Updated November 2008
Many UK share investors will have picked up shareholdings in Spanish companies in recent years. The most common example is Banco Santander who have acquired a number of UK building societies. (Abbey National 2004, the Alliance & Leicester, and more recently they have bid to acquire parts of Bradford & Bingley.)
If you hold Santander shares, dividends you receive after 5 April 2008 now benefit from the same 10% notional tax credit as UK shares. For basic rate tax payers there is no real change.
But what happens if you sell your Spanish shares?
Capital Gains Tax
Many UK holders of Santander shares will have paid nothing for the shares as they were acquired when the underlying UK building societies were demutualised many years ago. Subject to the usual rules your disposal may or may not create a capital gains tax liability in the UK.
What many shareholders may not realise is that they also have a legal obligation to file a tax form in Spain.
The completed Form 210 and certificate of UK tax residence must be delivered in person to the Spanish tax authorities, generally in Madrid. This means that shareholders will normally have to engage the services of a Spanish tax representative in order to have the documents filed.
Form 210 must be filed within 30 calendar days of the date of the sale or gift. The failure to file the form will give rise to a penalty of approximately (Euro) €100, even if there is no tax to pay. This penalty may increase to approximately €200 if the form is not filed before the Spanish tax authorities have raised a demand.
If you would like to discuss any of these topics, or indeed any other issues, please call.