Table Of Contents
Foreign exchange market: Things to consider when buying abroad
Buying property abroad is a busy task. Once you’ve found where you want to live, you then have to think about property prices, visas and residency, taxes, lawyers, and so on. But one area that’s often overlooked is foreign exchange.
Currency values are constantly changing. And the factors that cause these fluctuations are often out of our control. The recent movements of the pound and the euro show how much can change in a short period of time. At the start of February 2022, 1 pound was equal to 1.20 euros. This was the best rate the pound-euro exchange rate in two years.
However, only a few days later, the pound/euro exchange rate had fallen to 1.18. This was mainly due to the European Central Bank changing its stance on interest rates in Europe. While this difference may seem small, it becomes significant when exchanging the large sums of money needed to buy a property abroad.
Understanding the foreign exchange market on your own can be confusing and time-consuming. It is best to put yourself in the hands of professionals in the industry. Smart financial solutions from these brokers can help protect your money from the effects of market movements. You need to check the rates of the leading brokers in the market, they can guarantee you the best value for your international payments. The best thing to do is to contact a foreign exchange specialist and see for yourself how they can save you time and money on simple and secure foreign exchange and international payments. We do not do this in-house but we have dealt with a company called Privalgo with very good results.
Privalgo. Simple, Secure Foreign Exchange and International Payments
CJEU Ruling on the Model 720 in Spain
Model 720 is an informative declaration on the assets and rights that a foreigner with tax residence in Spain has located abroad. These are: real estate assets and rights over them, bank accounts, and other financial assets. For example, shares, loans, companies, properties, usufructs…
At the beginning of this year, the Court of Justice of the European Union ruled on this declaration.
In short, it states that the tax authorities have failed to fulfil their obligations under the principle of free movement of capital. The Court has ruled on:
- The statute of limitations. Previously, the imposition of the fine for failure to submit the tax return was not time-barred. This judgment states that there must be a statute of limitations.
- Proportionality of the fine for failure to file. The court has declared that until now, the penalty for not filing the tax return was disproportionate. Therefore, the amount of the penalty must be regularised again.
VAT or ITP
When you buy a property you pay several taxes. And one of the big doubts is whether you have to pay VAT (Value Added Tax) or ITP (Transfer Tax).
The general rule establishes that there are two determining factors for this:
- Whether or not the parties involved are taxable persons (individuals or professionals).
- Whether the transfer of the property is the first or subsequent transfer.
If the transfer is between individuals who are not professionals, the ITP will be applied. The percentage varies depending on each autonomous community. In the Balearic Islands it varies between 8% and 11.5%, depending on the value of the property.
If the transfer is between a professional and not professional, it will depend on whether it is the first or subsequent transfer of the property.
- If it is the first transfer of the property, it will be subject to VAT, and depending on the type of property the percentage varies between 10% and 21%.
- What is a first transfer? They are those that are acquired for example through a promoter. We must take into account that if the property is sold within the first two years of its use, it is also considered a first delivery.
- If the transfer is subsequent to the first one, it will be taxed through ITP, also varying between 8% and 11.5%.
If the transfer is between two professionals:
- If it is a first transfer, VAT is payable.
- If it is a second or subsequent transfer, it will be subject to VAT but there will be cases in which it may be deductible.
- Resolution and early maturity: yes, you can now argue and win - November 17, 2022
- The best Mortgage for the british - October 14, 2022
- Golden Visa, British nationals and residence in Spain - September 21, 2022
Our experience in the sector allows us to observe that, since 2020, the revaluation of homes in the Balearic Islands Read more
How to get your IBI tax rebate in Palma If you own a property in the city of Palma de Read more
The forecasts of hoteliers, tour operators, airlines and restaurateurs are exceeded by the reality of tourism in Mallorca. After the Read more
NOVELTIES OF THE NEW HOUSING LAW In this article we will discuss the major the New developments in the new Read more
After the impact of the pandemic, the real estate sector faced great challenges for the future. In the months of Read more