how to avoid spanish inheritance tax

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07 Mar 2015 11:43 by dbd Star rating. 62 posts Send private message

Background

I have been reliabely informed how to avoid spanish inheritance tax.........................haven't I?

Background

Myself and my family are in the process of going to retire to our second home in spain.so hopefully all is good. However, we have a complicated situation in that my wife and daughter are Spanish and I am Irish. So at our time of life we were thinking about what and how to leave our assets to our daughter. I had heard about this nightmare called 'Spaanish inherrritance tax' for a while now so it was something always at the back of my mind.

Bear with me

We were originally told the best thing to do in tems of wills was to have both a uk will and a spanish will. The uk will dealing only with the assets in the uk and the spanish will dealing only with the assets in spain but most importantly to make the spanish will an appendiceses of the uk will so both wills are determined unltimatley by uk law. I am no lawyer but realise and believe that when we make the big move we will no longer have assets in the uk so this would surely make the uk will null and void.

however

I was recently told the way to get around this, in relation to spanish ineritance tax, is to make sure  when we make the move to spain to retain the/a bank account in the uk which would still validate the uk will when we move to sunny spain. So the propertyi n spain as a part of the uk will could and would be left to our daughter under uk law and not spanish law. I have been reliabely informed how to avoid spanish inheritance tax.........................haven't I?
 





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07 Mar 2015 11:50 by bobaol Star rating. 2257 posts Send private message

bobaol´s avatar

Aren't you making that a bit over complicated? The new rules (law, legislation?) as explained by Maria on here say that you can now put a clause in your will stating that you want the laws of your home country to apply to succession.

Nothing about retaining ties in the shape of bank accounts in your home country.





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07 Mar 2015 13:23 by juansheetisplenty Star rating in Cartagena. 273 posts Send private message

juansheetisplenty´s avatar

Even if you retain UK accounts and move to Spain, you would still need to declare world wide assets on the "modelo 720" form if they exceed 50,000 Euros by category. Taxes also do not follow the wills, they follow the person and their residency. So if  become resident of Spain you will be taxed as a Spanish resident. The change in the law is very complex and I would recommend specialist advice. The key effect on UK citizens resident in Spain is to be able to preclude the Spanish inheritance laws applying (children's entitlement etc.). If you retain property in the UK you should also be aware of the effects of this then becoming a secondary residence to the Spanish tax. If you then dispose of this after moving there are capital gains implications also.





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07 Mar 2015 13:39 by camposol Star rating in Camposol. 1411 posts Send private message

Bobaol-- obviously it's a good idea to make a Spanish will, but it won't avoid inheritance tax.

 





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07 Mar 2015 13:45 by bobaol Star rating. 2257 posts Send private message

bobaol´s avatar

I didn't imply it would avoid IHT, simply apply the succession rules. 





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07 Mar 2015 14:03 by camposol Star rating in Camposol. 1411 posts Send private message

But dbd wants to know how to avoid IHT ( don't we all!)

Did what you have been told is, as Bobaol says, complicated, and I do not see how you would avoid this horrible tax.

Your daughter would have to pay IHT on all your worldwide assets anyway. No wil can change that fact.

Personally I would not move all my assets to Spain, putting all your eggs in one basket

You need to consult a financial  advisor.





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07 Mar 2015 15:53 by bobaol Star rating. 2257 posts Send private message

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The only way is to live in a region that has a high allowance. I know Murcia did but then reduced it so other regions can jump on the bandwagon which doesn't help.

Valencia has the first €100,000 as an allowance and then any tax due over that is reduced by 75% for spouses and children. I believe the allowance in Andalucia is even higher at €175,000. This, however, doesn't help much as Murcia had the same allowances but pulled the rug out and dropped it to less than 16K. ( and before you say it, I agee the barstewards).

Keeping an account in UK, or even an offshore account nowadays, won't make a jot of difference. 

By the way, my solicitor reckons this new EU ruling for non-resident allowances will be based on time the property has been owned, not residence status. Be interesting to see if she's right.





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07 Mar 2015 18:27 by camposol Star rating in Camposol. 1411 posts Send private message

 Bobaol- a bit of confusion here. Murcia regional allowances were abolished in 2013, hugely unjust  for residents in a postcode lottery.

the state allowance remains the same for everybody, just under 16 k, a measly amount,

it has not been reduced, indeed it needs raising as it has been the same for many years, while people's assets have vastly increased.

There are no satisfactory methods of reducing IHT, other than being lucky enough to live in a region with generous allowances.

There is talk of a fairer IHT involving lessening the huge differences over the regions

What is also needed,  is a decent state allowance, and for spouses to be exempt from this mean tax.

 





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07 Mar 2015 18:27 by camposol Star rating in Camposol. 1411 posts Send private message

duplicated- again

 

 


This message was last edited by camposol on 07/03/2015.



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10 Mar 2015 17:46 by dbd Star rating. 62 posts Send private message

Could somebody notify me of the IHT tax free amount in andalucia. My mother in law (Spanish in Andaluca) inherited a house after her husband passed away and she or the rest of her family did not have to pay IHT.How come?

If I put a clause in  my willl (Spanish or English) Does that matter? Some body mentioned how Maria had coverred this ipreviously. Where can I find the info. thanx.





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10 Mar 2015 17:49 by dbd Star rating. 62 posts Send private message

By the way my Spanish father in law passed away approx two years ago so before the EU changes.





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10 Mar 2015 18:26 by bobaol Star rating. 2257 posts Send private message

bobaol´s avatar

dbd

The allowances in Andalucia are (were) very high. The first €175,000 then was exempt and spouses/children had a 99% exemption on anything over that up to a large amount. They wanted to scrap IHT altogether but it's part of national law so they had to keep it, albeit with very high allowances.

Valencia had similar allowances but reduced the exemption to 75% after the first €100,000.

 





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10 Mar 2015 18:48 by camposol Star rating in Camposol. 1411 posts Send private message

Dbd- your MIL probably didn't  have to pay IHT because the assets didn't come over the allowance threshold 

perhaps the assets were split between members of the family

putting a clause in a will does not mean you can avoid IHT!  Otherwise we 'd all do it!

Just be grateful you don't live in Murcia!





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