# Money Problems - Costa Blanca



## daisy164 (Jun 23, 2010)

Hi there

I was wondering if anybody could offer me some advice please. 

My brother lives on the Costa Blanca and due to a few unfortunate incidences has found himself in financial difficulty. He owns his own property and has just turned 60 and draws his pension. Due to health issues he is unable to work so just lives on his pension. Whilst he just about manages it is only a matter of time until he finds himself in a bit of a mess, ie if something breaks around the house.

He doesn't drive and has never become a Spanish resident and doesn't speak Spanish. Due to a legal headache he is currently unable to sell the house and return to the UK which he would be reluctant to do anyway.

My question is, does anybody know if he would be able to claim any financial assistance from the Spanish Social Security. He has never worked or contributed in Spain so I'm not hopeful but could do with finding out. He contributed over here for 30 years before emigrating but I have checked and he cannot claim anymore here, not without it affecting his pension so he would be no better off.

Thanks for you time and any thoughts.

Regards


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## jojo (Sep 20, 2007)

I think the simple answer is no!! The Spanish social security is totally different to the UK. Sadly, if you havent paid in, you cant claim anything! 

Jo xxx


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## daisy164 (Jun 23, 2010)

jojo said:


> I think the simple answer is no!! The Spanish social security is totally different to the UK. Sadly, if you havent paid in, you cant claim anything!
> 
> Jo xxx


Quick rightly so aswell! Am just scratching my head trying to think of something!! 

Many thanks!


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## jojo (Sep 20, 2007)

The pound is going up against the euro at the moment so that may help him a bit??? Its all a bit tenuous, but if it continues like this.............................???!!!

Jo xxx


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## Guest (Jun 23, 2010)

Rent out a room in his house?


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## Stravinsky (Aug 12, 2007)

And if he has lived here all this time and not bothered to register as a resident / on the list the answer would be double no. I assume therefore he hasnt registered as a tax resident either, which may cause issues if he decides to try and sell his house.


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## xabiaxica (Jun 23, 2009)

Stravinsky said:


> And if he has lived here all this time and not bothered to register as a resident / on the list the answer would be double no. I assume therefore he hasnt registered as a tax resident either, which may cause issues if he decides to try and sell his house.


unfortunately so very many older people find themselves in this position

they just move over here without a thought (because it IS that easy when you have a decent pension to live on), don't learn the language or have any idea of their legal position (which let's face it changes frequently!)


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## daisy164 (Jun 23, 2010)

What is the situation regarding tax then if he decides to sell his house? He certainly hasn't registered himself anywhere.

Does anybody know if he would be entitled to legal aid as he lives in Spain?


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## jojo (Sep 20, 2007)

daisy164 said:


> What is the situation regarding tax then if he decides to sell his house? He certainly hasn't registered himself anywhere.
> 
> Does anybody know if he would be entitled to legal aid as he lives in Spain?


Legal aid????? To sell a house??? I dont think Spain does legal aid for its own citizens. So I'd say the answer would be no! Theres not really the same welfare system in place here as the UK

Jo xxx


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## James3214 (Jun 25, 2009)

As it looks like he doesn't 'exist' in Spain I doubt if he will be getting any help. If he has a house I would of thought he wouldn't get any financial help either. I guess that would make sense but there again I don't have any experience of Spain.


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## daisy164 (Jun 23, 2010)

Sorry I meant Legal aid from the UK, considering he was a citizen here for however long. I wouldn't expect him to get any help from any Spanish system as as you say he "doesn't exist".

The legal aid question refers to a different situation he has going on, not the potential selling of the house.


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## jojo (Sep 20, 2007)

daisy164 said:


> Sorry I meant Legal aid from the UK, considering he was a citizen here for however long. I wouldn't expect him to get any help from any Spanish system as as you say he "doesn't exist".
> 
> The legal aid question refers to a different situation he has going on, not the potential selling of the house.


I dont know about legal aid, I thought that had been stopped in the UK a while ago. 

As for tax on his Spanish property, I'm a bit hazy on it, but I think it would be considered as Capital gains and therefore would be taxed - I'm not sure of the rate, but as with everything in your poor brothers case, it'll probably be quite high!!! - sorry  It does sound a bit gloomy for him 

Jo xxxx


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## James3214 (Jun 25, 2009)

There is a legal aid calculator here:
Eligibility Calculator


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## Stravinsky (Aug 12, 2007)

daisy164 said:


> What is the situation regarding tax then if he decides to sell his house? He certainly hasn't registered himself anywhere.
> 
> Does anybody know if he would be entitled to legal aid as he lives in Spain?


No. Thats what I was trying to explain. By not actually registering on the system, or in the tax system he has created himself a number of possible problems, because he doesnt exist here, and he may not exist in the UK either.

