Editorial: One of the most confusing and frightening tax rules here is the one concerning the declaration of all major assets abroad, known as the Modelo 720.
Can such a thing be possible, is it aimed at squeezing the (unrepresented) foreigners and will it end up with massive tax claims or fines? The Modelo 720 has even caused some foreigners to sell up and leave Spain, either to return ‘home’ or to try Portugal, which has several schemes to attract foreign home-makers. But some tax-assessors, financial advisors and others have lodged complaints in Brussels, where the cold light of Law is slowly being focused on Spain. An excerpt from On The Pulse (March this year):‘The obligation to declare all assets abroad valued at 50,000€ or more has not only caused many residents, particularly foreign residents in Spain, a lot of hassle and untold stress, it has also resulted in heavy fines for others, and even caused some foreigners to return home in defiance of the law that was introduced at the end of 2012. Now, however, the 720 Model, has been labelled as “illegal” by the European Commission in Brussels, due to the fact that it “infringes Community rights”, and the sanctions applied for failing to comply have been regarded as “disproportionate” when compared to similar sanctions in other cases. For this reason, the EU will now go ahead and open a judicial case against Spain for this act that it sees as breaking the law...’. Any update yet? Nothing so far... …... Housing: ‘Residential real estate prices are rising in Spain at their fastest pace in six years, according to Spain’s Ministry of Development. The strengthening housing market is partly the result of more mortgage lending. The number of home loans issued rose 19.7% in March compared with the same month in 2014, according to Spain's National Institute of Statistics. The average price per square meter rose 5.9% in the first quarter of 2015 compared with the same period a year ago, according to the Ministry of Development. In Madrid's luxury market, prices were up 4.9% in the first quarter compared with a year earlier, according to Knight Frank's Prime Global Cities Index...’. From Mansion Global (expensive homes). Following a ruling by the Supreme Court, Spain is to reform the law that deals with taxes on urban land, where the IBI paid hitherto on undeveloped urban land will now be annulled. This should be a useful saving for those with empty lots or untouched urban land. The IBI will now only be charged as ‘urban’ once a ‘plan parcial’ or basic infrastructure is installed. The rule comes in on November 1st. Story at Levante. ‘Spanish Senate, Wednesday 24 June: A compromise text presented by the Partido Popular to an amendment proposed by the Socialist Group was agreed. Some 100 people came from Cantabria, Almería, Málaga and Valencia to the Senate on June 24th to call for justice. When this initiative becomes law, the houses of innocent families cannot be demolished without prior compensation when planning permission is revoked, as happened to the Priors for whom this change, sadly, comes too late. This new amendment is in addition to the one that took place in March of this year when, via the same procedure, the Senate approved another initiative of the associations to modify the Criminal Code to ensure prior compensation to purchasers in good faith whose properties were at risk via the criminal courts’ (AUAN report). Spanish News Today also covers the story here. A quote from Helen Prior, present at the Senate vote: “I'm chuffed to monkeys. I could not stand the idea of anyone else going through what we went through; knowing that we did everything right and yet still lost our home through no fault of our own.” A brave woman. The average Spanish home, apparently, costs 200,000€ to buy. Story here. Builders in the tourist industry on the Costa del Sol now incline towards residential tourism: building homes over hotels. They have the support of the mayors of Marbella and Benhavís. ‘...Better regulation of private holiday rentals could increase Government revenues by 800 million euro, finds a new study sponsored by EXCELTUR (The Alliance for Excellence in Tourism, a non-profit trade organisation), and prepared by consultants EY (formerly Ernst & Young) and the law firm Tourism & Law...’. See Mark Stüklin’s Spanish Property Insight. Ten things to consider before buying a retirement property abroad, from The Express. …... Tourism: ‘...As a result of incidents occurring in France, Tunisia and Kuwait, Spain has now increased the security threat to level 4. There are 5 levels of alert. This will mean heightened security checks in all public areas, such as airports, ports and main roads, and an increase in patrols and road blocks. Level 4 puts state security on a higher alert and also includes activities by the military to be prepared for potential calls to assist, whilst increasing their own security...’