When Alan Roy and his wife Margaret decided to challenge the Spanish authorities with regard to the 35% tax deducted from the capital gain made on their holiday home, even they could not have guessed the repercussions of their action. After making a €10,000 profit on their property they were charged 35% capital gains tax by the Spanish government which deemed them to be non-resident, against a 15% charge for Spanish residents. The Spanish authorities have upheld their claim and they will soon receive a 20% rebate, however the repercussions are more widespread.

It is estimated that up to 10,000 Britons with holiday homes in Spain could be in line for more than £140 million in compensation for capital gains tax overcharges which amounts to around £18,000 per property when taking into account interest at 6%. This is a directory percussion of the European Union regulations and the freedom of movement which is afforded to EU residents. However the £140 million rebate is a significant blow to the Spanish authorities in these troubled times.

Slowly but surely the whole issue of European tax regulation is unravelling with each and every country in Europe charging different rates for different people for different situations. Many people believe we are moving inevitably towards a European state.

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