He wont get legal aid in the UK because he doesnt live there. He wont get anything in Spain because he doesnt exist here, and theres little like that to aid the Spanish anyway. 

Re sale of the house, he will suddenly register on the system if he sells, as the solicitors etc go through the process. Capital gains tax, and maybe a request about tax returns over the years he has been here. If he has been paying tax in the UK it may be deductable .... indeed for all I know he may not be over the threshold for tax anyway.

Bottom line is, unless he is lucky and drops the price considerably then in the present climate over here he is unlikely to make a sale ... thats why so many people are going into the bank and throwing the keys over the counter as they cant afford the mortgage any more

When you leave the UK to live in another country permanently then you are no longer a resident there and lose a lot of the benefits you once have. You are not able to access the health system legally for instance as you are no longer entitled to it.


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## Stravinsky (Aug 12, 2007)

James3214 said:


> There is a legal aid calculator here:
> Eligibility Calculator


Please note the header of that site
*
This website offers free, confidential and independent legal advice for residents of England and Wales.*


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## mrypg9 (Apr 26, 2008)

xabiachica said:


> they just move over here without a thought (because it IS that easy when you have a decent pension to live on), don't learn the language or have any idea of their legal position (which let's face it changes frequently!)


And, if they have left because in their eyes everything about the UK was dreadful......it's interesting how often people turn to the UK for support when in difficulty.
I'm not implying that's the case here but I wonder how many of those people who can't wait to emigrate to do crap jobs in Spain are only too glad to be able to return to the UK and its benefits when the 'dream' doesn't materialise.....


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## Guest (Jun 23, 2010)

LOL, I bet the OP wishes they hadn't asked now!


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## jojo (Sep 20, 2007)

ShinyAndy said:


> LOL, I bet the OP wishes they hadn't asked now!



But its the OPs brother and she obviously is worried about him. However he came to be in Spain, he's obviously now causing concern for his family in the UK

Jo xx


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## daisy164 (Jun 23, 2010)

It was meant to be a dream move but his partner died and it's all gone wrong from there really


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## Guest (Jun 23, 2010)

I don't expect they anticipated a lecture on the wrongs and rights of what he's done wrong though (which is how I've read it!)


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## jojo (Sep 20, 2007)

ShinyAndy said:


> I don't expect they anticipated a lecture on the wrongs and rights of what he's done wrong though


This thread will hopefully be a lesson to anyone who is here under the same circumstances or planning to come here without being fully prepared! 


As for "Daisy," the OP, I hope you can sort your brother out, I do feel for you both. Maybe you could take him in as a lodger, try to straighten his affairs and maybe he could rent his Spanish place out???

Did his deceased partner own any of the property??? cos................... well that could complicate things even further, especially if he/she has family AAAAGGGHHHH sorry!!!

Jo xxx


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## mrypg9 (Apr 26, 2008)

You can't give people useful advice without knowing the background. If people have done things that weren't advisable or failed to do things that were advisable it has a bearing on what they can actually do to remedy bad situations, if anything. 
I don't think anyone was 'lecturing' and my comment (which I specifically stated was a generalisation) was actually prompted by something Jo wrote last week and which I thought was very true.
We're not children and have to take responsibility for what we do/don't do.
But even the best laid plans go awry when something unexpected and catastrophic, such as the death of a partner, occurs.
Although I suppose that's all the more reason for checking everything is in order so....my OH and I should start thinking about whether our wills, last made yonks ago in the UK, are still valid in Spain.


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## mrypg9 (Apr 26, 2008)

daisy164 said:


> Quick rightly so aswell! Am just scratching my head trying to think of something!!
> 
> Many thanks!



Have you tried your local branch of Age Concern? I know sixty isn't exactly ancient but you say he has health problems and is drawing a pension...


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## UKinSpain (Apr 9, 2010)

Hi Daisy164,

It's Sally here from the British Embassy. It sounds like you've already looked into your brother's situation in detail, but you might find it interesting to look at our website about eligibility for UK benefits:

What benefits am I entitled to if I live in Spain?

It sounds as though it might be useful to look into Spanish benefits too:

Seguridad Social: Pensioners

The Pensions, Benefits and Healthcare Team at the British Consulate in Alicante may be able to advise you further, or put you in contact with some local organisations. You can contact them at [email protected] or by calling 965 21 60 22.

I hope you find the information and assistance you and your brother are looking for.

Take care,

Sally
British Embassy, Madrid
Promoting British interests in Spain with commitment, consistency and confidence.
ukinspain.fco.gov.uk


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## jojo (Sep 20, 2007)

UKinSpain said:


> Hi Daisy164,
> 
> It's Sally here from the British Embassy. It sounds like you've already looked into your brother's situation in detail, but you might find it interesting to look at our website about eligibility for UK benefits:
> 
> ...


