If you own property in Spain then please take note of the following:

• The inheritance tax system in Spain for non-resident property owners or beneficiaries is very complex and vastly different to the laws in the UK
• Unlike in the UK, it is a tax on the individual beneficiaries, not the deceased persons’ estate
• There is no total exemption between Spouses
• There are very minimal exemption allowances. (15,957€ usually being the maximum)
• The tax is calculated in bands from 7.65% up to 34% and sometimes higher
• Any tax owed is dependent on the relationship of the beneficiary to the deceased, the age of the beneficiary and the beneficiary’s current wealth in Spain
• The inheritance tax has to be paid within 6 months of death before the beneficiary can own the asset

Because there are so many factors to consider when calculating the IHT liability, Wincham Consultants are offering a free IHT Assessment service.

Our solution is comprehensive, legal and simple. We advise that owner/s should invest their property into a UK Private Limited Company which they, as shareholders of that company, would own outright. They then bequeath the shares in that company via a UK Will. This has no implication in Spain as the property owner is the UK Company which, of course, has not died. Beneficiaries need no NIE numbers to inherit, there is no need to probate in Spain and no Spanish Inheritance Tax will be charged.

What are the benefits?

There are many and here are just a few:

• Once the company owns the property, there is no longer a requirement to have a Will in Spain in respect of this property
• There would be no Spanish IHT Tax or Legal Fees in Spain payable on the death of the current or future beneficiaries
• As the company is a UK PRIVATE LIMITED COMPANY an Executor in the UK can easily deal with the Shares
• There may be significant benefits and tax savings in the UK in respect of UK IHT
• Should you wish to sell the property in the future you may consider selling the company with the property in it as it may avoid the Spanish property purchase tax for your buyer
• The Company may be able to claim tax relief on direct property expenses and to claim tax relief on the fees, expenses and taxes in respect of the Property Transfer transaction
• If your property is let then UK Corporation Tax would be levied on any net income. This is less than Spanish Personal Income Tax

What happens next?

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