Despite sanctions by the Spanish authorities, wealthy Russians are in no hurry to leave the country
These measures have affected not only Spanish citizens but also foreigners residing here permanently, i.e., tax residents. According to official statistics, by early 2015 about 65,000 Russians and 90,000 Ukrainians lived in the country. However, the control measures did not affect everyone, only those with expensive property and substantial bank accounts.
“The law on combating money laundering, on the basis of which the competent authorities received the right to demand from foreigners documents on the origin of their capital invested in property or bank assets, was adopted in April 2010,” explained Gregorio Fuentes, a member of the Valencia Bar Association. He specializes in defending those accused of financial and tax crimes.
According to the lawyer, the administration received the right to freeze the accounts of those who “did not respond within the prescribed time – usually two to three months – to the request to provide a certificate of the origin of their capital.” This right began to be implemented last year.
Fuentes also recalled that since spring 2014, the tax inspectorate has required foreigners to annually fill out the so-called Form 720 – a declaration of assets outside Spain – real estate and bank assets totaling more than 50,000 euros. Concealing foreign assets carries a fine of 5,000 to 10,000 euros. According to the lawyer, to verify the correctness of filling out this form, Spanish tax officials contact their foreign colleagues, including Russian and Ukrainian ones.
The interlocutor of Deutsche Welle claims that the demand to explain the origin of income and report on assets left behind in the home country is not made to all foreigners. “If you are a migrant worker, ride a bike to work, live in a rented attic, and have a few hundred euros in the bank, then no one will bother you, of course,” noted lawyer Fuentes. “But if you have bought a mansion for several million, purchased shares for a similar amount, and drive a Bentley, then rest assured – sooner or later you will come to the attention of the competent authorities, and you will be notified of the need to explain the origin of your income.”
According to the Spanish lawyer, not all wealthy Russians were able to provide documents proving the legal origin of the money brought to Spain, and therefore their accounts were frozen. Fuentes admitted that among them were at least a dozen of his Russian and Ukrainian acquaintances living in the Valencia autonomous community. In total, according to the lawyer, hundreds of people from the former USSR have been subjected to this sanction. He does not have a more precise figure, as these data have not yet been disclosed by the authorities.
The information about the freezing of bank deposits of Russians living in Spain was confirmed by another interlocutor of the publication – Nikolai A., who provides intermediary and consulting services to compatriots in Andalusia. It is here, in the south of the country, in the resort towns of Marbella and Sotogrande, according to the Spanish press, that the wealthiest representatives of the diaspora from the post-Soviet space live. Having agreed to answer questions concerning current problems with bank accounts and tax payments, Nikolai insisted on anonymity, as it concerns “a very delicate and painful problem for many people.”
The Russian believes that the majority of compatriots, given the current campaign in Russia to return exported capital, are simply afraid to request documents from their homeland that could confirm the legal origin of their money. And, of course, it is not about justifying any criminal dividends, but only about funds obtained from completely legal activities. Therefore, most people whose accounts have been frozen “do not even try to challenge the actions of the Spanish authorities and accept their decision.”
The discontent of wealthy people from Russia, according to Nikolai A., is also caused by the need to declare in Spain their income received at home. It is no secret, in his words, that, for example, “most wealthy Russians living here live precisely on this income.” Spanish law forces them, after paying taxes at home, to pay the difference in Spain. And the difference is quite significant. For example, if the personal income tax in Russia is 13 percent, then in Spain it is progressive and ranges from 24.4 to 51.9 percent. The latter percentage applies to those whose income exceeds 300,000 euros per year.
The tax measures of the authorities caused discontent last year among Spanish business circles involved in real estate sales and the use of Russian investments. They believed that these measures could scare off both current and potential clients. This opinion was expressed in July 2014 in the newspaper Sur by the well-known Spanish lawyer Ricardo Bocanegra.
However, lawyer Gregorio Fuentes, consultant Nikolai A., and a number of diaspora representatives interviewed by Deutsche Welle claim that discontent with these measures is not provoking the wealthy people from Russia and other post-Soviet countries to leave for their homeland.