There is a raising concern among English expats owners of properties in Spain, about the significant amount of inheritance tax to be paid at the moment of death. We have already discussed in a previous article about the benefits of obtaining “civil partnership”, as an affordable option for those joint tenants who are not married.
However, regarding inheritance tax, unfortunately there would be no full exemption irrespective of the fact that the children, the spouse or civil partner might be the appointed legal heirs.
This explains why, we are receiving an increasing number of inquiries from foreign nationals (mainly English) asking us about the possible ways of eradicating all future national inheritance tax in Spain in respect of their Spanish property.
Therefore, the solution of transferring the ownership of their properties into a uk limited company might be of interest to some of you.
This option is taxed at 10% of the fiscal value of the property. This procedure can now be completed with the transfer made from personal names into a UK limited company. This would be basically the steps required:
First, a “company deed” would be prepared in the UK.
Second, they would then bequeath the shares in that company via a UK Will.
Third, the stamp duty tax must be paid in Spain, so that the new ownership of the property can be registered at the Spanish land registry as well.
Fourth, the legal company owners would have complete control of the property during his or her life time.
Finally, when the owner passes away, it would only be required to transfer some company shares, which falls outside Spanish inheritance tax as the company would still remain the owner of the asset. In other words, it is only the shares in the company that would change hands when the times comes.
Please find below an estimation of standard average costs regarding the process of transferring the ownership into an UK Limited Company:
1).- The 3% retention calculated over the amount of the declare price in the Title Deed, only applicable to NON RESIDENT citizens in Spain.
2).- Local Plusvalia Tax
3).- Payment of the Stamp Duty Tax (ITP or AJD) which the percentage will be 10%
4).- Notary and Land Registry Fees: around 1.500 Euros
For example, please find below a tax estimation calculated on a taxable price of 300.000 Euros:
a) Stamp duty Tax: 30.000 Euros
b) 3% Non Resident Retention: 9.000 Euros
Obviously, the costs of the administration need to be balanced against the advantages of future inheritance tax. All of the properties held would require to be assessed and the tax implications of moving the property carefully calculated.
We hope this information is useful for you. Should you have any question, please do not hesitate to contact our firm either by e.mail firstname.lastname@example.org or alternatively by visiting our contact section of our website www.ricorabogados.com
Thank you for your attention and we look forward to helping you.