Thousands of Britons who made capital gains when selling their Spanish properties could be in line for a 20% tax rebate because foreign non-residents were charged a higher rate than Spanish nationals.

According to Spanish lawyers Costa, Alvarez, Manglano & Associates this would contravene the European Community Treaty, Reuters reports.

Foreigners who sold their homes in Spain before rule changes last year were charged the Spanish non-residents' income tax rate of 35% on any capital gains instead of the Spanish flat rate of 15%.

An estimated 4500 Britons in addition to thousands more residents in other European countries can now to try and reclaim the difference from the Spanish authorities, plus interest, in what could be the biggest class action against the Spanish government in years.