Inheritance Tax on Irish assets

@mariadecastro / @purdyw

Thank you both for your replies.

@mariadecastro - I do not see how the Modelo 720 does not apply in my situation. As @purdyw has pointed out, cash + property of more than 50k requires the submission of this form and as far as I know (I do not have the details as of yet), the inheritance will be above the 50k. This is my understanding, unless I have been misinformed or I have misunderstood. For example now the following scenarios occur to me:

Do I declare (Modelo 720) only if the monies are transfered to a Spanish account?

What happens if I leave the money in an Irish account?

Are there different rules depending on where the balance resides ?

Is the inheritance the total of the estate or my portion of the estate? I will be recieving 50%.

Regards

Finner

Finner:

The whole situation falls, from a Tax point of view, into the IHT. Just this.

Model 720 is for your holdings abroad, not for acquisition through inheritance.

You will pay IHT in Spain because Spain is your tax residency, regardless of where balances are. You will be paying taxes just for the 50% of course.

@mariadecastro thanks for your reply

What does IHT mean? Is it Inheritance Tax?

Does that mean I only have to pay a one off payment of tax for the money inherited and that's it? No Model 720 next year or anything like that?

Would the house be considered holdings once it is in my name? Wouldn't that mean I need to present a Model 720?

Yes, just IHT ( Inheritance Tax) applies to your situation

M

Finner - you said last September

I live in Cataluña full time. I am not a tax resident in Ireland, only in Spain.

Maria

Surely then any gain in Finner's worldwide wealth due to his/her inheritance that means he/she holds a benifical interest in a qualifying asset with a value over 50k€  will require the submission of a modelo 720 ?? 

Finner I'm sure this needs to be done before the end of March - take advice locally - its not a further tax but just to report your assets - the penalties for not doing it are potentially large! 

@Team GB  

Model 720 applies to the previous year, in this case 2017. In 2017 I did not inherit anything. The inheritance is only coming through now, in 2018. Any declarations will need to be presented next year.

@mariadecastro what is the tax procedure? Do I need to declare anything this year in La Renta? 

Ahh ok! didn't realise you hadn't got it yet! 

We are talking in 2 different realities, which generates two different tax obligations, if you are a Spanish tax resident:

1.- Inheriting- It generates the obligation of paying IHT taxes in Spain for all you are inheriting worldwide. Taking into consideration your rights on avoiding double taxation regarding assets abroad. The obligation is to be met within 6 months from date of death. No further tax on capital gain, holding assets abroad.... generates from the fact of inheriting.

2.-Holding assets outside Spain: As a Spanish tax resident you need to declare all your assets worldwide

• Accounts in financial institutions abroad. 
• Securities, rights, insurance, and income deposited, managed or earned abroad. 
• Real estate assets and rights in real estate situated abroad. 

You present this info once and there is not an obligation in subsequent years unless you obtain a value increase of more than 20000€ in any of the three groups

If you inherit a house abroad, you will need to declare on its existence on next 720 declaration period ( 1st of January to 2nd in April) after the acquisition.

@mariadecastro In the case of inheriting, my dad died in September but the inheritance is only coming through now (I am not the executor of the will). Does the six months apply from September of once the inheritance is finalized?

Should I transfer the funds to my Spanish account or Irish account?

How do I declare/ pay these taxes ?  

Hi Finner, I would definitly recommend you get a specialist lawyer/ solicitor who deals with this... My father and distant cousin died 3 years ago, and my dads probate is still not through!! My cousin left some cash and land between 5 of us.... The irish lawyer has kept the tax on this, until i have proof of paying it in spain!! unreal! Its a mess realy... The land, although my share is under 50k, as far as i Know it still needs to be declared on 720 form, as the total  land value is over 50k. (between us)

You realy do need to get a solicitor to deal with this, as esp there is land/house involved, and siblings.

You have an alowance of 100k in spain, so if your inheritence is over this then you pay tax. (in ireland its 300k!) .. I think its about 20%, but not sure.. You need to get the death cert, his will and land plan/info translated legaly, so I would get this done asap to bring to solicitors...

It probably best to lodge it in Ireland, until you have declared your inheritence,and transfer it in dribbles if you need cash or withdraw from here..( i think anything over 6 or 10k that is transfered to your account here, will be reported to main banking entity), so transfer small amounts.

When you have inheritence declared, and tax paid, I suggest you fill out 720 to declare property, and cash if its still in your Irish account... It would probably be easiest to transfer cash into yr spanish account, once inheritence is declared, so you only need to declare the irish property on 720..

hope that helps..

Hi 

The land, although my share is under 50k, as far as i Know it still needs to be declared on 720 form, as the total  land value is over 50k. (between us)

My understanding is that you only report asset values owned by you ! so no, if your share is under 50K€ you wouldn't need to report it! maybe Maria or Kathyslad  can confirm 

Hi there,

Quick update.

The professional advice I have been given with respect to receiving the funds is as follows:

a) Pay the tax in Ireland

b) Declare the inheritance on Modulo 720 next year, 2019 

Finner