As a part of the real estate market, I would like to share with you and your clients the recently news about inheritance legislation and Spanish wills in Spain. As EU citizen, there is new EU inheritance law, that may affect you if you have assets in Europe.
The new Regulation (EU) No. 650/2012 of 4 July 2012 states:
Article 21 General rule:
1. Unless otherwise provided for in this Regulation, the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death. In case the last habitual residence is in Spain, the Spanish law will applicable to the succession.
Choice of law
1. A person may choose as the law to govern his succession as a whole the law of the State whose nationality he possesses at the time of making the choice or at the time of death. If you possesses British or Irish nationality you could choose by a will your nationality law to govern the succession.
2. The choice shall be made expressly in a declaration in the form of a disposition of property upon death or shall be demonstrated by the terms of such a disposition. By a will.
This means that if you have a Spanish will it must specifically state that you wish your own country’s inheritance law to apply. If this clause isn’t included then the distribution of your inheritance will automatically revert to Spanish law. If you have no will at all, then Spanish law will also apply. This does make a difference.
Spanish national inheritance law
According to the Spanish national inheritance law a certain percentage of inheritance must be left to legal beneficiaries such as your spouse and children. This is different to UK and Irish law which allows an individual to leave their inheritance to whoever they wish.
If you have a specific request for who you wish your inheritance to be left to then leaving your old Spanish will as it is or having no will at all may mean that your wishes cannot be followed.
The new legislation comes into effect since 17th August 2015. For that reason, I highly recommend that you do change your will if you are a resident in Spain but do not have Spanish nationality, in order to adapt your documentation to ensure that you can leave your inheritance to those you choose.
On the other hand, I would also like to remind you the news about taxes, penalties and inspection from the agents of the tax office when a client is an owner of a property in Spain.
The non-resident property tax (Impuesto Sobre la Renta de no Residentes) is a tax based on property in Spain for non-Spanish residents.
The Spanish tax authority assigns an income, or imputed income, or notional letting value to the property. A tax return has to be filed regardless of whether or not the property has been rented and whether or not the owner has actually received an income from the property.
As there have been problems in the past and still today that many people are simply unaware of their financial responsibilities, the tax office is checking all taxes to be paid, and if the owners are late paying, they are charging an interest rate, and it will keep increasing until paid, interest and penalties will be depending on the severity of the case, between 50-150% of the tax amount.
Furthermore, actually if the owner as a natural person, is not resident in Spain, tax may also be due in the country where they are resident, subject to any Double Taxation Treaty Relief.
In order to avoid unpleasant surprises, the owners of a property in Spain have to be updated in all taxes. They have to avoid to wait the Taxman to knock on their doors with a penalty proceeding against them.
In case that you have any require, or need help in this matter do not hesitate to contact me.