estate sales are taxed at 35 per cent for non-residents, while for residents there is a progressive scale if the property was held for less than a year and at a flat rate of 15 per cent if the time of ownership was greater than a year.

The EC said the Court of Justice has clearly established that offering different financial treatment to resident and non-resident EU citizens is ‘incompatible’ with the European Treaty.

“The difference in the tax treatment for residents and non-residents constitutes indirect discrimination on the grounds of nationality prohibited by the Treaty,” the spokesman said.

“The higher tax burden on non-residents may dissuade individuals from taking up employment or buying property in Spain while remaining resident for tax purposes in another member state. It also makes it less attractive for Spanish employers to recruit labour from other member states.”

The EC’s move to report the case to the Court of Justice comes after Spain failed to alter its tax structure after an official request in July 2005.

Original Source Costa Blanca News

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