Spanish Lawyer’s View

Introduction by Maria L. de Castro
Maria is a Legal Advisor in Spain.

In considering the benefits of transferring a property in Spain to a United Kingdom Limited Company, let's consider the position using an example;

I. ONE SPOUSE TO THE OTHER:

Let's look at the costs and time involved in a probate procedure in Spain in a typical case where one spouse leaves jointly owned real estate property to their marriage partner, and to their two children (25 and 30 years old) as an alternative:

Illustration;

Jack dies in 2007.

Jack has a property in Spain valued at 300.000 euros.

His Will names his wife (Jill) as heir, and two children as alternative heirs.

Jill, (Jack’s wife) survives Jack.

At the time of Jack’ s passing the property belongs 50% to each of them.

In Spanish law the 50% owned by Jack falls into probate.

Value of the inherited portion (i.e. Jacks half share) therefore is 150.000 euros

Procedure and time frame for the registration of the house in Jill’s name:

Probate procedure (made by a Spanish Lawyer)
Obtaining Power of attorney for probate procedure = (15 days)
Obtaining Certificate of the Registry of Last Wills = (30 days minimum)
Petition of Will to Notary = (15 days)
Declaration of goods for payment of ISD ( Inheritance tax) = (10 days)
Payment of tax = (15 days)
Notarising probate deed = ( 10 days)
Registration of inherited portion in Land Registry = (30 days)

Dependent upon the time of year, court workload, notary schedules and delay possibilities, any or all of these time scales could be doubled or more.

OVERALL TIME SCALE: 4 to 6 months. During that time, if a bank account is also inherited, it is frozen.

Expenses (approximate):

1. Legal fees for probating in Spain are an average of: 5000 €.

2. Tax to be paid in that case is shown in the graph below

IMPORTANT: Please note the illustration below was calculated at the time of print and is subject to any changes by the Tax office in Spain

Taxable Amount:

150.000€

Family Reduction:

15.956€

Taxable Balance:

134.043€

Tax Payable:

23.727€

Registry Fee & POA

450.00€

Legal and Probate fees in Spain

5000.00€

TOTAL LIABILITY: 29,177.00 €

The safe, legal alternative to an initial 29,177.00 € tax bill

is with the property in Spain owned by a UK Limited company:

Jack dies and is the owner of 50% of shares in a UK company which owns the property.

The transmission of shares is held in the UK and there are no legal costs, no fees in Spain.

II.LATER:

When Jill dies:

Their children (the two sons 30 y/o, 25 y/o) will have to probate the property again:

Every child: Same fees, same timing, same tax by each of them.

However the probate becomes even more complicated as there are now 2 beneficiaries, therefore legal expenses effectively increase by 50%, and tax liability now falls on both beneficiaries.

The safe, legal alternative to a SECOND Inheritance Tax Bill

With a property in Spain is owned by a UK company, there will be the correspondent transmission of shares and no liabilities under succession law in Spain. No fees, no legal costs

Conclusion

Restructuring your property now is a legal, intelligent and very simple process to save a small fortune in future taxes for your heirs.

The Wincham Investment property strategy takes care of everything for you.

We use qualified Lawyers, company formation agents, accountants and business consultants to restructure your property ownership.

You will NEVER lose control of the property, and can rent or sell it as you wish.

"For Example IHT in Spain differs from the UK. After an allowance (typically 15,957 euros) the balance is taxed at rates from 7.65% up to an incredible 34% or more..."
David Ivars - Lawyer in Spain - Real Estate building and Town Planning Degree

click here for more detail

"We are increasingly confronted with complicated estate planning cases involving Spanish property. Our clients often require solutions for legally and legitimately mitigating their tax exposure and/ or putting in place special arrangements, to cater for complicated family or beneficial circumstances. In appropriate cases, UK Limited Company Structures have successfully formed a component part of the solution we have provided in achieving our clients' objectives"
Andrew Eastwood, Managing Director, Legal4spain

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