Two changes within Spanish law have meant that our inheritance department has been very busy this year. In our question and answer section we try to address some of the queries that we have been receiving.
I would like to donate my property in Spain to my daughter. We are both non-residents. What tax implications will there be for us?
What you are talking about here is the ‘donación de bienes’ which is a gift from a donor to a donee. Some people prefer to take this route rather than pass on their property as inheritance.
If you do decide to go ahead, the process is still quite similar to that of transferring a property through inheritance. A new title deed will need to be signed and the transfer officially recognised in front of a notary. Many people have chosen to donate in the past in order to avoid inheritance tax. What some didn’t realise was that in Spain there is donation tax as well as inheritance tax.
Donation tax in Spain works very similarly to inheritance tax. However, you will be pleased to hear that as a result of the EU ruling, the relatively high rate of donation tax that used to be applied to non-residents is no longer applicable and donation tax now runs at the same rate for both residents and non-residents.
As your daughter is a very close relative it could be that you have very little donation tax to pay, depending on the value of the property to be donated and where it is located. If your property is in the Comunidad Valenciana, for example, and the donation is made between parents and children it could mean that there is no donation tax to pay at all.
I am a resident in Spain and made a Spanish will five years ago. In this I stipulated that my belongings go to my husband should I die and he has made out a similar will that favours me. Following the new EU ruling do I need to make a new will? I am a British citizen.
It seems that you already know that last year the European Parliament and European Council agreed that people’s inheritance should follow the inheritance law of the country in which they reside unless they specify differently in their will. A person with a different nationality has the alternative of asking for their own national law to apply:
EU citizens habitually residing in Spain will be subject to the Spanish succession law, despite their nationality, unless they specifically state in their will the wish for the succession law of their country of origin applied.
If you made your will five years ago, it won’t specify that you wish your own national law to apply. Under current Spanish succession law a portion of the half of whoever dies first will go to your children, if you have them. If your partner has children by a previous masrriage this can have particular implications for the surviving spouse.
If you have a previous will in Spain and any doubts about whether it should be amended, please do not hesitate to contact us so that we can check it for you. We are advising people in your kind of situation to make a new will and ensure that their wishes are complied with when they die.
I am a non-resident with a property in Spain. I intend to bequeath my property to my niece. She is also a non-resident but has spent many happy holidays in Spain. Does she need to put money aside to pay for the inheritance tax on the property?
You are very wise to be thinking ahead of the implications for your niece of inheriting a property in Spain. Too often we have seen where individuals have been unprepared for inheriting their Spanish property and this has caused difficulties for them.
It used to be the case that non-residents were charged significantly more inheritance tax than residents. However, you have possibly heard that a modified law was passed on the 28th November 2014 that meant that after January 1st 2015 non-residents could not be discriminated against when it came to inheritance tax.
This means that there might be very little tax to pay now. However, you do need to check what the exact situation is for you as you are intending to leave your property to a slightly more distant relative and there are variations according to region.