|Dear IPA Friend
Welcome to today's email. We've had lots and lots of emails lately about a story from Spain suggesting the tax authorities are targeting Brits who have bought properties there. Not quite the case, as Peter Esders at the Judicare Group tells us...
There seems to be quite a lot of talk and interest in relation to extra unexpected taxes paid on the purchase of property in Spain. This appears to be coming from one couple who seem to be aggrieved at paying the extra tax demand imposed by the tax authorities in Spain. Certainly reading through the comments on various forums there are lots of people getting worked up about this and who believe that this is a case of the Spanish tax authorities targeting Brits and that this is another example of unfair practices that happen in Spain. It is very easy to sensationalise such a story so it is probably sensible to look at what the actual situation is and why it occurs.
The ‘problem’; is that when some people bought properties in Spain they have been presented by a supplemental tax assessment for the Spanish equivalent of stamp duty. The tax authorities actually have the legal right to do this in cases where they believe it is appropriate and have four years in which to make such a claim.
In order to understand why some people are receiving supplemental assessments by the tax authorities in Spain on properties that they have already bought it is important to understand four different points that come together to create this issue;
One, when you buy a property in Spain you pay a transfer tax on the purchase. This is roughly equivalent to the stamp duty in the UK. The tax is based on the value of the property as a percentage. The tax is based on the higher of one of three values;
The value that the parties declare the transaction value to be (i.e. the value declared in the title deeds).
The Valor Catastral (Rateable Value). This is reassessed every so many years just like it is in the UK.
The value that the tax authorities believe the transaction to actually be.
In fact, although this issue is being discussed in relation to a purchase of property it can also happen in other circumstances such as an inheritance.
This method of calculating the tax has been in place for many years (I have been dealing with Spanish Law for over 20 years now and it has been the case well before then).
Two, in the past there has been a history of under declarations in Spain. This is where both the buyer and seller lie to the authorities as to how much the property was sold for. The amount that they wish to state that the property is worth (and therefore pay tax on) is declared in the title deeds and then the balance between that and the actual sales price was paid in cash and not declared to anybody.
The ‘advantageR17; of this was that both the buyer and the seller paid less tax on the transaction. Of course this was always illegal (it is tax evasion) but as it is a civil offence in most cases rather than a criminal offence most people over the years took the risk. It is amazing how Brits who would never think about doing something like that in the UK quickly adopted the culture in Spain (and other countries) when it came to this practice.
When I started dealing with Spain, people wishing to declare less than half the actual transaction cost and pay the rest in cash under the table was not unheard of. Over the years the amount being declared increased and now this habit has, thankfully, pretty much disappeared. The tax authorities in Spain are not stupid and have always known that this happens – after all, they themselves buy and sell properties and have probably done the same thing themselves.
Three, property prices in Spain have come down significantly over the last few years. There are some real bargains out there. In some cases the market value is less than the rateable value of the property. In addition to this because the market is still not particularly active it is difficult to accurately assess how much a property is worth. In the past you could normally see that a similar property had sold in the area recently for €X but now that is often not possible.
Four, the tax authorities in Spain need money. In the past, the amount that you could get away with declaring was anything above the rateable value as the authorities effectively turned a blind eye (or didn’t have the resources) to investigate what the true value was. With the economy in Spain suffering and many regional tax authorities struggling for money they have started to look at the black economy and tax evasion as a way of bringing in more tax euros.
If you put all of these four points together, you can get a situation where the sceptical tax authorities looking to make money look at a transaction and don’t believe how much was being declared in the title deeds. This could be because an under-declaration was made in the title deeds. It could be because the buyers got a genuine bargain. It could be because the authorities don’t know what the property is actually worth.
Whatever the reason you must remember that the tax that needs to be paid is based on the higher of the three things outlined above. Therefore, just because you declared the full price and that amount is higher than the rateable value doesn’t mean that the authorities won’t question the value.