Sally, you're a star, thank you!!!!

Jo xxx


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## Stravinsky (Aug 12, 2007)

ShinyAndy said:


> I don't expect they anticipated a lecture on the wrongs and rights of what he's done wrong though (which is how I've read it!)



Well you clearly read it wrongly, as the OP's brother is in trouble we are pointing out the problems he may or may not face. Not lecturing anyone. Just informing people, thats all


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## timr (Feb 1, 2010)

Hi, there is a legal aid system in Spain but only for residents. Here´s a link;

La justicia gratuita | iAbogado |

As far as I know both residents and non-resident now pay the same CGT on property sales (18% ?), the main difference for non-residents though is that 3% of the sale price will be retained when the property is sold to cover any tax liability. 

Sorry, but I can´t think of any help he would in Spain from the Spanish authorities (regardless of his residency status).


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## daisy164 (Jun 23, 2010)

timr said:


> Hi, there is a legal aid system in Spain but only for residents. Here´s a link;
> 
> La justicia gratuita | iAbogado |
> 
> ...


So how would that work then? Would it be 18% of the property sale price to be paid when it is sold along with an additional 3%? What if the worst happened and he died (I'm next of kin), what would I have to do?

I know nothing about the Spanish tax system and am quite interested in how it all works.

Does anybody know how inheritance tax works over there, ie how much is it, are you exempt from paying it after a certain time period has elapsed?

Does anybody know anything about trusts in Spain, ie a will in England can state that something should be held in trust, would this be valid in Spain?

Thanks for all the helpful comments folks, you're really helping me out here.

Regards


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## Stravinsky (Aug 12, 2007)

In the unfortunate event of Inheritance tax kicking in, then as you are a non resident you will have a shock. Just checking first off, has HE made a will in Spain? That is most important. If he hasnt then you will end up employing a solicitor, having the UK will translated and notorised etc etc. Plus, you cant sell the property to raise the IHT. You have to pay the IHT over (I think its 6 months but may be wrong) to get the house. There is no time limit. You have to pay.

In Valencia when someone dies and the house is passed down in the family it can be partly split between children and spouse, and I THINK that gets around Inheritance tax.

You can create a Limited company in the UK to take ownership of the property, but its quite a process and will cost money .... and I suspect the tax man will close that loopehole eventually.

I know nothing about trusts in Spain I'm afraid, never heard anyone talk of them


I found this on inheritance tax as an idea, but cant guarantee it is 100% up to date:

Wills

Although foreign wills are valid in Spanish inheritance cases, it is advisable to have a Spanish will to avoid complications during the inheritance process. Spanish law requires that two-thirds of an estate must go to the children, as compulsory heirs. However, all British property owners can choose their heirs and this will not be challenged by forcible heirs under Spanish laws.

The most commonly used form of will is the “open will”. It is usually in double barrel column format, in both Spanish and English. This is signed before a Notary Public and is directly enforcemed without the need for grant of probate. The Notary Public will keep the original and a copy is sent to a central registry of wills in Madrid.

Who pays Inheritance Tax in Spain?

Expats resident in Spain and paying tax are liable to pay Spanish Inheritance tax regardless of the country in which the inheritance is situated. Non-residents are liable to pay Inheritance Tax in Spain only on assets which are physically located in Spain. There is no exemption on inheritance tax in Spain.

Categories of Inheritors

Inheritors fall into four categories with the allowances conceded shown in brackets::

Group 1: Descendants and adopted children under 21. The older the child, the more tax to pay (15,956.87€).

Group 2: Descendants and adopted children over 21, spouses, parents and adoptive parents (15,956.87€).

Group 3: Brothers/sisters, nephews/nieces, aunts/uncles (7,993.46€).

Group 4: Relatives in forth degree or friends (No allowances).

Calculating Inheritance tax

Once the above allowance has been deducted the Tax authorities apply the following tax rates on the remainder of the inheritance, with Group 1 paying the least and Group 4 the most.

AMOUNT Percent (%)
0 up to 7,993.46€	7.65
Up to 15,980.91€	8.50
Up to 23,968.36€	9.35
Up to 31,955.81€	10.20
Up to 39,943.26€	11.05
Up to 47,930.72€	11.90
Up to 55,918.17€	12.75
Up to 63,905.62€	13.60
Up to 71,893.07€	14.45
Up to 79,880.52€	15.30
Up to 119,757.67€	16.15
Up to 159,634.83€	18.70
Up to 239,389.13€	21.25
Up to 397,55.08€	25.50
Up to 797,555.08€	29.75
Over 797,555.08€	34.00


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## daisy164 (Jun 23, 2010)

Stravinsky said:


> In the unfortunate event of Inheritance tax kicking in, then as you are a non resident you will have a shock. Just checking first off, has HE made a will in Spain? That is most important. If he hasnt then you will end up employing a solicitor, having the UK will translated and notorised etc etc. Plus, you cant sell the property to raise the IHT. You have to pay the IHT over (I think its 6 months but may be wrong) to get the house. There is no time limit. You have to pay.
> 
> In Valencia when someone dies and the house is passed down in the family it can be partly split between children and spouse, and I THINK that gets around Inheritance tax.
> 
> ...


