Inheritance tax differs between countries, and with many people choosing to enjoy their retirement in beautiful Spain (who can blame them), it is helpful to know how Spanish inheritance tax differs from that of the UK.
If you stay in Spain long-term or frequently, as a non-resident or resident, it will pay to understand Spanish inheritance tax.
What is Inheritance Tax?
Inheritance tax is the sum that beneficiaries owe on assets inherited from an estate. This can be significant amounts of money, particularly if the deceased owned property. The inheritance tax rate is currently 40% on any estate valued at more than £325,000.
Inheritance Tax in Spain
If you are a UK citizen and own assets or property in Spain, you should ensure you know precisely how the Spanish inheritance tax will affect you and the beneficiaries of your estate. The first key difference between Spanish and UK inheritance tax is that in the UK, assets left to your spouse or offspring are free from inheritance tax, but in Spain, they are not. You should bare this in mind when creating your will.
Your Children’s Inheritance
It is usual practice in the UK to state in your will what is to be left to your children, but in Spain, you must have a clause stating that you wish the inheritance to be split according to UK law. Without this clause, Spanish residents from the UK will need to comply with Spain’s inheritance tax regulations. Spanish inheritance tax rules are that 2/3 of your assets must go to your offspring as legally forced beneficiaries. The total sum of inheritance tax due on this varies in different areas of Spain, so it is a good idea to research the rules of the particular area you will be staying in.
Andalucía – Inheritance Tax Rules
Andalucía offers not only beautiful weather, stunning scenery and a wealth of things to enjoy, but it is also one of the best areas for inheritance tax. Andalucía has now topped Valencia as the most tax-friendly area of Spain, with a whopping one million Euro tax-free limit. When you make your will, it is important to consider all aspects of your estate and where you will reside. This will help you to plan a better future for your loved ones once you have passed away.
For help with Spanish probate issues, contact Spanish Probate Matters on 0208 1502010.