Bottom line? No, the tax authorities are not targeting the Brits when it comes to this, they are also targeting other nationalities and the Spanish themselves.
Having read some of the forums and posts from the public to some of the articles about this subject in the press you would be forgiven in thinking that this is a particularly Spanish situation. It isn’t. It happens in many countries. In fact I have seen similar things happen in the UK – after all the authorities here can also query the value of a transaction (how many times have you read about somebody trying to dispose of an asset to a family member or to a company at an under value in order to save tax or the authorities revaluing the value of an estate in an inheritance.)
So you can now see how and why the tax authorities in Spain can query the declared value on a transaction. So what can be done about it? Well, there are several things that you can do to avoid this situation;
One, declare the actual purchase price in the title deeds. Do not under declare. It has always been illegal. It has always been a bad idea anyway as it creates an artificial capital gains tax unless you can sell at a similar under-declaration
Keep all of the paperwork including;
The advert for the property at the estate agent
Details of other similar properties for sale at the time and their prices
Copies of correspondence where you negotiate the price (what do you mean that you did all of this verbally and have no record?)
Copy of the contract and contract negotiations
Details of arranging payment
If the price is paid by bankers draft, a copy of that
Anything else where you have details of the price and how it was paid
Using that information it is possible to appeal against the value that the tax authorities assess as the value. This is possible. It is not easy and isn’t guaranteed to work, but is possible – I know, I have done it.
Prior to signing the title deed speak to the tax authorities about the declared price. The tax authorities in Spain are surprisingly helpful when it comes to the question of declared prices. If in doubt, speak to them about what should be declared.
Thank you, Peter. Excellent information and advice, as always. All for now, see you again tomorrow.
With Best Wishes
Editor, International Property Alerts|
|North Korea hacks Fifa, awards itself World Cup, brands Sepp Blatter 'scary dictator'|
Sanctions add fresh urgency to Petropavlovsk refinancing
By James Wilson, Mining Correspondent Author alerts
Escalating fears over the potential impact of sanctions on Russia are adding to the problems facing Petropavlovsk as the gold miner races to refinance its debt.
The UK-listed miner of Russian gold acknowledged it was in a volatile situation because of the tension between Ukraine and Russia, with sanctions imposed by the west against banks including VTB and Sberbank, two of its senior lenders, that could limit their access to capital.
Petropavlovsk needs to reach agreement with its senior lenders to avoid breaching banking covenants by the end of the year. It also needs to refinance $310m of convertible bonds due early in 2015, and its shares have dropped sharply.
Senior lenders remained “steadfast in their commitment to the group”, Petropavlovsk said. It said they were willing to relax covenants, as was Industrial and Commercial Bank of China, which benefits from a guarantee that Petropavlovsk has given over project debt at IRC, an iron ore subsidiary.
Peter Hambro, chairman, called talks with bondholders “laboriousR21; but said there had been “meaningful dialogue .R01;. . I think we are in a position where in the near future we are going to make a material move forward.”
Delays over completing a deal to cut its IRC stake are another problem facing Petropavlovsk. Two Chinese groups, General Nice and Minmetals, have yet to complete the remaining instalment of a $238m subscription for IRC shares, announced last year, that would cut Petropavlovsk’s exposure to IRC.
Mr Hambro said the Chinese groups had a “strong desire to complete” the deal, but were being hampered by credit conditions in China. “It is a contract .R01;. . I am confident it will complete,” he said.
If the deal fails to complete as planned then Petropavlovsk may have to change the way it accounts for its IRC stake, increasing its exposure to the iron ore price – which has dropped sharply this year – and raising its net debt considerably.
Reporting interim financial results, Petropavlovsk said it cut net debt to $924m at the end of June and expected to reduce it to $850m at the end of the year after cutting mining costs.