Thanks for this. I notice you are in Oliva, I know it well!!

So you say there is no time limit on paying inheritance tax? His partner died 7 years ago leaving an English will stating that her share should pass to him but he's never done anything about it (or had the will translated). It worries me that he will have to pay this (and whatever other taxes) when and if he gets the deeds changed to his name. What a mess!

If something were to happen to him would I be liable for all these taxes as the main beneficiary in his will?


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## daisy164 (Jun 23, 2010)

Stravinsky said:


> In the unfortunate event of Inheritance tax kicking in, then as you are a non resident you will have a shock. Just checking first off, has HE made a will in Spain? That is most important. If he hasnt then you will end up employing a solicitor, having the UK will translated and notorised etc etc. Plus, you cant sell the property to raise the IHT. You have to pay the IHT over (I think its 6 months but may be wrong) to get the house. There is no time limit. You have to pay.
> 
> In Valencia when someone dies and the house is passed down in the family it can be partly split between children and spouse, and I THINK that gets around Inheritance tax.
> 
> ...


Thanks for this. I notice you are in Oliva, I know it well!!

So you say there is no time limit on paying inheritance tax? His partner died 7 years ago leaving an English will stating that her share should pass to him but he's never done anything about it (or had the will translated). It worries me that he will have to pay this (and whatever other taxes) when and if he gets the deeds changed to his name. What a mess!

If something were to happen to him would I be liable for all these taxes as the main beneficiary in his will?

He has got a proper Spanish will stating that everything comes to me but all he has is the house, or whatever part of it he may or may not own!


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## Stravinsky (Aug 12, 2007)

Hold on a min, you know Oliva well?
Where exactly is your brother? Is he in the Valencia Province?


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## daisy164 (Jun 23, 2010)

Stravinsky said:


> Hold on a min, you know Oliva well?
> Where exactly is your brother? Is he in the Valencia Province?


Only from years and years ago, I had some old friends there that I visited a few times.

He is further south in the province of Alicante.

Are you a solicitor?


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## Stravinsky (Aug 12, 2007)

daisy164 said:


> Only from years and years ago, I had some old friends there that I visited a few times.
> 
> He is further south in the province of Alicante.
> 
> Are you a solicitor?



No 
Ive been giving advice and help on forums though for about 5 or 6 years now, and this comes up a lot.

The bottom line is that he's going to have to do something to negate any future problems, and I suggest the first thing he does is sees a solicitor for a first appointment.

Things are not always what they seem to be. In Valencia prov if the house is in joint names then when one dies, it passes to the spouse with NO IHT, the proviso being that the survivor has to own the house for 10 years. No having a Spanish will may complicate matters, but he wont be able to sell it as things stand.

Thats probably the last thing you want to hear as he is having financial problems, but I really think he needs to address it. He may find there is little tax to pay. If the property is left to you in his will in the UK, he needs to do a Spanish one to mirror it. Thats another expense I'm afraid


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## Stravinsky (Aug 12, 2007)

JBODEN said:


> As to closing the loophole - what loophole? International Companies set up offices all over the world and buy their property in the name of their Company. There is nothing wrong with that.


It's a loophole because its a way of avoiding tax, and your "company" wont actually be trading ... therefore there are moves afoot to set this right


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## xicoalc (Apr 20, 2010)

if someone comes to spain, lives here some time, buys a house and doesn't bother to learn spanish, doesn't bother to register as resident and doesn't bother to go on the padron then why the hell should the spanish authorities offer him help

if you make your bed you have to lay in it

by going on the padron the spanish authorities get money, money to collect your rubbish, clean your streets, police your town and make it safe...i still to this day dont understand why people don't bother to register then ask "what can i get out"


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## daisy164 (Jun 23, 2010)

steve_in_spain said:


> if someone comes to spain, lives here some time, buys a house and doesn't bother to learn spanish, doesn't bother to register as resident and doesn't bother to go on the padron then why the hell should the spanish authorities offer him help
> 
> if you make your bed you have to lay in it
> 
> by going on the padron the spanish authorities get money, money to collect your rubbish, clean your streets, police your town and make it safe...i still to this day dont understand why people don't bother to register then ask "what can i get out"


You have no idea how much I agree with you. If I was there I'd make every effort to learn the language and contribute in every way I could. Very frustrating when people don't "bother" and then people like me end up on forums trying to fix it all when they are enjoying the sunshine in complete oblivion.


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