Inheritance Tax in Spain

Dodgysailor

Hi, I am not sure if anyone will be able to answer this question but I will try.
I was born in Spain from Spanish parents but I emigrated to the UK 13 years ago.
My mum died a few years ago in Spain and we had to pay a lot to the local goverment for inheritance tax. My dad and me want to avoid or at least minimize this when he dies and we are trying to figure out how. I have a 5 year old daughter born in the UK with British passport and my dad has suggested that if he passes the house that he owns in Spain to her she may be exempt to pay inheritance tax in Spain when he dies but she will need to pay in the UK which is likely to be much less.
I also believe that there are bilateral treaties between countries on this repect
Can anyone enlighten me over this?
Thanks in advance

xylophone

http://www.spanishsolicitorandlawyer.com/2013/03/06/spanish-inheritance-tax/

Before doing anything at all you /your father should consult a firm of solicitors qualified to advise on UK and Spanish IHT rules?
Example found here http://www.mmlawyers.co.uk/about.html - I'm sure there are others?

Savvy_Sue

I second that. If your Dad has assets in both Spain and the UK then I believe he needs a will in each country disposing of the assets held in each.

grey_gym_sock

however, if your father has always lived in spain, and only has assets in spain, then it's only spanish IHT that applies. leaving money to beneficiaries in the UK doesn't bring the estate within the scope of UK IHT.

donna20101

There is an article in the Telegraph online paper saying that you can recover inheritance taxes paid in Spain if you are a non-resident. Spanish Legal Reclaims have started a project to help EU residents that are non-residents of Spain to reclaim the money if you have paid within the last four years.

Savvy_Sue

donna20101 wrote: »

There is an article in the Telegraph online paper saying that you can recover inheritance taxes paid in Spain if you are a non-resident. Spanish Legal Reclaims have started a project to help EU residents that are non-residents of Spain to reclaim the money if you have paid within the last four years.

Probably this article.

Cook_County

Spain has forced heirship rules while the UK bases IHT on domicile.

It sounds unlikely that any of your family (you included) are domiciled within the UK for IHT purposes - but as you will become deemed domicile soon you may want an excluded property trust offshore - funded by your father would be fine.

SeniorSam

Dodgysailor wrote: »

Hi, I am not sure if anyone will be able to answer this question but I will try.
I was born in Spain from Spanish parents but I emigrated to the UK 13 years ago.
My mum died a few years ago in Spain and we had to pay a lot to the local goverment for inheritance tax. My dad and me want to avoid or at least minimize this when he dies and we are trying to figure out how. I have a 5 year old daughter born in the UK with British passport and my dad has suggested that if he passes the house that he owns in Spain to her she may be exempt to pay inheritance tax in Spain when he dies but she will need to pay in the UK which is likely to be much less.
I also believe that there are bilateral treaties between countries on this repect
Can anyone enlighten me over this?
Thanks in advance

Hello,

you have not made clear if your father is resident in the UK or in Spain. It is important to establish residency when considering possible IHT implications. Consulting a professional will give you a clearer picture.

Sam

Dodgysailor

Thanks all for your replies. It always help asking the forum before taking a decision...
Cheers