If you find yourself in this situation, it is important not to ignore the issue as it will not go away on its own and if you leave it too long it may become too late to salvage.
Unfortunately, ‘foreign debt’, no matter how old or how it arose can follow you back home. UK nationals who have arrears on their Spanish mortgage can be pursued in the UK through EU cross-border cooperation directives and also through funders who have bought the debts of lenders to pursue themselves.
We can help you if you need someone to advise you on negotiations with a Spanish bank or mortgage lender regarding financial or legal issues. We have acted for many English nationals who have found themselves in a similar situation to you. We are experienced in negotiating with Spanish mortgage lenders to achieve the best solution for you. We work from both UK and Spanish locations.
Unable to pay your mortgage on your Spanish property through no fault of your own?
A decline in the value of property in Spain since the height of the market pre-2008 has caused many people to find they are in negative equity, when the value of the mortgage they have is higher than its current market value of their property.
This can leave people feeling they are in a desperate position, as even if they sell their property, they will be left with a debt to repay. The alternative is to continue mortgage payments for a property whose value may continue to decline and never return to the price they paid at the outset.
We have advised foreign owners of Spanish property for many years and have good connections with mortgage lenders and banks. Contact us to see if we can find a solution to your negative equity problem.
If you own a property in Spain and fall behind on your mortgage payments, as in the UK, your mortgage lender can begin the repossession process. Then they can sell the property at auction to cover the mortgage arrears. Unfortunately, properties sold at auction often do not achieve full market price, or even if they do, depending on whether you are in negative equity or not you may still have a debt to repay.
If you find yourself in this situation, we can:
Unfortunately, when the property crash of 2008 hit, many Spanish property developers went out of business despite taking deposits for properties that were never built and/or completed. This resulted in many unwitting people losing a sizeable amount of money and not knowing how to recover their lost property deposit.
Legislation passed by the Spanish Supreme Court has created an opportunity to reclaim these lost deposits and pursue the Spanish Banks for the deposit amount plus interest. We can help you make a legal claim against the bank to recover your deposit money.
Spanish Floor Clauses to calculate the interest due were incorporated by some banks into mortgage agreements and set a minimum interest rate to be paid in monthly instalments, irrespective of the market interest rates. These Floor Clauses enabled the banks to guarantee minimum payments, even if the Euribor (European benchmark interest rate) fell below this minimum interest rate.
However, in 2016 the European Union Supreme Tribunal declared that the Spanish banks must repay the excessive interest paid by customers affected by bank floor clauses dating from when the mortgage was first signed. So, what does this mean for you?
We are experienced in acting for people whose mortgages included Spanish Bank Floor clauses, negotiating with the banks to get the maximum amount due. Be careful if you try to approach your bank directly, without legal representation, as many of the banks offer a reduced settlement, and often only pay the full amount due if threatened with legal action.
Del Canto Chambers’ dual-qualified, multilingual tax lawyers have handled over 500 complex cases from Europe, the Middle East, Latin America, and Asia. Discerning London-based and international clients, corporations, solicitors, and tax advisors count on our expertise.
You can more about what clients have to say, about working with Del Canto Chambers here below.
The Beckham Rule is a special Spanish tax regime for expatriates. It allows qualifying individuals to pay a flat tax rate on employment income and to be treated as non-residents for certain other tax purposes.
Any individual who moves to Spain for professional reasons and has not been tax resident in Spain during the five previous tax years may apply. This includes employees, remote workers, directors, and certain entrepreneurs.
Qualifying income is taxed at a flat rate of 24% up to €600,000. Income exceeding that threshold is taxed at 47%.
You must not have been considered a tax resident in Spain during the five tax years immediately preceding your relocation.
Your move to Spain must be for genuine employment or professional reasons, such as:
Holding an employment contract with a Spanish or foreign companyWorking remotely from Spain under a Digital Nomad Visa
Acting as a highly qualified professional or entrepreneur conducting a business activity in Spain
Serving as a director of a company, provided that—if the company is asset-holding—you hold no more than 25% of its shares
You must apply for the regime within six months of registering with the Spanish Social Security system (Seguridad Social). This deadline is strictly enforced.
The regime applies for a total of six tax years: the year you become a Spanish tax resident and the following five full years.
The regime applies for a total of six tax years: the year you become a Spanish tax resident and the following five full years.
Under the Beckham Rule, all employment and professional income is taxable in Spain, regardless of where it is earned. However, income from non-Spanish sources—such as interest, dividends, investment income, and capital gains—is not subject to Spanish tax.
You are only subject to Wealth Tax and Solidarity Tax on assets located in Spain. Foreign assets are excluded from the Spanish tax base during the six-year period.
Your spouse and dependent children under 25 (or of any age if legally disabled) may also benefit from the regime, provided they meet the requirements and file separate applications.
If you move to Spain to act as a director, you may apply regardless of your shareholding. However, if the company is an asset-holding entity, your ownership must not exceed 25%.
If you cease to be tax resident in Spain before completing the six-year period, you will automatically lose the benefits of the regime. From that point onward, you will be taxed under the general Spanish tax system, which includes progressive rates and worldwide income taxation.
Del Canto Chambers has a specialised team ready and eager to support you to apply for Spanish nationality. If you are interested in applying and would like to know if you are eligible, we would be delighted to help you.
Del Canto Chambers specialists are constantly up to date with new legislative changes and aware of any Spanish tax and legal implications. Contact our Spanish legal and tax specialists to find out the best tax planning and corporate structures in your circumstances.
At Del Canto Chambers we are always sharing our knowledge and act as an active voice across different media. The following articles and news are related to and relevant for Real Estate Sale & Purchase and Spanish Tax Law.
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