. From Spanish Vida here. Slightly missing the point, The Express weighs in: ‘How safe is your holiday destination? Map of tourist hotspots with terror threat levels. SPAIN is among a host of tourist destinations listed as at HIGH RISK of a terror attack as fears rise of a copycat to the Tunisian terror strike’. ‘Spanish air traffic controllers have called partial strikes over two weekends in July - threatening to disrupt some of the busiest travel days for holidaymakers. The strikes have been called for July 11th, 12th, 25th and 26th Spain’s air traffic controller union, La Unión Sindical de Controladores Aéreos (USCA) has said...’. From The Local. ‘Private home rentals have surpassed the number of hotel beds on offer in Spain for the first time, thanks to popular online services such as Airbnb, a study published by Spanish tourism sector body Exceltur showed. Airbnb and other similar sites listed a total of 2.7 million beds in Spain at the end of 2014, compared to 2.4 million beds available at hotels and other traditional regulated lodgings, according to the study carried out by audit firm EY for the association...’. From The Local. With Barcelona hosting five times as many visitors as 20 years ago, there is a feeling among some locals that the financial benefits are not worth the hassle... Story at The Guardian. …... Finance: ‘The President of Spain wants to "reassure" Spaniards in a turbulent day while all eyes are on Greece hoping for it to agree to a deal with Europe. ... Instability in the euro-zone, "is not conducive" to anyone, government sources admit, but Mariano Rajoy ruled out any possible contagion and said that Spain took in its day the correct decisions, although "difficult, hard and uncomfortable", he admitted, they were necessary to "end up leading the country to growth and better employment." "People see what is happening in Greece, where citizens cannot get their money from the banks. Fortunately, in Spain this will not happen, because Spain is a serious country and has had a serious government”, he declared...’. From Ideal. According to the Corporate Reputation Business Monitor, the ‘Chairman of Mercadona supermarket chain Juan Roig is ranked top for the best corporate reputation in Spain ... He is followed by Europe's richest man and founder of the Inditex clothing empire, Amancio Ortega, with the latter's current chairman Pablo Isla third...’. More with Think Spain. The richest towns per inhabitant in Spain: Madrid’s Pozuelo de Alarcón, Las Rozas and Majadahonda (descending from 54,000 to 44,000€ per household) and a low unemployment rate of around 12%. The poorest is Torrevieja (Alicante) with an average annual household income of just 7,985€. The highest unemployment is Spain is (apparently) suffered in two Cádiz towns - Sanlúcar de Barrameda (49.6%) and La Línea de la Concepción (46.6%). These 2014 figures, supplied by the INE, are reported in El País. Journalists are reading the ‘Blesa emails’, some 8,000 emails sent and received by the disgraced banker Miguel Blesa (here) when head of the Caja Madrid (2000 to 2009). Some of the major banks, for example, wanted to ‘lighten’ the Bank of Spain’s rules being drawn up at the time (2004) to prepare a fund against possible bank failures. One bank, apparently, even threatened moving its head office to Portugal over the proposal. Exposé here. Since the photovoltaic industry is in the doldrums in Spain, what better time for foreign vulture funds to swoop in and start buying up – at heavy discounts – discarded solar energy plants indebted to the banks? The story is at La Vanguardia. …... Politics: After nothing much happening in the Cabinet Reshuffle last week, Mariano Rajoy suddenly pulled a surprise by removing the Minister for Culture, Sports and Tourism, the unpopular José Ignacio Wert, and promoting to his place Íñigo Méndez de Vigo. Story here. Isabel García Tejerina, the Minister for Agriculture and the Environment, raised a few eyebrows on Monday when she said that ‘every Spaniard owes a debt to Mariano Rajoy’ for managing to avoid a situation similar to that suffered by Greece. ‘By the way’, said the Minister referring to the upcoming Greek referendum, ‘the ballot box can be a dangerous place’. El Mundo has its fun here. The ‘Citizen Safety Laws’ came into effect on Wednesday. Spain now has a number of new rules which are in place to either make us safer or, perhaps, better controlled. The fines are frightening if you get caught doing something improper... El País in English explains here. The spokesperson for Ciudadanos in the Valencian regional government is Carolina Punset, who recently criticised the promotion of valenciano saying (and we feel for her as we must pretend to disagree) that a good education must ‘not abandon a universal language to concentrate on a minority one, since, while perhaps charming, it