# Brexit and changes to inheritance and gifts



## kaipa (Aug 3, 2013)

Had a meeting with my lawyer to try and organize my affairs. One thing I am trying to discover is IHT for money received from a UK estate. According to my lawyer there could be a substantial change, as at the moment anyone receiving money ( gifts/inheritance) from uk gets the various regional exemptions. Once uk is a 3rd country then all monies are taxed according to state inheritance laws which are very heavy. He seemed to think that the same could occur with estates in spain going to beneficiaries in uk. He said there had been changes in law concerning non-residents but that all these laws were only applicable to EU countries. Anyway another example of how Brexit is going to start to work against many Brits living in Spain


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## Miss Jones11 (Jul 13, 2020)

kaipa said:


> Had a meeting with my lawyer to try and organize my affairs. One thing I am trying to discover is IHT for money received from a UK estate. According to my lawyer there could be a substantial change, as at the moment anyone receiving money ( gifts/inheritance) from uk gets the various regional exemptions. Once uk is a 3rd country then all monies are taxed according to state inheritance laws which are very heavy. He seemed to think that the same could occur with estates in spain going to beneficiaries in uk. He said there had been changes in law concerning non-residents but that all these laws were only applicable to EU countries. Anyway another example of how Brexit is going to start to work against many Brits living in Spain


How can Spanish IHT laws affect non residents who are obviously tax resident elsewhere?


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## kaipa (Aug 3, 2013)

Obviously it only affects if the estate( or part of) is in Spain. Prior to 2015 a non resident who inherited a spanish assest would be subject to much heavier IHT than a resident. That has changed due to a EU ruling. However as the uk becomes a 3rd country certain aspects of EU law will not apply and therein might lie hidden problems


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## kaipa (Aug 3, 2013)

If you are a non resident and for example you inherited a spanish house then the government would levy a tax on the house irrespective of where the beneficiary lives. That tax is often expected irrespective of a sale which is why many Spainish simply reject the inheritance so they arent stuck for years with a property that wont sell meanwhile being forced to pay the tax


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## cervasalagartija (Aug 4, 2020)

how is the UK a ´third country´ and what does that mean?


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## TanGem (May 7, 2020)

kaipa said:


> If you are a non resident and for example you inherited a spanish house then the government would levy a tax on the house irrespective of where the beneficiary lives. That tax is often expected irrespective of a sale which is why many Spainish simply reject the inheritance so they arent stuck for years with a property that wont sell meanwhile being forced to pay the tax


So are you stating that this is the law at present or pre 2015?


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## Megsmum (Sep 9, 2012)

kaipa said:


> Had a meeting with my lawyer to try and organize my affairs. One thing I am trying to discover is IHT for money received from a UK estate. According to my lawyer there could be a substantial change, as at the moment anyone receiving money ( gifts/inheritance) from uk gets the various regional exemptions. Once uk is a 3rd country then all monies are taxed according to state inheritance laws which are very heavy. He seemed to think that the same could occur with estates in spain going to beneficiaries in uk. He said there had been changes in law concerning non-residents but that all these laws were only applicable to EU countries. Anyway another example of how Brexit is going to start to work against many Brits living in Spain


How does it work against brits living in Spain, surely we are simply going to have to live by the rules of Spain as do others, once we are no longer part of the EU?
You say you are tying to discover, can you provide a link as to how IHT affects , for example, a US citizen in Spain at the moment? That might be a starting point. To be honest what your lawyer “ thinks” might occur is not really relevant until we know for sure


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## Megsmum (Sep 9, 2012)

cervasalagartija said:


> how is the UK a ´third country´ and what does that mean?


It refers to the U.K. leaving the EU and becoming what is called a 3rd country like the USA or Canada for instance.


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## Pesky Wesky (May 10, 2009)

cervasalagartija said:


> how is the UK a ´third country´ and what does that mean?


It refers to the status Britain now has or will have when the withdrawal agreement comes into place. It refers to countries outside of the EU like the USA, Canada, the Philippines etc and the fact that citizens of those countries will not be able to visit Spain in the same conditions as someone from an EU country.


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## cervasalagartija (Aug 4, 2020)

Megsmum said:


> It refers to the U.K. leaving the EU and becoming what is called a 3rd country like the USA or Canada for instance.


got you, cheers


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## cervasalagartija (Aug 4, 2020)

cervasalagartija said:


> so who is a ´second country´ then?


just looked it up, yep third country.


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## kaipa (Aug 3, 2013)

Like I say my lawyer was simply trying to advise me as to the possible changes in law in respect to UK being a 3rd country. He pointed out that at present, for example, where I live 100,000 euros would be exempt from IHT for both resident and non resident ( although this was not always the case for non resident circa 2014). However, he believed that that exemption might not exist once uk leaves the EU ( as it states that exemption is only for residents of EU countries). If the exemption is taken away the the states not the provinces tax laws apply. So you can see that that is one example of how things will change. As he said, no one has actually been a member then become a third country so there alot of grey areas that would need to be tested. He simply advised me to assume the more restrictive version to be on safe side.


