By Roser Coll, Partner at Temis & Co
This article aims to provide a useful overview of dealing with estates that contain both Spanish and UK assets and answer frequently asked questions.
What are the required documents to execute inheritance in Spain?
In addition to the death certificate, other paperwork required for executing inheritance in Spain includes:
-
Last Will and Testament in the UK
-
Last Will and Testament in Spain
-
Passport of the Deceased*
-
Passport of the Executor(s)
-
Passport of the Beneficiary(s)
-
Spanish Property Deeds
-
Grant of Probate (when available)
-
NIE Number (Tax Identification Number for Foreigners)
*If a passport isn’t available, any other document which identifies the Deceased is acceptable. Documents require a sworn Spanish translation and legalisation by the Hague Apostille.
The rules of intestacy in Spain
The inheritance law in Spain foresees the list of beneficiaries below:
-
If the Deceased leaves descendants – children, adopted children, or grandchildren – and is also married, the spouse will inherit the life tenancy/usufructo of a third part of the estate, and the descendants will inherit the rest of the estate in equal shares between them.
-
If the Deceased leaves only ascendants – parents or grandparents – and a spouse but no descendants, the spouse will inherit the life tenancy/ usufructo of 50% of the estate, and the parents will inherit the remaining.
-
In cases where the Deceased dies only with a spouse, without ascendants or descendants, the spouse inherits 100%. If there is no spouse, the collateral family will inherit: brothers, sisters, nieces, nephews, etc.
What happens when the Deceased passes away with no Will?
If the Deceased did not have a Will in place expressly mentioning the applicable law to the inheritance – chosen by the Testator/Testatrix –
according to European rules, the applicable law will be the law of the last habitual residence of the Deceased. Even though the United Kingdom stepped out of Europe under Brexit, this rule applies as long as a British national owns a property in Spain, as it is applicable Erga
Omnes.
For example, this means that if someone owns a property in Spain and passes away with their last habitual residence in Mallorca, the assets will be distributed based on the rules of Spanish intestacy law: the children will inherit the estate in equal shares and the spouse enjoys the life tenancy of 1/3 of such estate. Therefore, for British nationals who own property in Spain, it is highly advisable to make a Will referring only to Spanish assets, mentioning that the applicable law will be their national law – English law.
The advantage of English law in comparison to Spanish law is that it gives free disposal of assets and does not contemplate compulsory heirs, as opposed to Spanish Law.
Information on the relevant taxes
Inheritance Tax (to be paid in Spain)
The beneficiaries will pay Inheritance Tax once they inherit assets located in Spain and have six months from the date of death to do so. If the tax is not paid, a surcharge of interest and a fine shall be applied. The Inheritance Tax rate paid by British nationals is the same as the Inheritance Tax rate paid by residents in Spain. Inheritance Tax is regulated by the Autonomous Community where the property is located, and any reductions and bonuses applicable to the residents of that particular Autonomous Community shall also apply to British nationals.
Plusvalía Tax
In addition to Inheritance Tax, the heirs shall pay a local Tax called “Plusvalía Tax” based on the increase in value of the land from the day the Deceased acquired the property up to the date of the death. This tax is filed before the town hall of the city where the property is located.
In order to file the taxes, the Executors and beneficiaries will need to apply for an NIE number (Tax Identification Number for Foreigners). As the NIE number is usually requested in Spain, the Executors, and the beneficiaries will sign a bilingual Power of Attorney before a Notary in the UK, so they can authorise their counsel in Spain to deal with their NIE.
Other costs to be aware of during the process
Notary fees: approx. 1.000-1.500 euros
Registry fees: approx. 800 euros
Bilingual Power of Attorney: approx. 250 euros
Translation and legalisation of documents: approx. 300 euros
Legal fees: Temis & Co offers a fixed fee depending on the value of the estate, the number of beneficiaries, and the Executors involved.
