Costa del tax changes

KEY POINTSCapital gains tax rate equalised for non-residents and residents.Corporation  tax reduced.Effect of using a Spanish property holding company.Offshore companies owning Spanish property may face greater scrutiny.

THE SPANISH PARLIAMENT has recently passed two very important Acts affecting the holiday homes tax regime from different angles:

• Ley 35/2006 28 November 2006. Income Tax Act (LIRPF) and amendments to Corporation Tax Act (IS) Non Residents Income Tax Act (LIRNR) and Wealth Tax Act (IP)
• Ley 36/2006 29 November 2006. Tax anti-avoidance measures and transfer pricing regulations.

The Acts introduce some important changes impacting particularly the current tax status for holiday homes for the tax years starting 1 January 2007 and in broader terms the Income Tax and Corporation Tax Acts both for residents and non-residents. The definition of tax residence for foreign companies and a new definition of tax haven jurisdiction have...