Under the amnesty, Spanish and non-Spanish nationals who have assets which should have been subject to corporate income tax, personal income tax and/or non-resident income tax, can make a declaration to the government’s tax authority, the Ministerio de Economia y Hacienda, and pay a flat 10% levy.
The amnesty includes any unreported income or assets held outside of Spain, including, for example, property, offshore bonds and bank deposits. It does not apply to IHT, gift tax, wealth tax or VAT.
It is also important for people to note that the amnesty, which is due to close on 30 Nov, only covers undeclared assets up until the end of December 2010, and not the 2011/2012 tax year, according to adviser Paul Barnett, who is a director at Spain-based advisory firm Totus.
Barnett said he had anticipated the amnesty generating more leads than has been the reality, but that some factors had been off-putting for clients.
“Unfortunately, many clients are worried that once they make a declaration they will continue to be hounded by the authorities, as happened in the Italian amnesty, this is particularly worrying as the amnesty specifically states that once a declaration has been made the authority retains the right to investigate further,” said Barnett.
“Rumours the deadline will be extended have also been unhelpful. I do however, believe people should take the opportunity as the tax authorities are likely to be aggressive in their approach after the amnesty closes.”
Indeed, the Spanish government has warned it will adopt new anti-avoidance measures and will increase the penalties for tax fraud after the amnesty has completed.
Paul Fidell, senior business development manager at Prudential, said this “was, and remains, a good opportunity for advisers to re-engage with their clients” and urged advisers to talk to those clients who have not yet made use of the amnesty, but could benefit from doing so, to do so before time runs out.