Frequently asked questions
1. How can I save on Inheritance Tax in Spain?
It is advisable to make a Spanish Will referring only to your Spanish assets in order to plan in advance who your beneficiaries will be, and how much tax they will be liable for. It should be noted that the exact tax rules depend on each Autonomous Community and Local Council (Ayuntamiento), so each case should be studied separately. When making your Spanish Will, you should ensure you are provided with clear estate planning, advice on tax minimisation, and Will writing services in English. This will ensure your Spanish Will is compliant with Spanish laws and fully enforceable in Spain. At Probate in Spain by Temis & Co, we can help you create a Spanish Will.
2. Do I need a Spanish Will?
If you own Spanish property, we strongly advise you to make a Spanish Will referred to your Spanish assets only. If something happens to you without having a Spanish Will in place, the execution of your inheritance in Spain can be time-consuming, complicated, and expensive. Moreover, it will leave your heirs on their own to handle an additional difficulty: dealing with Spanish bureaucracy.
3. How do I know if there is a Spanish Will?
In Spain there is a centralised system for registering Wills which are to take effect over Spanish assets: the Last Wills Registry (Registro General de Ultimas Voluntades). All Wills are registered, whether they have been signed in the UK before an English Notary (provided registration in Spain has been arranged), or in Spain before a Spanish Notary. Custody of the Wills is therefore secured against loss or destruction. When making a request to the mentioned institution, we will always know if a Spanish Will was made.
4. What happens if I die intestate?
If you do not have a Will in place defining the applicable law, according to European Union rules that entered into force on 17 August 2015,
the applicable law for estates in Spain is the law of your habitual residence. This means that your assets would be distributed based on the intestacy rules of the Spanish Law in the region where you have established your residence. For example, if you have your residence in Mallorca, it brings into play a combination of forced heirship rules and life tenancies for spouses. Again, this is why it is highly advisable to make a Spanish Will if you own property in Spain.
5. Can I sell the Spanish property in the estate?
As a beneficiary of an estate with Spanish assets, prior to selling a Spanish property, you must accept the inheritance in Spain before a Spanish Notary in a Public Deed, and pay the Inheritance Taxes to the Spanish Inland Revenue and Local Council (Ayuntamiento). As a Treaty of Double Taxation between the UK and Spain applies, you will pay Inheritance Tax (IHT) over Spanish assets ONLY to the Spanish Tax Authorities, and NOT to the Inland Revenue for UK Inheritance Tax purposes.
6. Can I inherit the 50% property from my husband/wife/civil partner, as I have a joint tenancy in Spain?
In Spain, the property ownership differs from the UK. When a spouse owns half of the property each in joint ownership, if one passes away it does not mean that the surviving spouse will automatically inherit all the property. According to Spanish Law, before one can become the owner, the inheritance proceeding has to take place in Spain.
7. Do we need to pay taxes in both countries, UK and Spain?
The response is no. As there is a Double Treaty agreement between the UK and Spain, the lawyers of both countries will be coordinated to avoid paying Inheritance Tax twice.
8. Is there any tax discrimination between Spanish residents and non-residents?
In 2015, the EU courts decided that Spain was discriminating other EU nationals and overcharging Inheritance Tax from heirs who had their residency in other EU countries outside of Spain; since these heirs could not benefit from the same deductions as the Spanish residents could.
9. What are the taxes of executing an inheritance in Spain?
Apart from the Inheritance Tax (depending on the Atonomous Community where the asset is located), the heirs shall pay a local tax called “Plusvalía” Tax. This is based on the increase of the value of the land from the day the deceased acquired the property up to the date of the death.
10. What are the costs related to an inheritance in Spain?
The costs to claim the inheritance are:
i. Notary fees: approx. 1.000 euros
ii. Registry fees: approx. 800 euros
iii. Bilingual Power of Attorney and Apostille: approx. 250 sterling pounds
iv. Legal fees: estimated 1% of the inheritance. Minimum fee: 3.500 sterling pounds
If you’d like to find out more about how Title Research can help you with probate genealogy or asset repatriation, call our Client Services Team on 0345 87 27 600 or email fill in the form below.
Topics: Intestacy, Overseas Assets, Tax
