First of all, Spanish succession tax (or “Impuesto sobre Sucesiones y Donaciones in Spanish” (ISD), is a tax on inheritance and gifts and is paid by the recipient of the inheritance or gift. It is due if the asset being inherited or gifted is an asset located in Spain, such as real estate or moveable property like stocks, shares, deposits in bank accounts, cars, etc
As a general rule, allowances are available depending on the relationship with the deceased or donor, irrespective of being resident or not in Spain. (Group 1: Natural and adopted children and other descendants (e.g. grandchildren, great-grandchildren) under 21. Group 2: Natural and adopted children and other descendants aged 21 and over; parents and other ascendants such as grandparents, great-grandparents, and spouses. Group 3: In-laws and their ascendants/descendants, step-children, brothers and sisters, cousins, nieces and nephews, aunts and uncles).
Group 1 and 2 receive a higher allowance than those included in Group 3.
Where both the deceased and the recipient are NON-RESIDENTS owning properties in Spain, the Statutory law will apply and subsequently the tax will be paid in MADRID. There is currently no blanket exemption between a husband and wife under the State rules, although some degree of allowance will be granted.
However, in the case of RESIDENTS, the inheritance rules will greatly vary depending on the respective Autonomous Community. (AC). In fact, where a married couple are both resident in Spain and one spouse dies, the surviving spouse can be fully liable on all assets inherited from the deceased spouse, subject to the allowances and reliefs available, providing they lived in one of the AC which grant such concessions. Remember that not all ACs do so!!!
The worldwide estate of those who are UK domiciles on death will also be liable to UK inheritance tax, as well as to Spanish succession tax on chargeable Spanish assets. Any succession tax paid in Spain can be deducted from any UK inheritance tax liability on the same asset to avoid double taxation.
So, What happens if the joint tenants or owners of a property are not married and one of them dies? What would be the best advisable options?
The problem here lies in the fact that there won’t be any applicable deductions or allowances and subsequently, the amount of inheritance tax might dramatically increase.
Therefore, the most advisable options would be either:
1) To get married under the Spanish law or alternatively
2) To apply for CIVIL PARTNERSHIP (“UNION DE HECHO” IN SPANISH)
A civil partnership is a legal relationship, which can be registered by two people of the same or different gender. Registering a civil partnership will give your relationship legal recognition. This will give you added legal rights in Spain. Not all people living together, however, decide to get married. If you are not looking to get married, but are in a serious and dedicated relationship, here is some legal information to keep in mind. Note that every Spanish district may have different laws with regard to partnerships.
The law regulating registration of a “Union de Hecho” in the Comunidad Valenciana is contained in Ley 1/2001 of 6 April 2001of the Generalitat Valenciana, and the procedure for registration is laid down in Decreto 61/2002 of 23rd April 2002 of the Gobierno Valenciano.
Those who register their partnership gain access to a number of legal rights. These include rights to survivor pensions, recognition for immigration purposes, equal treatment for tax purposes, including inheritance tax, protection from domestic violence.
Failing to register as Civil Partners can have dire consequences for Expats who are or become resident in the Comunidad Valenciana. An unmarried couple can register as a “pareja de hecho” and benefit from the same reliefs given to a married couple For example, a married couple, or couple in a “Union de Hecho”, resident in the Comunidad have a generous exemption from Spanish Inheritance Tax, but this would not be available to NON Civil Partners. As a consequence, in the event of the death of one non-registered Civil Partner, the direct financial consequences could be disastrous for the surviving Partner, as he would be regarded as unmarried and the survivor would be treated as an unrelated stranger and subject to the highest rates of Inheritance Tax, as explained before!!
There are about 100 local Register Offices for live-in couples in Spain. They have different provisions and several steps needed for their registration. However, I general these are some of the requirements for live-in couples to register:
- You are an opposite-sex couple or a same-sex couple
- You shall be stably cohabiting – living together in a de facto relationship
- You shall have common interests to maintain a family life together
- You and your partner should be of legal age or emancipated minors
- You must be legally capable
- You must register with the town district where the Register Office is located
Our Law firm is specialized in dealing with Civil Partner registration, and we will be delighted to help you through out the entire application process in the most efficient way. We would therefore be more than happy to provide you with a free very competitive quotation as well as to attend any of your future legal needs.
Should you be interested in receiving more detailed information about the nature of our Firm, and the scope of the legal services offered, please do not hesitate to contact us by phone or by E-mail to firstname.lastname@example.org and we’ll be glad to be of assistance to you.
Thank you for your attention and we look forward to providing you with individual personal service and the benefit of our “know how”.
Mr. Oscar Ricor