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Thread: Ways on How to Avoid Inheritance Tax on Spanish Property

  1. #1
    DAVID THOMAS
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    --

    Hi,
    what are the costs be to avoid Spainish IHT in the UK? of forming a company? etc.
    Dave

  2. #2
    Senior Member
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    Dear Sir,

    The reply to your queries are in the article you quote.

    However, I must point out that article is from 2005 and changes in the laws have been passed which change the advice given within. e.g. regarding holding companies the taxation has changed making them a less attractive option.
    Last edited by Lawbird Lawyer; 12-29-2008 at 12:45 PM.

  3. #3
    liz hagerty
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    Is there less tax to pay in the UK? If so can an English will override a Spanish one?

  4. #4
    Junior Member
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    David ,The costs of forming a UK company translating, Notorising and Apostile of the Documents, obtaining a CIF number for the company in Spain ,all Legal fees and Notary fees in Spain in connection with gifting the property to the company ,IVA/VAT would be £5000 all in less than the cost of 1 persons probate in Spain

  5. #5
    Vanessa Deakin
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    Could you please advise me on the costs of setting up an EU company for my property in Majorca?
    Thanks,
    Vanessa

  6. #6
    Doug
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    My wife and I jointly own a property on the Costa Del Sol, Spain, worth about 600,000 - 700,000 euros. We are both residents. Would the formation of a UK or Spanish Limited Company avoid paying Spanish IHT if either of us died. We have a Spanish will, naming our two daughters in the UK as beneficiaries. Can you give us any idea of the cost?
    Thank you

  7. #7
    Senior Member
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    Hi Doug. I do see why you would be interested in setting up a structure with a view to reducing your exposure to IHT, given the small mortgage on the property.

    A calculation based on the figures and the number of inheritors (2) shows a tax liability of around 40k Euros per inheritor in the current scenario (700K Euros value of property and 80k Euros mortgage).

    You are able to form an UK company or alternatively a Spanish company (SL) and transfer the property into it, which although would not eliminate the exposure it would however allow you to deal with it in a more effective manner.

    The associated costs would be as follows, in the case of a Spanish Limited Liability Company:

    • Company incorporation costs: 1800 Euros
    • Stamp Duty: 7.000 Euros (on a declared value of 700k Euros)
    • Notary fees: 800 Euros (approx)
    • Land registry fees: 700 Euros (approx)
    • Change of utility contracts and Town Hall records: 250 Euros
    • Registration of deeds fee: 250 Euros
    If you were to incorporate a UK limited company you would have the same costs as above except for the incorporation costs which presumably would be significantly lower.

    Should you have further queries do not hesitate to contact me.
    Antonio Flores
    Abogado/Lawyer
    Lawbird Legal Services | Contact Me
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  8. #8
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    Doug
    The cost of the whole transaction of investing your property into a UK Company including Notary fees in the UK and Spain are £5000 This includes company formation ,and obtaining a CIF number for the company also the setting up of a Company bank account and transferring all the property bills into the UK company . There will be Plus Valia tax to pay ,land register fees and 1% regional tax. When done the company does not pay any taxes in Spain , No IHT in Spain and no IHT in the UK for you or your Spouse .The company can claim tax relief in the UK on all attributable expenses including mortgage interest, running costs are £575 per year The transfer takes maximum 4 weeks, review www.winchamiht for more info.

    You don not need a Spanish Will if you have a UK one ,all that is required is a death certificate and a grant of probate from the UK translated notarised and apostiled , remember a UK Will can be varied within 2 years from death and this means that the asset could be left to a UK Company that will not pay IHT in Spain, A Spanish will can not be varied.
    A UK company is the only sensible method of removing Spanish taxes with no risks and at a low cost.

  9. #9
    Dee
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    Default Ways on How to Avoid Inheritance Tax on Spanish Property

    Need some advice due to death of my mother, jointly own a property with my sister and mum, there is a spanish will

  10. #10
    Senior Member
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    Dear Dee,

    Please contact us on your matter.

    Yours faithfully,

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