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## kaipa (Aug 3, 2013)

Megsmum said:


> kaipa said:
> 
> 
> > Had a meeting with my lawyer to try and organize my affairs. One thing I am trying to discover is IHT for money received from a UK estate. According to my lawyer there could be a substantial change, as at the moment anyone receiving money ( gifts/inheritance) from uk gets the various regional exemptions. Once uk is a 3rd country then all monies are taxed according to state inheritance laws which are very heavy. He seemed to think that the same could occur with estates in spain going to beneficiaries in uk. He said there had been changes in law concerning non-residents but that all these laws were only applicable to EU countries. Anyway another example of how Brexit is going to start to work against many Brits living in Spain
> ...


I guess it works against the Brits in the sense that we are accustomed to financial planning early on in are working lives and this may have been done within a framework of a UK tax scheme. If you move to a different country you possibly need to see if you can make adjustments to best benefit you. For example IHT in UK is levied against the estate not the beneficiary whilst in Spain it is the beneficiary. This means that a british beneficiary living in Spain can be doubled taxed and the might be something that many feel is unfair
Just a thought


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## Joppa (Sep 7, 2009)

According to EU definition, third country national is someone who doesn't enjoy the right of free movement.


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## kaipa (Aug 3, 2013)

TanGem said:


> kaipa said:
> 
> 
> > If you are a non resident and for example you inherited a spanish house then the government would levy a tax on the house irrespective of where the beneficiary lives. That tax is often expected irrespective of a sale which is why many Spainish simply reject the inheritance so they arent stuck for years with a property that wont sell meanwhile being forced to pay the tax
> ...


This is the law at the moment. If you have a Spanish testament then your estate will be taxed in Spain even if the beneficiary is not living in Spain. Not sure how it works if you hold a UK Will.


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## kaipa (Aug 3, 2013)

kaipa said:


> TanGem said:
> 
> 
> > kaipa said:
> ...


Prior to the rule change non residents actually would pay more tax than residents.


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## TanGem (May 7, 2020)

All I know is if you are a Spanish Resident here in Andalusia and you inherit from say a parent you do NOT pay any IHT on anything under 1 million Euros


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## kaipa (Aug 3, 2013)

TanGem said:


> All I know is if you are a Spanish Resident here in Andalusia and you inherit from say a parent you do NOT pay any IHT on anything under 1 million Euros


Very true . However, is that exemption only for EU countries?


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## TanGem (May 7, 2020)

kaipa said:


> Very true . However, is that exemption only for EU countries?


No it isn't. It also applies to non-EU/EEA citizens


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## kaipa (Aug 3, 2013)

TanGem said:


> kaipa said:
> 
> 
> > Very true . However, is that exemption only for EU countries?
> ...


That's good to know .Can you provide the Spanish link please?


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## TanGem (May 7, 2020)

kaipa said:


> That's good to know .Can you provide the Spanish link please?



In February 2018 the Spanish Supreme Court published a judgement confirming that the Spanish succession and gift tax rules breach the free movement of capital established by the EU Treaty in relation to non-residents.

Following this, the Spanish DGT (Dirección General de Tributos/General Directorate of Taxes) published some binding rulings in December confirming that the SSGT rules should be applicable to all non-residents – regardless of whether they reside in an EU/EEA member state or a third country. Therefore, the exclusion of third countries in relation to the application of SSGT law should not be taken into account.


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## kaipa (Aug 3, 2013)

TanGem said:


> kaipa said:
> 
> 
> > That's good to know .Can you provide the Spanish link please?
> ...


Okay well that sounds encouraging. So as of 2018 a non resident of Spain in a non EU country will have the same rights in respect to IHT as a resident of Spain. However, does that not just apply to the Spanish state's tax laws? Does it still give the individuals the regional exemptions?


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## TanGem (May 7, 2020)

kaipa said:


> Okay well that sounds encouraging. So as of 2018 a non resident of Spain in a non EU country will have the same rights in respect to IHT as a resident of Spain. However, does that not just apply to the Spanish state's tax laws? Does it still give the individuals the regional exemptions?


Not a clue go get some professional advice from a Tax Specialist accustomed to such leftfield questions


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## Williams2 (Sep 15, 2013)

cervasalagartija said:


> how is the UK a ´third country´ and what does that mean?


Personally I think Boris and his sidekick Dominic Cummings have taken the UK beyond third country
status and into the fourth dimension lately.


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## kaipa (Aug 3, 2013)

TanGem said:


> kaipa said:
> 
> 
> > Okay well that sounds encouraging. So as of 2018 a non resident of Spain in a non EU country will have the same rights in respect to IHT as a resident of Spain. However, does that not just apply to the Spanish state's tax laws? Does it still give the individuals the regional exemptions?
> ...


That's why I started the thread. I went to my lawyer who started musing about the leftfield questions!!. Oh well, he was going to look into it so I will keep you informed


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## Love Karma (Oct 10, 2018)

kaipa said:


> Okay well that sounds encouraging. So as of 2018 a non resident of Spain in a non EU country will have the same rights in respect to IHT as a resident of Spain. However, does that not just apply to the Spanish state's tax laws? Does it still give the individuals the regional exemptions?


And what happens if they are over 65 in a civil partnership and one is a Peruvian with disabilities and the other is her carer from Sheffield and wears loud shirts on Mondays wednesdays and Fridays?


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