Shares in Banco SantanderMany UK residents who formerly owned shares in Abbey National Plc now, following the take over, own shares in Banco Santander which is a Spanish company. If you are one of the shareholders concerned it may surprise you to know that when you sell your shares there is a requirement for you to notify the Spanish revenue authorities within 30 days and failure to do so may result in a penalty.
Under the terms of the double taxation agreement between the United Kingdom and Spain, gains on disposal of shares are only taxable in the country where the owner is resident. However the Spanish Authorities still require to be notified that a sale of shares has taken place even if the owner is UK resident and has no other connection with Spain.
A shareholder who is not resident in Spain for tax purposes, who disposes of Banco Santander shares by way of sale or gift and who realizes a gain on that disposal is required by Spanish law to file a tax return (form 210) with the Spanish tax authorities declaring the gain made on the disposal. A separate form 210 must be filed for each transfer of shares. The form must be filed within one month of the date of the sale or gift of the shares and, even if no tax is payable, failure to file the relevant form can give rise to a €100 fine which may increase to €200 if the form is not filed before a demand has been issued by the Spanish tax authorities. If tax is payable, failure to file form 210 within the 1 month time limit can lead to additional penalties. If a shareholder wishes to claim the application of an exemption from Spanish tax in relation to the disposal of the shares, as a resident of the European Union, or under an exemption provided in a double tax treaty, form 210 must be accompanied by an appropriate certificate of residence from the relevant tax authority (e.g. United Kingdom HM Revenue & Customs).
Abbey Sharedealing offers assistance with the Spanish tax requirements to eligible shareholders who sell their shares through Abbey Sharedealing. However Abbey Sharedealing will not offer assistance or guidance to shareholders who hold or sell their shares via other brokers. In the latter case shareholders will have to deal with the Spanish tax formalities themselves. In these cases a signed form 210 must be physically delivered to the Spanish authorities in Madrid. Shareholders not able to avail themselves of the assistance of Abbey Sharedealing will therefore generally need to appoint a tax representative in Spain to submit form 210 on their behalf. Needless to say there will be formalities to be complied with and a fee will generally be payable for the services provided.
Form 210 can be downloaded from the website of the Spanish tax authorities at
www.aeat.es but unfortunately it is only available in Spanish. 26 pages of instructions on the requirements and on the completion of form 210 can be found at the website of Banco Santander
www.gruposantander.co.uk.
This is likely to come as surprising and unwelcome news to many people and if you are contemplating disposing of shares in Banco Santander you should either consider using the services of Abbey Sharedealing or you should discuss with your broker what arrangements are to be made for complying with the requirements of the Spanish authorities.
Other Assests In SpainAnother trap for the unwary in relation to assets in Spain can be the effect of the Spanish inheritance and gifts tax (ISD). This tax differs in two major respects from UK inheritance tax: -
- In Spain it is the recipient of the gift or the inheritance who is the taxpayer (whereas in the UK it is the estate of the deceased person which bears the IHT).
- There is no spouse exemption.
An individual resident in Spain is liable to ISD on receipts by him of assets etc sited anywhere in the world. An individual not resident in Spain is liable to ISD on receipts by him of assets sited in Spain. Nationality is irrelevant. So for example if a married couple resident in the UK jointly own a holiday home in Spain, on the death of the first spouse, assuming the property passes to the survivor under the terms of the will, the survivor will be liable to ISD on the deceased spouse’s half share inherited. This a complex subject which cannot be covered in full in this article but it is a matter worth bearing in mind if you already own property in Spain or are considering acquiring, for example, a holiday home.
Should you have any queries in respect of the above please contact Carolyn Spencer, Tax Manager at
Carolyn@nunn-hayward.com or on 01753 888211.
