# Inheritance Tax for British Citizens in Spain



## GUAPACHICA (Jun 30, 2012)

Hi - I've a query concerning the level of Inheritance Tax which would be payable to the Spanish Tax Authorities by a British citizen, resident in Spain, were he/she in receipt of a legacy acquired from the UK.. (I have looked on the list of '*Stickies'* but couldn't see a relevant post). 

Spanish friends tell me that the percentage payable varies, according to the province concerned, but I'd have thought that Inheritance Tax levels would be determined nationally. If so, how does the level compare with that of the UK, where a friend's inherited house has just had to be sold - to help meet her new Inheritance Tax bill? 

However, if this were, indeed, a Provincial tax issue within Spain, mightn't it then need to be a consideration for some expats. when choosing their relocation destination -along with the weather and good local schools..? After all, it isn't only the rich who inherit their family homes - although they can probably afford to pay their inheritance taxes without having to sell their legacies..!

Thanks a lot,
GC


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## snikpoh (Nov 19, 2007)

GUAPACHICA said:


> Hi - I've a query concerning the level of Inheritance Tax which would be payable to the Spanish Tax Authorities by a British citizen, resident in Spain, were he/she in receipt of a legacy acquired from the UK.. (I have looked on the list of '*Stickies'* but couldn't see a relevant post).
> 
> Spanish friends tell me that the percentage payable varies, according to the province concerned, but I'd have thought that Inheritance Tax levels would be determined nationally. If so, how does the level compare with that of the UK, where a friend's inherited house has just had to be sold - to help meet her new Inheritance Tax bill?
> 
> ...



Firstly, Spanish succession tax IS regional.

The next big point is that you have to pay the tax BEFORE you can inherit! So you can't sell an asset and then pay the tax.

In order to take maximum benefit from the various succession tax rules/laws, one needs to be resident in Spain (tax resident) and so do the people inheriting. If the inheritors are, say, UK resident, then the costs are quite high with little or no allowances.

Best to seek legal advice.


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## Stravinsky (Aug 12, 2007)

You need to go see a gestor in your area that specialises in these things, as they do tend to vary

For instance in Valencia as a resident if you pop your clogs, then your wife pays no IHT. Elsewhere it's different but I thought Andalucia had a similar situation

This has been discussed in the forums so much its worth doing a search. Last time my solicitor advised me (and from reading similar experiences), you need to have a UK and Spanish will, and your UK will takes precedence as regards who gets what .. i.e. you dont have to leave it to different members of the family like with Spanish Nationals

Whats Snikpoh says is true, in as much as you have to pay the tax first


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## mrypg9 (Apr 26, 2008)

Are we discussing properties in Spain here or assets of all kinds in the UK?
We have no property of any description in Spain, the UK or anywhere else. Our assets are held in the form of investments of various kinds in the UK and offshore.
OH and I are Civilly Partnered, UK, 2006. We have a handwritten will leaving our assets to whomsoever is the surviving partner.
Should we do something more formal?


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## snikpoh (Nov 19, 2007)

mrypg9 said:


> Are we discussing properties in Spain here or assets of all kinds in the UK?
> We have no property of any description in Spain, the UK or anywhere else. Our assets are held in the form of investments of various kinds in the UK and offshore.
> OH and I are Civilly Partnered, UK, 2006. We have a handwritten will leaving our assets to whomsoever is the surviving partner.
> Should we do something more formal?


YES! (IMHO)

As far as I understand, it could take ages to go through probate if you haven't formally registered and logged a will here in Spain (no matter how small your assets). 

As Spanish residents you could well get stung for Spanish succession tax AND UK IHT unless you have your investments 'structured' wisely. Civil partnerships are a whole different ball of chalk and I think you have to do things slightly differently.

Have you declared all of your UK and offshore assets yet?


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## zenkarma (Feb 15, 2013)

GUAPACHICA said:


> Hi - I've a query concerning the level of Inheritance Tax which would be payable to the Spanish Tax Authorities by a British citizen, resident in Spain, were he/she in receipt of a legacy acquired from the UK.. (I have looked on the list of '*Stickies'* but couldn't see a relevant post).


As others have rightly said, this is such a complex issue that the individual concerned really needs to seek specialist advice.

Having said that and in my travels looking at all tax issues with respect to Spain (I like to know what I'm potentially getting myself into!) I've uncovered some information that may be of use in _guiding_ you in what to expect.

You say the person is resident in Spain, but not if they're considered a tax resident in Spain. It must be assumed then, that as they are resident there more than 183 days, they become a Spanish tax resident by default and will therefore be liable to Spanish Inheritance Tax.

The other question is whether the UK Inland Revenue considers them _domiciled_ in the UK or whether they have cut all ties and settled in Spain, that needs to be determined with regards to UK Inheritance Tax. If they do pay UK Inheritance Tax, then that can be offset against the Spanish liability.

The other question is what relationship they had to the person they have inherited from as different relationships attract different allowances. The more direct the relationship, spouse, son, daughter etc the more generous the allowance.