Revenues for the six months to the end of June fell 10 per cent to $453m in spite of a 4 per cent increase in gold produced. Petropavlovsk swung to a pre-tax profit of $8.3m, compared with a $615m loss last year, but impairments at IRC pushed the group loss to $95m, compared with $742m a year ago.
The miner expanded its resources and reserves and said it had enough ore for operations for the next five years at current output rates. Operating results were “decent”, analysts at Citi said.
Shares fell more than 3 per cent to 35.5p in early afternoon trading in London.|
grbaker 28 Aug'14 - 11:12 - 33641 of 33662 5 0
There's going to be a recording of the Webcast which you can listen
to a later date: it's well worth a listen!
I'll post the link as soon as I can...
A few key/interesting points from the presentation:
1. They have 3 Million oz. of Non-Refractory Ore, which can be
processed by their existing plants (without the need for the POX
plant) - this represents about 5 years of production at the current
rates of 625,000 a year
2. They also have currently identified 4.9 million ounces of
Refractory Ore - this is about 7 years worth of production for the
3. The Pox plant will take 1 year to start up... so they can safely
put it on hold for 4 years at least.
4. They are finding new ore AT A HIGHER GRADE as fast as they are
depleting it from production
5. Total Cash Costs for H1 2014 were $853
6. Record H1 2014 production of 306,000 oz.
7. 60% of their Gold is produced in the second half of the
[N.B. Seems to me they could easily beat their forecast, if they
can keep up the current rate of production in H2!]
8. They believe that the delay in General Nice completing the IRC
deal is due to the current lack of liquidity (credit) available in
China and that General Nice do intend to complete when they
9. Mr Hambro also said that there was a 'contractual commitment'
and 'a guarantee' that they will complete.
10. None of the analysts put the boot in
11. According to my notes there were no questions from:
Bank of America Merrill Lynch
J.P. Morgan Cazenove
12. Only Maurice Mason from Peel Hunt asked a potentially sensitive
question, related to the Convertible Bond Negotiations, which Mr
Hambro declined to answer...
Mr Mason asked what level of debt POG was confident of repaying in
2015, assuming there were some holdouts who refused to
Mr Hambro basically replied that this was a 'good question', but
that to answer it would lead the Company to become 'a hostage to
13. Mr Hambro also said that contacting the Bond Holders was a
moving target, with people they have already contacted saying that
they have now sold when next contacted...
...sounded to me like they were making progress but some of the
Bondholders are actively trading the Bonds and that this is holding
up the process a little.
14. Paperwork on relaxing the Covenants is underway with one out of
the three banks (but they did not say which one): this is very good
news as it likely means that the risks of a covenant breach are at
this point reduced.
P.S. I am also in the process of updating the header and will post
it as soon as I can.
Stoopid 28 Aug'14 - 11:13 - 33642 of 33662 0 0
Katsy Lol ;-D damn I hope you are wrong........
I hope crimex defaults before we go bust ;-D
grbaker 28 Aug'14 - 11:14 - 33643 of 33662 2 0
You can listen to the Webcast and see the presentation here;
Stoopid 28 Aug'14 - 11:32 - 33644 of 33662 0 0
Ta GRB for the more comprehensive recap :-D I appreciate all you
on here as im sure do others.
I thought they said that all the covenants were being
and the legal documentation was being prepared? I stand
But I suspect the others will probably follow suit and as a
it means a covenant breach is now unlikely.
Im surprised that the update has not had more of an impact on the
SP. But hey this is POG.
grbaker 28 Aug'14 - 12:24 - 33645 of 33662 1 0
They did say that... although Mr Hambro, I think it was, confirmed,
when a PI asked a question (Alex Wright I believe), that actual
paperwork [i.e. done deal IMHO] was underway with one out of the
We know from this document http://www.petropavlovsk.net/images/stories/Presentations/140703_financial_operating_review.pdf
(see page 22) that there are three key Russian Banks whom I assume
Mr Hambro was referring to (I have also included what POG has
borrowed from them below):
Alfabank / $115 million
Sberbank / $479 million
VTB / $225 million
The question is which one has agreed!
