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Carnival in Roses

The Roses carnival is one of the areas of local life that incorporates a greater symbolic and emotional charge. In recent decades it has become a commonplace of local essentialism, almost unmarried by rational or emotional dissent.

We said it a few years ago: “…It is the festival most appreciated by the rose bushes, inalienable and beloved, felt as the most personal, personal and non-transferable, loaded with nostalgia and memories”.

In an imperceptible way, the identification between the subjects Roses and carnival has become total, absolute. It is evident that, in all of this, there has been a will to promote this festival because, after all, it has served to unite the community at a time when it was especially necessary, on the one hand, to redo and/or strengthen the identity community of the population in the face of a modern and different world and, on the other and consequently, become another means of integration for the recently arrived social sectors that, since the 1960s, and sheltered from the development of tourism, have transformed social reality of Roses.

If we understand the centrality of the carnival festival in local life, we will also
understand the need to make a sociological and historical reflection that
allows us to explain and understand how this centrality that we mentioned is achieved.
Any social creation becomes a symbolic manifestation when it responds to certain
specific, socially shared purposes, or when it is capable of satisfying the ideological expectations of the dominant social groups, which use it for the benefit of a certain social project and political or, at least, they are forced to swallow it in their mental magma and manipulate it in order to finally be able to use it in a concrete, material way. In this way, some collective experiences are dismissed -their purpose is not important or relevant, or they do not present characteristics that could help to reinforce the community features that they want to promote at that historical moment-, while others survive the passage of time and acquire a significance that exceeds the limits for which they were created. In short, they have demonstrated community functionality

Tax on the Wealth of non-residents with indirect ownership of real estate: not applicable

The  General Directorate of Taxation (DGT) has issued, on September 13, 2022, the binding resolution number V1947-22, which affects non-resident individuals in Spain who own real estate in this country indirectly, that is, through foreign entities. Through this resolution, the DGT confirms that the holding of shares or participations in non-resident entities, which directly or indirectly own real estate investments in Spain, does not generate taxation in Spain for Wealth Tax  (IP).

In the reference resolution, the Consultant is a  individual tax resident in Germany owner of 100% of the shares in a German entity which, through other non-resident entities, holds ownership of a property in Mallorca (ie, the applicant has indirect ownership of a property in Spain). Under this assumption, the DGT states that the applicant is not subject to the IP since he is not the (direct) owner of assets located in Spain.

This pronouncement is relevant since it provides greater legal certainty for many non-residents who own property in Spain through foreign entities. In cases in which the IP has been liquidated due to similar situations, the possibility of requesting the return of undue income and the corresponding late-payment interest should be analyzed.

In the past, the DGT had ruled otherwise, indicating that non-residents who indirectly own real estate in Spain should be taxed in Spain for the IP, when, for example, the real estate accounted for more than 50% of the assets of the society (remember in this case, among others, resolutions number V0093-16 and V1995-20).

We understood that this interpretation had no legal support since, although some  Agreements to Avoid Double Taxation (CDI) granted Spain the power to tax the ownership of real estate through foreign entities, the Spanish internal regulations lacked the corresponding legal provision that would allow Spain to hold the indirect possession of real estate.

This was also understood by the  Superior Court of Justice (TSJ) of the Balearic Islands, which in its judgment of December 3, 2020 concluded that “the natural person not residing in Spain, who is holder of a non-resident entity, is not subject to the Spanish IP by real obligation”.

Later, in 2021, the DGT took a turn and aligned itself with the interpretation of the TSJ. Thus, in resolution  number V2070-21, the DGT stated that although the CDI “allows taxing in Spain, in accordance with its internal legislation, the part of the patrimony of the two consultants that was constituted for shares or participations in said British company, given that the assets of this entity consist of at least 50%, directly or indirectly, in real estate located in Spain, it would also be necessary for Spanish internal regulations to tax the shares or participations that they met the indicated requirements”.

Finally, in its resolution issued on September 13, 2022, the DGT reconfirms that natural persons who are holders of shares or participations in foreign entities that directly or indirectly own real estate in Spain, should not be taxed in Spain for the indirect possession of said properties.

Finally, we recommend being cautious and analyzing each case in detail, especially in those cases in which the direct or indirect holders of the properties located in Spain are  foreign tax-transparent entities&nbsp ;(or semi-transparent), such as trusts, KGs or GmbH & German Co KGs, among others.

Non-residents will not pay municipal capital gains when selling their property

The Spanish Government modified in 1999 the regulation of municipal capital gains, the tax that is paid when selling a property and since those not nationalized in Spain and non-residents in our country are released from the declaration of this tax.

However, the state transfers this obligation, by law, to the buyer.

Payment of municipal capital gains

The law that regulates this tax is the Ley de Haciendas Locales, which says that the person who must pay the municipal capital gains is the seller of the house, but if the seller is a non-resident foreigner in Spain, he is exempt and the The obligation to pay falls on the buyer, who must pay said tax to the Town Hall where the property is located.

Even if it was the buyer who paid the municipal capital gains, it should be noted that what was paid can be recovered by him. The General Tax Law (LGT) itself allows you to demand the reimbursement of municipal capital gains from the non-resident seller.

But it is even possible that the non-resident is not willing to return the amount of the capital gain to the buyer and that it must be claimed through the courts. It is highly advisable to agree in the deed of sale of the property the way in which the buyer can be compensated and thus avoid judicial proceedings.

How to compensate the buyer for the payment of the municipal capital gains

Including a clause in the contract that allows the buyer to somehow recover the payment of this tax. However, the buyer will not be released from his obligation to declare or self-assess the tax and pay it even if the seller has not complied with the compensatory payment to the buyer.