How We Work

INTRODUCTION

Non-Domiciled property owners in Spain are sitting on a ticking Inheritance Tax time bomb. Most owners do not understand that their heirs and their estate will pay Inheritance Tax in two jurisdictions: Spain and their country of domicile. The reason for this is that in Spain the individual inheritor is taxed, whereas in other countries, like the UK, it is the estate that is taxed. This could mean that on the death of an owner, the surviving partner, or the owner’s beneficiaries, could have a tax bill that virtually wipes out the entire Spanish inheritance. Added to this is the cost of probate in both countries for the inheritors too.

COMMON MISCONCEPTIONS
Most lawyers in Spain recommend to owners that having a Spanish Will deals with the problem; this is incorrect as a Will only deals with the issue when there is a death and does not remove taxation in Spain.

Other advice given is that Double Taxation Treaties between Spain and the UK help with the tax being reduced; this is true with identical taxes but these are not, as in the UK it is the estate which is taxed and in Spain it is the beneficiaries who are taxed. It therefore should not be assumed that one tax can be offset against the other as they are both totally different taxes on totally different entities.

Many owners are advised to re-finance the property as Inheritance Tax is not charged on the property amount if there is an outstanding mortgage and loan, but this may end up leaving the beneficiaries with a huge debt they cannot pay off.

Owning a property with your children is a favourite; this is not a good idea either, as their share of the property may end up being at risk through money or marital issues and if they die before the parents then the parents have to pay taxes to get the property back too.

PROVEN SOLUTION
Our solution, that has been proven in the Spanish courts, to the IHT problem in Spain in conjunction with our partner Wincham Inheritance Tax is for the owner/s to transfer the property to a UK Private Limited Company.
The advantages to this are many.There is no 7% Transfer Tax in Spain unlike other property transactions Eradication of future Spanish taxesA UK company is not an 'offshore company' unlike Gibraltar or the Isle of Man Shares in the UK company can be dealt with in a UK WillPossible exemption from UK Inheritance Tax for share transfersExpenses including flights may be tax deductibleCan be used for sale of a property rather than just for inheritance

This is a simple solution costing less than most probate and legal fees in Spain on the death of an owner of the property. Our unique service is available to all nationalities, including both residents and non-residents of Spain. To find out more including details of how one couple's beneficiaries stood to pay over €78,000 in taxes and fees on a €198,000 property please contact us using the form below.

To receive a personalised illustration please follow this link.