People who have invested in the Spanish property market could be set to receive a substantial tax rebate, it has emerged.

Authorities in the European country were recently alerted to an error which was made when foreign property sellers were taxed on their capital gains.

Whereas they should actually have been charged for 15 per cent of their returns, they were actually forced to hand over 35 per cent because they are not Spanish nationals.

However, such a practice is illegal under European Union rules and means that the government must now return the extra money it has taken.

Lawyer Emilio Alvarez, who helped expose the mistake, commented: “This tax trap is thought to have affected hundreds of thousands of people across Europe and in the UK.”

It is thought that British investors were overtaxed by about £37 million, which works out to £11,000 for each sale.

According to Holiday-Rentals, Spain is currently the most popular country in the world among British property buyers.

Tags: Spanish Property, taxes