Here's a couple of useful links that might help give you an idea of the possible scenario:

Spanish inheritance tax law and rates
Spanish succession tax


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## zenkarma (Feb 15, 2013)

mrypg9 said:


> Should we do something more formal?


Almost certainly you should put this on a proper legal footing, typewritten, signed, witnessed and registered at a notary.

You're leaving yourself open to all sorts of problems in not doing so.

AFAIK for inheritance tax purposes all inherited assets (property or otherwise) are subject to inheritance tax.


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## 90199 (Mar 21, 2010)

The locals here seem to avoid inheritance tax, by giving their property away long before they die.


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## Stravinsky (Aug 12, 2007)

zenkarma said:


> As others have rightly said, this is such a complex issue that the individual concerned really needs to seek specialist advice.
> 
> Having said that and in my travels looking at all tax issues with respect to Spain (I like to know what I'm potentially getting myself into!) I've uncovered some information that may be of use in _guiding_ you in what to expect.
> 
> ...




You see, thats why I take more notice of solicitors than property sites
The second link, first sentence, 

"The most significant difference between UK inheritance tax and Spanish succession tax is that, unlike in the UK, in Spain there is no exemption between husband and wife. So, if you live in Spain with your spouse, on the first death the survivor can be liable for Spanish succession tax on worldwide assets"

Its a sentiment repeated by many people trying to offer ways to get around it, but although true in some cases I guess, its not true generally for instance here in Valencia, and I believe also in Andalucia

A lady's husband died here, she owned property. She paid no IHT, all done properly through a solicitor

To Mrpg9
Yes, you should have your wills notarised. The original is kept in a central point whereas you have the copy


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## zenkarma (Feb 15, 2013)

Stravinsky said:


> You see, thats why I take more notice of solicitors than property sites


You're being unduly and unnecessarily harsh.

I made it crystal clear in my post that:

1/ This person needs to seek specialist advice.
2/ The following information is intended as a *guide*.
3/ The following links give an _idea of the *possible* scenario._

At NO point am I ever stating that this information is definitive and absolute. 

If you actually look at the date the first article was written, it says 2006. It's highly likely things may have changed since then, which as you've pointed out, some clearly have.

There is no substitute for seeking *specialist advice*.


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## Stravinsky (Aug 12, 2007)

zenkarma said:


> You're being unduly and unnecessarily harsh.
> 
> I made it crystal clear in my post that:
> 
> ...


And I think you are being unduly sensitive 

I am not criticising you at all and that wasn't my intention. I was just giving my opinion on estate agent sites, as I have seen them many a time giving misleading information.

In 2006 the system was the same as now btw and although as you say, things are always changing 

So please dont misunderstand me, I am just stating that it is best always to get proper legal advice on these matters


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## snikpoh (Nov 19, 2007)

I would also go so far as to say that it is extremely dangerous to quote web sites where the information is clearly wrong (or at best incomplete).

This will, inevitably, lead to people being misled and/or confused.

As Jon says, there is a good allowance in the Valencia region which might result in no succession tax having to be paid.


I've heard and read that (UK) IHT can be offset against (Spanish) succession tax - I was advised some time ago by a company of respectable financial advisers (in Javea) that this was NOT possible.

I have therefore taken steps to make sure that the UK Government can find little reason to consider me domiciled in UK.


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## CapnBilly (Jun 7, 2011)

snikpoh said:


> I've heard and read that (UK) IHT can be offset against (Spanish) succession tax - I was advised some time ago by a company of respectable financial advisers (in Javea) that this was NOT possible.


I have also read that in places. However, there is no mention of it in the DTA, so if there was agreement, it would have to be contained in that. The problem is, that UK inheritance tax is levied on the estate of the deceased rather than the beneficiary, which it is in Spain. So unless you inherit the whole estate, it is difficult to se how it is apportioned.

In terms of the original question I think I have posted before, that following the modelo 720, this is a potential future problem. Whereas in the past, the general advice from lawyers !, has been to ignore UK inheritances, even though IHT was payable, I think this is now potentially very dangerous. If you don't declare it, and it is then discovered, you would be subject to the penalties for not declaring it.


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## mrypg9 (Apr 26, 2008)

snikpoh said:


> YES! (IMHO)
> 
> As far as I understand, it could take ages to go through probate if you haven't formally registered and logged a will here in Spain (no matter how small your assets).
> 
> ...


Yes, I'm OK, no problems, and in any case compared to OH what assets I have are fairly trivial. But OH has yet to get her affairs in order here in Spain.

Our investments are indeed structured so no IHT will be payable. Any assets I have are offshore, OH's are UK and off-shore. I'm the one with the fairly good iincome in the form of a FSS pension plus other income, we live off her assets invested from the sale of UK commercial properties. When I die I hope to have zero assets and my income will cease although OH is entitled to roughly one-third of my income after my demise.

I'm off to the UK in March so will draw up a more formal document and will consult a notary here.

Thanks for the advice.