won’t help one find a job’. She added, ‘indeed, where the linguistic immersion is complete, society has returned to village-life’. She has a point perhaps? Story and video at El País. The hard-liners in the Partido Popular are gathering behind the erstwhile President José María Aznar in their criticism of Mariano Rajoy, whose popularity with PP supporters is falling. Story at El País. The insistence by Aznar of returning to the ‘old ways’ clashes with the PP’s attempts at ‘renewal’. Article at El Diario. ‘Dark clouds are lowering over Europe's economic future, as three distinct tempests gather: the Greek crisis, Russia's incursion in Ukraine and the rise of populist political parties. Though each poses a considerable threat, Europe, aided by the recent cyclical pickup, is in a position to address them individually, without risking more than a temporary set of disruptions. Should they converge into a kind of "perfect storm," however, a return to sunny days will become extremely difficult to foresee any time soon...’. From The World Post. …... Corruption: The Valencian ex-banker and politician José Luis Oliva was arrested earlier this week together with eight others as part of the ‘Operación Coral’ investigation centring on unlawful activities connected with BanCaja and the Banco de Valencia. Oliva was president of the Valencian Community in 2002 and 2003, as well as president of the two banks. Europa Press has the story here. El Pais in English asks ‘Why Valencia is paying the high price of rampant political corruption. An estimated €12.5 billion has been plundered from the region’s public coffers. So why do voters keep supporting the same politicians at the polls?’ Story here. …... Brexit: The Telegraph: ‘Emigration: Why British expats have nothing to fear from Brexit. Despite warnings and fears, Britons living elsewhere in the EU would be largely unaffected if their home country left the union’. Story here. (Thanks John) …... Courts ‘Gibraltar Chief Minister awarded £30,000 damages in Manos Limpias libel case. Picardo took action against the group and its leader Miguel Bernad Remón after he described him in ‘scandalous and false’ terms in front of the European Commission in 2013’. More on this story at The Olive Press. ‘Remón is a lawyer and an ex ultra right-wing politician’, says Wiki here, adding that ‘the group is best known for its continuous law-suits’. …... Various: You know how some of those tourist videos are made to stretch the truth a tiny bit – with lots of smiles, gambas and beauties scampering about on the beach? So: Welcome to the Real Spain. This is a video and part of a website made by indignados evidently working in ‘marketing’. They say: ‘We are a group of creative people specialized in advertising. We are tired of seeing how a few people live a wealthy life at the expense of many others who live in subhuman conditions. Behind this action there is neither client nor agency. All the action has been financed by ourselves so we are not conditioned by any external interest. The collaboration of some photography and advertising professionals made this possible. We are not related to any political ideology or party. We are neither on the right nor on the left. We just see that the top of the pyramid is taking advantage of most of the people below them and … we cannot stand that...’. Their page here. A new batch of cables poached by Wikileaks has surfaced which show that Saudi Arabia has big plans for the islamization of Al Andalus (or Spain, as we call it). Believe it or not, but there’s plenty to read at Público here. The AVE (la línea de alta velocidad) is Spain’s most ambitious project. Built, initially in 1992, with the Seville to Madrid and later to Barcelona lines, the whole shebang has cost Spain, so far, 50,000 million euros. One section that has progressed slowly is the Almería to Murcia chunk, with some 500 million spent on about a third of the 137km distance between the two cities. Work has not progressed since a Government-ordered stoppage back in 2011. It was nice to see Pablo Iglesias (Podemos) mentioned on the Government-run TVE news as he, together with some of his associates and Ada Colau (the new mayor of Barcelona) were stuck for half an hour in a lift and Pablo sent out a humourous ‘Tweet’. The National TV reported the incident on what must have been a slow news day (Greece, terrorists in Tunisia, gay marriage in the USA etc...), complaining about a spelling mistake in the missive. Yep! ‘The boy with the first case of diphtheria in Spain for 28 years has died, Catalan regional health authorities have told The Spain Report. The boy had not been vaccinated against the disease, which his parents now attribute to being “tricked” by anti-vaccination groups. And the bad news doesn't stop there. Already eight other Spanish children have been found to be carrying the Corynebacterium diptheriae bacteria that causes diphtheria. Fortunately, all these children had been vaccinated, and consequently have not developed the disease, but the danger of other unvaccinated children becoming exposed remains high...’