I would like to update you about some new measures carried out by the Junta de Andalucía, containing many reforms in the different existing taxes (not exactly to re-boost the current market situation…).
Concerning those interesting, we will focus on the Stamp Duty (A.J.D.), a tax applied to those public acts formalized on public documents to be registered in the different Public Registry offices with an economic amount (e.g. new property sales, new building declarations, or a mortgage deeds, among any others).
So, last week, the 19th of June, the Junta of Andalucía approved the new Decree-Law 1/2012, of 19th of June, which contains a series of tax, administrative and labor measures, published in the B.O.J.A. (Official Journal of the Government of Andalusia)last 22th of June 2012. You can find it by clicking: http://www.juntadeandalucia.es/eboja/2012/122/BOJA12-122-00014-11216-01_00009593.pdf
Within these measures, regarding the tax ones, we can find an increase of the general rate on the Stamp Duty, going from 1.2% to 1.5% of the declared value.
Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)
The Spanish Constitution and the regulations (tax and social) developed thereof, regarding the protection of the elderly, guarantee that the elderly will receive a comprehensive system of care and protection that promotes and enhances the wellbeing of this section of the population, within which this article highlights the area of economic protection.
The purpose of this type of protection is to formulate a system of regulations that provide the elderly with the necessary economic resources, which will contribute towards their independence and improve their quality of life.
As principle provisions or benefits within this economic protection of the elderly, we can highlight, among other things: retirement pensions (contributory and non-contributory), supplementary economic provisions, various subsidies and aid, which is granted within the scope of Social Services, as well as certain tax benefits.
In relation to this matter, this article will focus on the exemption from capital gains tax, which, for those over 65, occurs at the time that their habitual residence is sold.
Gains derived from the transfer of immovable property are taxed, for non-residents, at a fixed rate of 19%. For residents, the first €6,000 is taxed at 19% and the rest is taxed at 21%.
Moreover, in the case of the transfer of property by a non-resident, the purchaser shall be obliged to withhold and pay 3% of the sale price as payment on account of taxes which should meet the requirements of capital gains for non-residents and that should be paid directly to the Tax Authorities. Said retention from the sale price is not incurred if the seller has the right to tax reduction for the transfer of property that is their habitual residence, for those over the age of 65.
Article 31.4 b) of Law 40/1998, which regulates personal income tax, establishes that those over the age of 65 shall be exempt from capital gains in the event that the property transferred is their habitual residence.
The only two requirements for eligibility for this tax exemption are the following:
The taxpayer must be over 65 at the time that the transfer takes place.
The transferred property must be their habitual residence. In order that the property be considered a place of habitual residence for the purpose of this tax, two temporal limits are established: 1) it must be effectively occupied by the taxpayer within a period of 12 months from the date of acquisition or from the termination of any building work; 2) it must constitute their place of habitual residence for an on-going period of at least three years prior to the date of sale.
Author: Francisco Delgado Montilla, C&D Solicitors (lawyers)
Torrox-Costa (Malaga/Costa del Sol/Andalucia)
Some months ago, a foreign prospect client, who we have come to know as “Mr. X”, came in our offices. He requested some information regarding sale procedures, legal work and our professionalfees.
After the first free appointment, in all honesty he commented to us that he had contacted a professional offering a 40% cheaper fee than ours. However, he would be interested in contracting our services provided that we could offer him a discount.
At that moment, we considered which option to adopt; naturally, we wanted to win this client, but we also knew that the rural property, which he wanted to buy, required a quite complex searching process.
At the end, Mr. X was offered a “courtesy” discount in our fees, which was not close to the low price offered by the former professional. Finally, Mr. X decided to contract the other professional’s cheaper services.
Regarding the current market and low circulation of clients, some solicitors offer great discounts to stand out from competitors and then win a client. Then, considering the aforesaid, why our legal firm did not offer a higher discount to win Mr. X as a client?
The answer is obvious; because such low fees proposed by Mr. X could not pay for the time of commitment for the searching process to buy the above mentioned property in a rural land and then providing full legal certainty to the client.
Within our professional environment of legal services, you may and shall be flexible and capable for adapting to win a client, considering the current situation of financial difficulties and increase of competitors in our sector. However, you should NEVER compete with lower fees, because if the fees for your services are reduced so much, then the quality of your services becomes also poorer.
Furthermore, if we are realistic, no professional may work with the same intensity neither commit the same time when their fees are so low, because production costs and ideal profits would require much more cases which may not be properly and professionally handled, and as a result, a poorer quality counseling service may be provided.
Later on, we knew that Mr. X hired an agent’s services for the legal counseling instead of a solicitor’s. We do not know how his case finished or whether he received a good counseling service. Similarly, if I do not feel physically well or fell pain, I would contact a doctor for a diagnosis and the prescription of a solution, instead of contacting a person who is not a doctor and claims to know a lot about medicine. As a qualified general practitioner, the doctor is better trained and has a legal responsibility. As a result, the patient-client receives more security and reliability, although he or she may pay more for these services.
In all honesty, an agent will never provide the same legal service as a solicitor will, because a solicitor has been exclusively trained by and for law. Solicitors’ training is eminently juridical; this full time commitment and the responsibility of the practice of law—because of the rules and the professional ethics code and good practice; shall always result in a higher quality legal counseling and greater commitment to the client. But I do not go against agents, as I personally know some of them and I am aware of their worth. However, they are not solicitors.
In short, although we were really looking forward to winning Mr. X as a client, we could not afford to reduce our fees so much in order to avoid a poorer quality service. The fact of highlighting our professionalism and tailor-made customer service in our law firm implies a commitment of time and this commitment implies some costs that the client should pay.
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