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ENGLISH SPEAKING LAWYERS IN MALAGA (ANDALUCIA / COSTA DEL SOL) SPECIALIZED IN PROPERTY LAW & CONVEYANCING

Archive for estate

INHERITANCE TAX IN ANDALUSIA: CHANGES AHEAD

inheritance tax paid by the heirs

inheritance tax paid by the heirs

On 1 August, the Regional Government of Andalusia approved the first of two reforms of inheritance tax in Andalusia. This reform and the upcoming one aim to improve taxation for heirs.

The first reform affected the acquisition of a person's usual residence by heirs and a series of reductions were approved, ranging from 100% to 95% when the value of the home exceeds €242,000. The reduction in inheritance tax in this sense is very significant.

However, it should be noted that only in estates inherited from parents by children (whether biological or adopted), spouses, relatives in the ascending line and persons related collaterally (siblings, cousins or grandparents) over the age of 65 can an heir in Andalusia opt for the reduction for the acquisition of the usual residence. Likewise, the following requirements must be met:

  1. Having lived with the deceased person in the usual residence during the two years preceding death.
  2. Maintaining ownership of this residence for 3 years.

Furthermore, the Regional Government of Andalusia has announced that it would complete a second reform of Inheritance Tax, which will enter into force on 1 January 2017.

In this case, the minimum exempt from Inheritance Tax in Andalusia will be of €250,000 per heir. I.e. heirs inheriting assets valued at an amount equal to or smaller than €250,000 will not have to pay Inheritance Tax in Andalusia.

As explained in a previous article, this exemption only applies to descendants or adopted children of the deceased person, as well as their relatives in the ascending line or adoptive parents and spouses, provided the pre-existing assets of the heir are equal to or less than €402,678.11.

Lastly, another substantial change should be noted as, for estates with a value of between €250,000 and €350,000, a minimum value of €200,000 is established. I.e. if the inheritance received by a child or widowed spouse is valued at more than €250,000, the first €200,000 would be exempt from inheritance tax and only the remaining amount would be paid, provided that the total value of the estate does not exceed €350,000. If this amount is exceeded, inheritance tax would be payable on the entire value of the estate, without the possibility to apply any exemption.

Lastly, I would like to remind you that the best way to plan your inheritance begins with your will, for which reason it is always best to go to an appropriate professional who can examine your situation and give you personal advice.

 

Author: Gustavo Calero Monereo, C&D Solicitors, Malaga, Andalusia.

 

 

DON’T FORGET YOUR WILL IN SPAIN WITH THE NEW EUROPEAN REGULATION

Renewing Spanish will 2015

Renewing Spanish will 2015

We wouldn't want to ruin your day by talking about the “other life”, which we hope is a long way away (fingers crossed). However, because of the European Succession Regulation approved on 27 July 2012 and its upcoming application for the succession of people who die after 17 August 2015, I think it convenient to dedicate a few words to foreigners with assets in Spain.

As a starting point, this regulation establishes which jurisdiction applies to the assets of a EU national in a country of the European Union. The law applicable to the succession of a EU national, according to this Regulation, would be that of the country of habitual residence, with the ability to choose to apply the Law of his or her nationality provided that the deceased has stated this clearly and unequivocally in his or her will.

When it comes to Spain, if you are a national of a different country in the European Union but you reside and own assets in Spain, you must know that, if you do not have a Spanish will that clearly and unequivocally states that you would like the law governing your succession to be that of your nationality at the time of death, Spanish law will apply to your inheritance. What does this mean?

In Spain, there is no liberty to leave your property as inheritance to whomever you want. In Spain, the assets of the deceased are divided into three parts. Two of these parts belong to forced heirs, as follows:

  • The first part goes to each of the children in equal parts or, in the absence of children, to parents or, in the absence of the latter, to siblings.
  • The second part goes to one of the children or, if nothing has been set out, it is divided among all children in equal parts as well, as explained above.
  • The third and last part of an inheritance is the freely disposable part and this is the part that the deceased can leave to whomever he or she wishes but, to do this, there must be a will establishing this because, in the absence of a will, it will also be divided among the children in equal parts.

In Spain, a spouse comes last among forced heirs and would only inherit in the absence of these. In other words, if you are a foreigner in Spain and you reside and hold assets in our country, be aware that, if you die without a will or your will doesn't clearly state that you would like the law of your nationality to apply, your spouse will probably inherit nothing.

The best way to prevent problems of this type is for you to execute a will in Spain and clearly state the Law you would like to apply at the time of your death.

If you happen to have a will in Spain already, it is important for you to review it and verify that it complies with the provisions of the European Succession Regulation or, in other words, that the will you have signed clearly states that your will is for the law governing your succession to be your personal law, i.e. the law of your nationality at the time of your death.

In my opinion, wills that state that “this will is valid pursuant to the personal law of the testator and said law does not cover the concept of forced heirs...” or contain similar words may cause problems under the New Regulation and, in these cases, my recommendation is to execute a new one that clearly states that you would like your succession to be governed by the law of your nationality.

I would like to clarify something that is often confused in these matters. The law governing the succession of a person in Spain is one thing, which depends on what has been explained in this article, but the tax consequences of succession in Spain are an entirely different matter. In this case, we're referring to Inheritance Tax, which is regulated as explained in our post from March , as payment of that Tax will be due from the fact of inheriting an asset located in Spain, regardless of the Law governing your succession.

Lastly, we wish that you live for many years and you don't have to worry too much about such unpleasant matters.

Author: Gustavo Calero Monereo, C&D Solicitors (Lawyer)

Torrox-Costa (Malaga/Costa del Sol/Andalucia)

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