How to cope with Brexit – finding tax-wise solutions

Last updated on March 19th, 2020 at 02:06 pm.

Most of our British clients are worried about the implications of Brexit. In this article we look at some possible tax consequences in Spain; helping you take matters in hand and provide peace of mind for you and your family.  

Have you ever considered donating your Spanish assets to your children? Donation is a legal form of passing on your property that is less well-known than inheritance. However, it can be very advantageous to you in certain cases.

There are currently some important tax advantages you can benefit from as an EU member with assets in Spain. These tax allowances do vary if you compare the different regions of Spain (Comunidades Autónomas). Here in the Comunidad Valenciana, the donation tax personal allowance amounts to 100,000€ per donée, provided that donation occurs between parents and children.

The adjective ‘personal’ when talking about taxes in Spain, means that it is applied separately to each taxpayer. In practice this means that the more people the property is shared between, the less overall tax liability there is.

This significant fiscal benefit makes donating particularly beneficial. However, there are other points worth taking into consideration to help you make up your mind.  For instance, declaring Spanish donation tax now means that, in the future, your children won’t have to pay inheritance tax upon your death. Instead they will have already met their fiscal obligations while their parents were still alive.

Having to go through bereavement is enough for a family and, having donated your property to your children, you prevent them from more trouble and expense at a particularly difficult time.

The Spanish donation process is also more straightforward than the inheritance process. It is a free act and it is not necessary to observe beneficiaries by law or wait for somebody to claim their share of the estate; you can just donate the property to whoever you wish.

We strongly advise donation to some of our clients for economic reasons, but also to avoid problems when dealing with your assets in Spain. As they get old, some people cannot act in their own name when they are ill and require somebody to represent them. They normally want their children to act on their behalf and need either Power of Attorney or a court authorisation and judicial appointment of a guardian. Only then can actions be taken as a parent’s representative. This takes time and it is expensive. Having donated your property to your children, you will never have this kind of problem regarding your Spanish assets.

It would be essential to study each case separately, but if after reading this article you think you are eligible for donation benefits, please do not hesitate to contact us by emailing legaldpt@abacoadvisers.com as soon as possible. In this way we can limit the consequences of Brexit and try to ensure that you don’t lose out.