. Found at IFL Science. The European Union will permit the copying and publication of ‘fragments of text’ from newspapers and magazines. Ruling coming up on July 9th. No ‘Google Tax’. Story here. A useful site for information: The Citizens Advice Bureau Spain here. ‘Thanks to its bloody history, Spain has the highest proportion of elevators in the world’. An interesting study about home-ownership, rentals... and elevators. At Quartz, here. …... See Spain The story of saffron (azafrán) here. ‘If the world knows one thing about eating in Spain, it’s tapas. But what exactly are tapas? If you ask ten Spaniards that question you will undoubtedly get ten different answers. Some tapas are plate-sized, some are bite-sized. Some are hot, some are cold. Some are free, some aren’t. Some come atop bread or on a skewer or in a clay pot… But one thing is always true: Spain wouldn’t be Spain without tapas...’. Found at Spanish Sabores. The 'b' and the 'v' issue in Spain: In Roman times it was said that Spaniards were lucky because they pronounced ‘living’ the same way as ‘drinking’ - 'Beati hispani quibus vivere est bibere'. In Spain, there are over 2,000 castles. Here are fifteen of the most impressive; to take you back to the Middle Ages. Photos here. …... Greece's Gamble by Andrew Brociner The chips are now all in, the game has gone on long into the night and the players have called for Greece to put its cards on the table. A defiant Greece staked everything on this game: it tried to get further funds while making few concessions; it wanted a debt write-off; and it gambled that its creditors would back down, not wanting to lose their loans. And the stakes were high indeed: if it didn't go through, it could mean the end of the game in terms of participation in the euro-zone. It would mean a return to the drachma. It would then mean a period of depreciation and high inflation. It would mean further credit on the capital markets would be difficult, since after defaulting on their loans, it would have lost credibility. Therefore, the interest rate would have to soar. And the Greeks, after having had to endure hardships, would have to deal with even more. The others at the table have now made their moves. The ECB said no to further liquidity to Greek banks, as it cannot lend to insolvent banks. The creditors have said no to further negotiations now that the Greek government has called a poll after the loan deadline. And the IMF can only say no as Greece has defaulted on its loans. The Troika has made a concerted move and now Greece has to show its hand. But the government has also staked its own future on the line and is now going to the Greek people for a poll on whether they should accept the bailout conditions. They want the Greeks to vote no. It wants to make it clear that it is about the conditions and not the participation in the euro-zone. But the creditors want the prime minister to leave the table and so are labelling the poll not as austerity, but as an exit from the euro-zone and want the Greeks to vote to stay in with a yes and to deal with a different player after that. There was a logic to the Greek demands: the government was voted in on an anti-austerity programme and it could not return to its electorate acquiescing to the sharks with further austerity measures. As we have seen in a previous issue, austerity might reduce the debt, but at the high price of contracting the economy and causing suffering to its people. It was something the radical left-wing Syriza government was clearly going to take a stand on. Greece has no money left and desperately needs further funding. The Greek government is now backing down and willing to concede to most of the conditions of its creditors. It, in the end, did not get its way. And, what is more, if the poll does not go its way, it will probably not last very long after that either. So, the Greek government gambled everything and so far it has obtained nothing. But there remains a last minute negotiating possibility, as it seems to have backed down. And then there are the polls, so we will know the outcome only after that. ...... ‘Spain's Prime Minister Mariano Rajoy said on Tuesday a Greek exit from the euro could send a message that the common currency union is reversible and open up the possibility that other countries might follow suit...’. From Reuters. ...... Finally: Salma Hayek sings ‘Siente Mi Amor’. A pretty song from the Mexican star. …...
Business Over Tapas
A digest of this week's Spanish financial, political and social news aimed primarily at Foreign Property Owners:
with Lenox Napier and Andrew Brociner
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