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## GUAPACHICA (Jun 30, 2012)

Hi - as the originator of this thread, I'd like to thank everyone who's contributed to the discussion, to date! My query was posted because I was aware I'd be very likely to need a clear understanding of Spanish '_Succession'_ Tax legislation in the near future - but had no idea just where to locate the relevant info. or how to interpret it, once found..!
It would appear, judging from the responses received so far, that this issue is really far more complicated than I'd appreciated, initially - perhaps that's true for some others, here, too. 

Thank goodness, then, that this Forum has members who are conversant with the mplications of this '_Succession_' Tax for Expats from the UK. Personally, I'm very grateful, as I'd allowed my own general lack of interest and motivation, re. organising my financial affairs, to leave myself in a state of ignorance and complacency, for far too long. Your advice on this particular issue has provided the proverbial '_boot up the backside_' - painful, but absolutely necessary, in my case - so, no more excuses..!


Finally, might it now be possible for this Forum to produce a 'comparative list' of Spanish 'Succession Tax' requirements on a _Region by Region_ basis, perhaps in the form of a 'Sticky' ? 

Thanks again,

GC


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## Stravinsky (Aug 12, 2007)

GUAPACHICA said:


> Finally, might it now be possible for this Forum to produce a 'comparative list' of Spanish 'Succession Tax' requirements on a _Region by Region_ basis, perhaps in the form of a 'Sticky' ?
> 
> Thanks again,
> 
> GC


Its keeping it up to date really. Like many things, it always seems to be open to interpretation.
I'm afraid I came to the conclusion years ago that if you have sizeable assets in the UK and Spain it is probably better to ensure that you dont't die in Spain . Unfortunately I am having some difficulty in planning an accurate timeline for that.


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## mrypg9 (Apr 26, 2008)

GUAPACHICA said:


> Hi - as the originator of this thread, I'd like to thank everyone who's contributed to the discussion, to date! My query was posted because I was aware I'd be very likely to need a clear understanding of Spanish '_Succession'_ Tax legislation in the near future - but had no idea just where to locate the relevant info. or how to interpret it, once found..!
> It would appear, judging from the responses received so far, that this issue is really far more complicated than I'd appreciated, initially - perhaps that's true for some others, here, too.
> 
> Thank goodness, then, that this Forum has members who are conversant with the mplications of this '_Succession_' Tax for Expats from the UK. Personally, I'm very grateful, as I'd allowed my own general lack of interest and motivation, re. organising my financial affairs, to leave myself in a state of ignorance and complacency, for far too long. Your advice on this particular issue has provided the proverbial '_boot up the backside_' - painful, but absolutely necessary, in my case - so, no more excuses..!
> ...



Thanks for raising the topic.  Tbh it had completed slipped from my mind....
I shall now take steps to get everything in order.


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## expatspain (Feb 27, 2013)

I have heard it could be as high as 50% in some cases...


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## extranjero (Nov 16, 2012)

What are they going to do to make it fairer regarding the regional allowances, with some regions being very generous, and others having no allowance at all?
Will spouses and registered partners ever be exempted from IHT on the deceased's assets?
Perhaps, apart from spouses, inheritees could pay, eg 4% on anything over a decent tax allowance of 100,000k?
Now, that would be fair!


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## Sara B (Nov 14, 2014)

extranjero said:


> What are they going to do to make it fairer regarding the regional allowances, with some regions being very generous, and others having no allowance at all?
> Will spouses and registered partners ever be exempted from IHT on the deceased's assets?
> Perhaps, apart from spouses, inheritees could pay, eg 4% on anything over a decent tax allowance of 100,000k?
> Now, that would be fair!


I agree with you extranjero, the 'post code lottery' system seems so unfair. You might have seen a recent thread on here http://www.expatforum.com/expats/spain-expat-forum-expats-living-spain/547457-spains-inheritance-tax-challenged-eu.html which discusses the recent ruling against Spain's discrimination between residents and non-residents regarding inheritance tax. 

I try to keep my ear to the ground on these sorts of matters and the general feeling is that following this there may be a shake up of the system across the board (who knows when though!!). Fingers crossed it will (eventually) mean a bit more equality between the regions as well as between residents and non-residents.


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## extranjero (Nov 16, 2012)

Although the EU ruling is a step in the right direction, I am astounded that the huge injustice of wildly varying allowances has not been stopped, as it cannot be fair that in one region a person could pay thousands of euros, in another none.
As I said before, spouses should be exempt anyway, but there must be a fairer way to tax inheritances .
A varying percentage according to closeness of inheritees should be applied across the board, eg ?4% of all assets above a new, realistic state allowance?
I know some on here didn't like the thought of their generous allowances being changed, but that's just being"I'm alright Jack"
If the Hacienda complains that a lucrative source of money will dry up, then chase all these non tax payers who are getting away with putting their two fingers up at them!
If the regions complain they will get less money, sort out the IBI more efficiently, it's long overdue.
Chase all the illegal workers, make the CG do their job, and not turn a blind eye to glaring traffic offences.
Encourage people to settle here , not frighten them away!
The present situation has never been fair, and it needs a thorough overhaul pronto.


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