We also know that Alfabank (from the same document) is largely paid
off and so is probably not an issue...
...that leave Sberbank and VTB. Let's hope it's Sberbank...
It's very good news either way!|
|SIMON LAMBERT: Building your own home can beat high house prices,
so let's make it easier to find somewhere to do it
By SIMON LAMBERT
PUBLISHED: 06:22 GMT, 28 August 2014 | UPDATED: 11:01 GMT, 28
‘Buy land, they’re not making it anymore.’ That
classic Mark Twain-attributed quote may often get wheeled out for
property-related reasons, but if you are hoping to buy any to build
your own home on you’ll find it heavy going.
A plot was hatched three years ago by the Government to encourage
more self and custom build homes.
Empowering a small army of Britons to start building their own
grand - or more modest - designs was touted as at least part of the
answer to our twin problems of not building enough homes and too
high house prices.
Grand Designs: Kevin McCloud's Channel 4 property show has put
building your own home on the minds of many more people, but
finding somewhere to do so is a problem.
Grand Designs: Kevin McCloud's Channel 4 property show has put
building your own home on the minds of many more people, but
finding somewhere to do so is a problem.
The plan hasn’t been a sparkling overnight success, as
demonstrated by the lack of high-profile MPs continuing to loudly
bang the drum. Things have moved slowly ahead though.
The Self Build Portal website has been set up, TV property star
Kevin McCloud has been enlisted, and the Government has eased a few
restrictions here and there, and even muttered about a
Right-to-Build idea in this year’s Budget.
Yet the problem remains the small matter of finding a place to
build your home. This is where an idea comes in that I like -
encouraging councils to free up land for self-builders.
Can you make your dream home come true? How self build can deliver
your grand design
The ultimate DIY investment: Novices urged to self build to solve
housing shortage - and make a 30% profit
Can you find a better mortgage? Check the best buys and get free
This has been a slow burn, but some interesting news emerged this
week. Oxfordshire’s Cherwell District Council has bought the
land for the UK’s first large-scale self-build project, with
planning granted for up to 1,900 homes, ranging from detached
houses to flats.
The land at Graven Hill, near Bicester, has been purchased from the
Ministry of Defence, and budding self-builders can register their
interest now, with even the prospect of teaming up to build
terraces and apartments raised.
This site is ambitiously big and likely to remain unusual, but
other councils should be nudged towards coming up with similar
plots, even if they’re just for tens or hundreds of
I don’t think that self-build is the solution to our property
There are only about 11,000 self-build homes completed each year,
so even doubling that would only deliver just over 20,000. To put
that into context, England is judged to need about 200,000 to
250,000 new homes a year, depending on whose figures you use, while
in the year to March 2014 112,000 were completed.
Such a small increase in supply would barely dent the market, and
arguably cheap credit plays the bigger role in allowing property
prices to rise far in excess of wage increases.
On an individual level though, self-build can make financial sense,
although experienced hands are keen to stress it is very hard work
and always return to the difficulty of finding land it is possible
to get planning permission on.
A self-build home can typically be worth 25 per cent more that the
cost of building and land once finished, dependent obviously on
location, sentiment and how well you watch the budget.
It’s also a chance to get a home designed how you want it and
a brand new property that doesn’t suffer from the common
complaint levied against most new builds in this country - that
they simply just aren’t big enough and all look the same.
Building your own will always be a niche area, and I’ve
probably been swayed by too many episodes of Grand Designs (and
Sarah Beeny’s slightly less ambitious extending programme
Double Your House For Half The Money) but I would quite fancy it
and whenever we write about this it is clear that many others like
the idea too.
Shouldn’t every Englishman have the chance to build his own
(And women and other Britons too, of course.)
