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The Spanish Lawyer Online

Antonio Flores’ Blog

Thoughts about laws and regulations which affect foreigners in Spain


Archive for December, 2014

Can Communities of Owners Chase Unpaid Fees Through Foreign Courts?

December 19th, 2014

Some days back, an interesting legal matter was raised by a customer who had received, in his Liverpool home letterbox, a letter from UK-based solicitors demanding payment of unpaid “Community Fees”, on behalf of the administrators of a Fuengirola Urbanization.

On reading the content of it, it was clear that the 2nd class-delivered letter raised an important legal question: Can a Spanish Community of Owners legally pursue such debts through any EU-Court?

One of such law firms seemed to have to answer to this:

[…] Where defaulting owners are resident in the UK or Ireland, we avoid the delays and difficulties described above by recovering the debt directly in an owner’s country of residence.  This we do by relying on the European rules permitting debt to be recovered throughout the European Union, no matter where that debt was generated within the European Union.

European rules referred to by the debt-recover firm are none other than the REGULATION (EC) 1896/2006 CREATING A EUROPEAN ORDER FOR PAYMENT PROCEDURE, and the lawyers would have invoked article 2, which says:

[…] This Regulation shall apply to civil and commercial matters in cross-border cases, whatever the nature of the court or tribunal. It shall not extend to…claim arising from non-contractual obligations, unless…they relate to liquidated debts arising from joint ownership of property.

A simple answer to a fairly simple question then? So we thought until Spanish Judges got involved to upset the EU consensus in a recent seminar held on the matter. Out of the 8 participating magistrates, only one accepted that both the Spanish and EU debt recovery procedures can coexist and therefore, be alternatively used by Communities of Owners. The dissenting judges argued that, although the EU Regulation specifically deals with this, Spanish laws and tribunals should take precedence inasmuch as:

i)                    The debt is classified as “ob rem” i.e. attached to a property, thus necessarily connecting the matter to the local Court where the dwelling is located in.

ii)                   According to art. 9 of the Horizontal Property Act, all owners are obliged to designate a Spanish address for notifications, thus impeding the application of foreign Courts and laws.

The matter is of great interest as once again, the Spanish judiciary clash with EU pragmatic law makers always keen to harmonize diverse legal systems. But then, can Spain be allowed to cherry pick the scope of application of EU laws when it has adhered to them, formally, as opposed to countries –such as Denmark- who have opted out?

And will English Courts (or for that matter, any other Court in the EU) not just consider, but even get to know that a group of Spanish Magistrates have ever expressed an opinion different from the official position? No chance.

Legal Practise , , , ,

Spain Tax Residency Cases: when the devil is in the detail

December 1st, 2014

shutterstock_Iakov Filimonov

The above proverb often implies that details might cause failure, and failure is what occurred to the three real test-cases (below) who thought that, by having a tax-residence-of-convenience status (Andorra and Switzerland) and spending a short time there, they would be shielded from the action of the AEAT (Spanish Tax Office).

TEST CASE 1: A self-defined Swiss tax resident lost an interesting case brought by the Spanish Tax Office who deemed him a resident of Spain. The tax payer had argued that, according to the DTA (Double Taxation Agreement) Spain-Switzerland, he could be classed as a resident of both country. Indeed, the man had properties in Switzerland and Spain, and had one daughter in each country; according to the Spanish Supreme Court, these facts alone would not conclusively establish where his connections were stronger. The devil in this case was he had signed up to the Spanish Automobile Club as well as Maritime Clubs in Ibiza and Marbella, without analogous memberships in Switzerland (attempts to convince the Taxman that there was no sea in this country were to no avail…).

TEST CASE 2: A Spanish Andorra-based taxpayer could not successfully argue against the evidence that was stacked up against him, notwithstanding his marriage to an Andorra citizen. The AEAT challenged his status by arguing that he had a company in Barcelona, his apartments in Spain were being regularly used (utilities were up and running), yet there was no proof of rental activity, he had a daily subscription to a local paper and had hired domestic employees. In upholding the Tax Office’s case, the Catalonia Supreme Court (1254/2013) deemed a tax residency certificate from the Andorran authorities not relevant.

TEST CASE 3: Similar to the above case, the Spanish Tax Office successfully proved that the Andorra resident was in fact in Barcelona-based because his medical insurance broker was based in the city and, more conclusively, a local hospital had reported frequent visits inconsistent with living in Andorra.

On a next issue, we will discuss those who were able to successfully challenge the AEAT who, we should not forget, has no influence over a Court decision (contrary to popular belief).

Litigation, Tax Law , , , ,