June 2010
Hot Property News Letter – June 2010
Welcome to this issue of the Hot Property news letter which we hope you find informative and helpful. If you have any suggestions, comments or questions, which we can address in future issues, you can contact us at info@hotpropertyspain.net
1: VAT INCREASE 1ST JULY 2010
As from 1st of July this year, the new Spanish government tax measures come into force, with the general rate of VAT, or IVA in Spain, rises from 16% to 18% and the reduced rate also increases from 4% or 7% to 4% or 8%.
As from 1st of July this year, the new Spanish government tax measures come into force, with the general rate of VAT, or IVA in Spain, rises from 16% to 18% and the reduced rate also increases from 4% or 7% to 4% or 8%.
Anyone intending to purchase a property in Spain is therefore advised to do so before 1st July.
At first glance, this tax increase appears to be a negative reason to purchase in Spain. However, even with this new rate, compared with the European Economic Union countries, Spain is still amongst the lowest rated, both for the general and the reduced rate.
Country General rate Reduced rate
Germany 19% 7%
France 19.6% 5.5%
Italy 20% 10%
Portugal 20% 12%
Greece 23% -
2: OUR SURVEY SAID - "9 OUT OF 10 EXPATS ARE HAPPIER ABROAD"
Ever imagined what life would be like if you packed up your things and moved abroad? The answer, according to a new survey, is extraordinarily better.
Ever imagined what life would be like if you packed up your things and moved abroad? The answer, according to a new survey, is extraordinarily better.
A surprising 9 out of 10 British expats admit that they now earn more and enjoy a better work/life balance since leaving the UK according to the study carried out by NAT WEST, whose Dave Isley, head of NatWest's International Personal Banking division, stated:
"89% of British expatriates believe their quality of life abroad is better than it would be in the UK. The fact that fewer expats say they will return to the UK in the future, compared to three years ago, proves that the pace of life, and work/life balance means life as an expat is sunnier in many more ways. In the current economic climate it is perhaps not surprising that British emigration is at a record high and that they are weathering the financial storm"
In 2006 alone, over 20,000 British citizens left the country to live abroad, followed by a further 169,000 in 2007.
The survey revealed that natural environment was the principle attraction, followed by climate, culture and leisure, healthcare, education, financial security, safety and security and infrastructure.
NatWest’s Quality of Life Report claims that the survey of more than 1,000 expats around the globe concentrated on a range of issues, from salary and monetary considerations, to leisure time and the way of life overseas.
Respondents also claimed that expats strike a better balance between work and leisure time, with shorter working hours, better weather, lower taxes and a cheaper cost of living - all contributing to a better standard of life.
Expats in Spain, were found to be amongst the happiest living, retired and working abroad.
3: WHEN AND NOW TO CHANGE STERLING INTO EUROS
When buying a property in Spain, for the British, it will be necessary, at some stage to exchange Pounds for Euros.
When buying a property in Spain, for the British, it will be necessary, at some stage to exchange Pounds for Euros.
Some thought should therefore be given to consider how to get the best deal and protect against exchange rate fluctuations, particularly in the current financial situation.
There are two ways of securing the best exchange rate within the necessary timescale.
The first is "BUYING SPOT" - The spot contract is the most basic and popular foreign exchange method. It is an agreement to buy or sell currency in exchange for another. The contract must be settled within two working days at a price based on the prevailing "SPOT EXCHANGE RATE" i.e. the current value of one currency compared to another.
Upon receipt of cleared funds, currency is available for onward transmission.
Of course, this will allow for funds left in the UK domestic account, to accumulate interest and to arrange for the purchase of Euros just before purchase contract.
The second way is " THE FORWARD CONTRACT". - A forward contract allows for the buying or selling of one currency against another for settlement NO LATER THAN ON THE DAY THAT THE CONTRACT EXPIRES. Unlike spot contracts, a forward contract eliminates the uncertainty and risk of fluctuating exchange rates by locking in a price for a transaction that will take place at a future date, up to a maximum of two years.
A 10% deposit is required to secure the contract and is payable within two working days, with settlement due on the date the contract expires.
The advantage of the forward contract is being able to correctly budget for the property purchase, as no matter what the exchange rate, the cost in sterling is known and cannot therefore fluctuate as the exchange markets do.
The forward contract is therefore very useful when buying in stages, such as with a 10% deposit, followed by a completion date, because the purchase price for the Euros need not be paid until the maturity date (only the 10% deposit) and allows time for all the finances to be arranged.
If you can afford to take the risk and speculate on the foreign exchange market in the hope of paying a lower price for the property, then it may be best to buy the Euro spot as and when needed. However, as per our article on foreign currency exchange in the April 2010 newsletter, Hot Property advise using a broker as the exchange rate is usually far more beneficial than using a high street bank. Please contact us for details.
This newsletter is intended as a guide and to be informative and helpful in the process of searching for and purchasing a property in Spain. Total accuracy cannot be guaranteed and in all legal, fiscal and other matters a fully qualified professional should be consulted. Reproduction of any part of this newsletter is not permitted without written permission.