Yes it can!
If you own holiday property in mainland Europe, changes to the internal tax legislation may well have a material affect. In order to combat the problems caused by the Eurozone financial crisis, several countries are introducing “wealth” taxes, which in the main are linked to property holdings. Whether or not you are resident in the country, you may well be caught if you own property there.
Spainand France in particular have recently issued legislation which is designed to collect tax on the value of property or on the transfer or disposal of properties.
In France, for example, there would be exposure to the French capital gains tax, where none in the past had existed, if the property is transferred after 1 January next. This will affect persons who are considering disposal of their holiday property, or transferring part of the property to other family members, for example to avoid inheritance tax.
Because of the changes in holiday property legislation here in the UK two years ago, many people have been holding on to holiday property as investments to take advantage of UK tax reliefs – this may now need urgent rethinking as the UK tax saved may be overshadowed by the French tax payable.
Austerity measures giving rise to these extra taxes have been introduced very quickly across Europe. You may have to act equally quickly to avoid being inadvertently caught.
If you need to speak to us for a review of your situation, or to do some research into impending foreign legislation, please contact Paul, but do it quickly.