Read more: http://www.thisismoney.co.uk/money/comment/article-2735955/Building-home-beat-high-house-prices-make-easier.html#ixzz3BgWERPCR
Follow us: @MailOnline on Twitter | DailyMail on Facebook|
|am i missing something?
is it too late to accept the offer? if not, surely buying at sub 58 is an easy arbitrage?|
|does anyone understand the timing/ procedure for acceptance.
i have had a request for instructions from HL, but nothing from TD and IG.|
|Well after much deliberation I have decided where I am putting my ill-gotten gains - Anglo Asian Mining (AAZ). Should seem attractive to those invested here I would think.
|one would imagine that the jitters in the US will be bad for equities, good for gold and thus good for ar. And thus good for us. Oh- hold on a moment...|
|I already hold AAZ, so I have bought some more this morning with the cash due from AR. Wish me luck. GLA|
|Very true but nothing we can do about it sadly.|
|Hi all fellow AR. shareholders,
As private investors we have been robbed by the very people entrusted to run the company!
Courtesy of Proactive Investor. Please ensure you read the last paragraph. It is very telling!
Archipelago Resource (AR/LN) Offer for company
Archipelago Resources shares jumped today on the announced offer for the company at 58 pence per share.
The offer values the business at £338m .
Archipelago Resources is not currently subject to the City Code on Takeovers. We suspect the offer has been timed just ahead of the rule change on London listed companies with overseas directors adhering to the UK Takeover Code which comes in on Monday.
Investors are warned that if they do not accept the offer then they might get stuck with less liquid paper in an unlisted company.
. "the Offer is not governed by, nor do all the terms comply with, the City Code and, following consultation with the Takeover Panel, the City Code will not apply to the portion of the Offer Period that extends beyond 29 September 2013. Accordingly, Archipelago Shareholders will therefore not be afforded the protections of the City Code in respect of the Offer."
. Management target gold production of 140,000-155,000oz this year at a cost of US$620- $680/oz net of silver credits.
§ Good production rose 20% in H1 to 72,636oz of gold produced with a 46% yoy increase in production in Q2 to 41,061oz
§ The company reported cash and cash equivalents of $108.1m at the interim.
Conclusion: We see the offer as opportunistic. The company is proving its value through recent gold production increases and this has reduced cash costs to $618/oz. We have to wonder why Archipelago was not previously advised to take up the UK Takeover Code for better shareholder protection as other miners have done?|
|They have timed their move pretty well.
I don't quite get the anger here.
First, Raj I think played a very large part in overcoming the local difficulties- without them we might not be mining at all, and might not have a company to sell at all.
Secondly, given that they had such a large % shareholding it was plainly the case, imo, that at some point they would seek a complete takeover. I have raised this as a possibility on this board in the past. ANyone who bought in post the raj involvement and did not take that into account is indeed a mug punter and deserves no sympathy.
Thirdly, gold has the jitters. It is a very different environment from last year when Colin was looking for £1 a share.
But for this move, if there was further weakness in gold, I think that a further retreat to 40p could have been a distinct possibility.
those who bought at hihger levels will have done so when the outlook on gold was rather different. so gold investments have proved to be not so good over the last 18 months- deal with it .
I am not too unhappy wiht 58p as an exit point.|
|Sad to see this go - lucky to get out well ahead.
They are certainly getting a bargain. Good luck all.
|REM.That is all.|
|Moved Archipelago off my Buy Rating now. I expected this to go a lot higher during 2014 (towards 80p) so disappointed with the 58p bid which fell short of my 2013 year-end target.
If anyone is looking for a smaller gold explorer (soon to be producer), I covered Serabi Gold (LSE:SRB) in my two-part gold series:
May be worth a look. Good luck with all your investments elsewhere, I won't be re-covering Archipelago.
|dont think i will put my returned cash into another miner|
|This is indeed a low offer. No doubt everyone approving the deal gets their lovely slice of cake.
Am going to stick my profits into AAZ. Resource upgrade due on Monday|