Irish people who have sold holiday homes on the Costa del Sol and elsewhere in Spain could be entitled to average tax refunds of more than €15,000 each following a landmark ruling of the Spanish High Court.

The court found that the Spanish authorities were in breach of EU rules by charging a higher rate of capital gains tax to foreigners than that which was applied to Spanish residents.

It ruled that they had been overcharged because they were made to pay a rate of 35% rather than the 15% rate which applied to Spanish residents.

As a result, it said that the Spanish tax authorities must refund any overcharged capital gains tax to the individuals involved.

According to a spokesman for the Spanish legal firm of Costa, Alvarez, Mangano, which won the case in February on behalf of a client, up to 20,000 people throughout Europe who sold properties may be entitled to a refund.

The company is already pursuing approximately 600 cases on behalf of clients which it has established may have a legitimate claim.

The spokesman said around 10% of these clients –around 60 cases – were from Ireland. It has also received several thousand enquiries about the possibility of a refund in recent weeks.

"Our own calculation is that the average refund will be approximately £14,100 sterling [€15,300]," the spokesman said.

"But some clients may be entitled to 10 or 20 times that amount."

To qualify, individuals must have paid capital gains tax at the rate of 35% between July 2004 and 31 December 2006, when the laws were changed by the Spanish government.

Unfortunately, the process for obtaining a refund is not particularly straightforward.

Individuals are required to formally lodge their claim firstly with the Spanish tax office, and then with an "economic tribunal" if they are refused. Both of these procedures are subject to strict time limits.

If the tribunal also refuses their claim – which is usually the case – they then have two months to pursue the matter with the Spanish courts. They then face the prospect of paying the costs associated with employing a Spanish lawyer with expertise of tax law.

Costa, Alvarez, Manglano says it is so confident of winning that it is offering to pursue individual cases on a "no win no fee" basis.

It has set up a website, www.spanishtaxreclaim.
co.uk, to deal with such claims.