Wincham looks at the facts of Spanish Property Inheritance Tax. Inheritance Tax is payable in two jurisdictions – Spain and the Country of Domicile for the heirs and estates of Spanish Property Owners.
This is due to the laws in Spain stating the individual who is inheriting the property is taxed whereas in other countries, for example the UK, it is the estate that is taxed.
This could mean that upon the death of one of the property owners the surviving partner, or the owner’s beneficiaries, could face a tax bill that they will have to pay out of their own pocket – they cannot access Estate funds (or sell the property) to obtain the tax.
Added to this is the cost of probate in both countries for the Inheritors on top of the tax.
Common misconceptions –
1. A Spanish Will negates the problem.
A Spanish Will only deals with the issue when there is a death and does not remove taxation in Spain. All joint accounts will be frozen until such time as probate has been completed.
2. Double taxation treaties between Spain and the UK will help with the tax being reduced.
While this is true with regard to identical taxes, these are not. In the UK it is the estate which is taxed and in Spain it is the beneficiaries who are taxed meaning that one tax cannot necessarily be offset against the other.
3. Re-financing the property will avoid IHT as it is not charged on the property amount if there is an outstanding mortgage and loan.
This can easily result in the beneficiaries having a huge debt they cannot pay off. It must also be noted that many lenders will only finance the ownership if suitable life insurance is taken out, so the property is paid for on death and the tax still becomes due.
4. Joint ownership of the property with your children/beneficiary means they do not need to pay IHT.
This method holds no guarantees as their share of the property may end being at risk through financial or marital issues and if they die before the parents then the parents have to pay taxes to get the property back.
Wincham Consultants offers owners or prospective buyers of Spanish property legal and Taxation advice to structure the ownership of their Spanish property to significantly limit themselves and their Beneficiaries from Spanish inheritance tax liabilities.
Whether you currently own a property in Spain, are about to purchase or own the property in an offshore or Spanish SL Company, we have a solution and method to help to transfer your property into a UK Limited Company to avoid Inheritance Tax in Spain.
Not only have Wincham, market leaders in the provision of Consultancy Services in respect of corporate ownership of Spanish property, been operating in Spain for almost 20 years, but we own a portfolio of properties using the UK Company structure and would not recommend our clients use any methods that we had not proven ourselves.
Our team consists of qualified professionals including UK Lawyers, Tax Consultants, Chartered Accountants, Gestores (Qualified legal Assistants), Economistas, Abogados, (Spanish Lawyers) and Notary Publics.
Offering a full legal service in the UK and Spain, specialising in property, wills, probate and company sale and purchase we also provide – Taxation services – advising clients in income tax, capital gains tax, inheritance tax and purchase tax in both Spain and the UK.
Accountancy services – provides corporate clients with book keeping, final account preparation and the submission to both HMRC and the Spanish hacienda where applicable.
Company secretarial services – to include the provision of registered office, the filling of annual returns, maintaining statutory books, dealing with share transfers and company formations.
Debt collection services – this is a specialist service available to the mangers of Spanish apartment blocks where there is a requirement to collect unpaid community fees, from UK owners of Spanish properties.
FX (Foreign Exchange) services – the company provides a highly competitive FX service from Sterling to Euros and Euros to Sterling. No commissions are charged, the company offers corporate rates.
The company holds full money laundering licence approved by HMRC in the UK to provide this and all other services on and international basis. Priding ourselves on a professional, friendly and informative service, you will always receive communications in your native language wherever possible.
Providing solutions to your problems.
If you are affected by any of these issues you can register for a free illustration demonstrating the possible IHT liability your beneficiaries could be exposed to in Spain by registering at www.winchamiht.com or simply email your questions to email@example.com and a member of our experienced team will be in touch.