Inheritance tax in Spain signing property over to children

[Benjamin]

Good afternoon,

I am after a bit of advice, after discovering the pitfalls of the inheritence tax in Spain would it be suitable to sign my property over to my children as a gift or for a nonimal fee now so they do not have to worry about finding what will be a lot of money?

Cheers

[Darren]

Although it's certainly possible you would then have to pay "donation tax" which equals the same as inheritance tax.

So the only advantage in doing this would be that you are confident that the price of your property is set to go up and up.

Having said this I'm told there are various ways of reducing your children's tax liability so I would seek professional advice on this matter as you will need to use the best solution that fits your own circumstance.

[mad golfer]

You can sort out the Spanish Inheritance Tax problem a lot easier by transferring the property in to a UK company

[Darren]

You can sort out the Spanish Inheritance Tax problem a lot easier by transferring the property in to a UK company

Hi Mad Golfer & welcome to MySpain!

If you transferred it into a UK company would you then have to make your children directors of said company?

[mad golfer]

All you will need to do is to change your UK Will to state who you want to leave your shares to.

The owners are controlling directors, the children can be issued with shares with no control of the company.

When you die it is a simple process to move the share and issue a new share certificate to the beneficiary or beneficiaries after your Will in the UK has been probated.

As it is the company that owns the property and the company does not die there is no need for probating in Spain as, in so far as the Spanish authorities are concerned, the ownership of the property remains exactly the same.

The end result is no probate in Spain, no taxes in Spain and a smooth and seamless transfer of the ownership of the property.

[Tim]

All you will need to do is to change your UK Will to state who you want to leave your shares to.

The owners are controlling directors, the children can be issued with shares with no control of the company.

When you die it is a simple process to move the share and issue a new share certificate to the beneficiary or beneficiaries after your Will in the UK has been probated.

As it is the company that owns the property and the company does not die there is no need for probating in Spain as, in so far as the Spanish authorities are concerned, the ownership of the property remains exactly the same.

The end result is no probate in Spain, no taxes in Spain and a smooth and seamless transfer of the ownership of the property.

What happens if you no longer have any connection with the UK and nor do the beneficiaries? Surely that will be a matter for the Spanish authorities?
ie, you don't have a UK will as all of your assets are in Spain.

[mad golfer]

IF you are non resident or non domiciled in Spain you will have to pay National tax rates on Spanish Inheritance Tax, If you are domiciled in Spain then you will come under the Regional Tax Laws. Each region in Spain has different laws relating to Inheritance Tax.

In Valencia if you and your beneficiaries can prove residency for 3 years then there is a 95% tax allowance, but you must stay resident in Spain for 10 years after claiming this allowance, if you decide to move from Spain within this period then you will have to pay back the total allowance claimed plus interest.

It is always best to check what the tax laws in your region are relating to Inheritance tax

[Sam Greenfield]

Can you not just buy the property in your childrens names - i think id be more inclined to do that now with the trouble we are having with my pops

[Tim]

I am sure that this is only valid for holiday homes.

[Sam Greenfield]

I am sure that this is only valid for holiday homes.

Oh sorry