Inheritance tax reductions – Andalucia

Filed under : Open Days - Free, Bookable Consultations, Tax Planning - Inheritance, Wills, Probate & Inheritance

This year 2018 brings good news for family members who inherit property and assets bringing inheritance tax reductions in Andalucia. The regional tax has been reduced, with spouses, children, parents and those registered as partners – parejas de hecho – receiving an increased tax allowance of 1,000,000€ per beneficiary.

Spanish inheritance tax is a donee tax falling on the person who receives. This means that if you and your spouse are joint owners of a property whose tax value is just under 2,000,000€ and you receive one half, you would not pay succession tax in Spain.

Unlike previous deductions, this new allowance applies even if the beneficiary receives more than the amount of the allowance. It acts therefore in the same way as the nil rate band in the UK.  So if you inherit 1,100,000€, you deduct 1,000,000€ and only pay tax on the 100,000€.

At present this applies to all European Union residents which currently includes the UK. It is going to be important to know if these allowances will remain post Brexit. Many lawyers and accountants fear this will not be the case.

This is because the way in which this tax was payable before 2015 was challenged in the European court and a decision was made that by charging higher rates to non-residents in Spain it discriminated against EU nationals. Once Britain is outside the European Union it is possible British residents will be treated as citizens of countries outside the EU, with a return to the high pre-2015 inheritance tax.

There is a possibility that the principle of reciprocity might be applied to some taxes post Brexit. For example, the fact that spouses of Spanish residents would not be charged inheritance tax in the UK could allow for some negotiation on inheritance tax provisions post Brexit. The important thing is to obtain information now on what inheritance tax could become payable, and what measures might need to be taken post Brexit if you are a UK citizen.

Individual circumstances vary so do please contact us for further information or a consultation on 952 527 014 or email [email protected] We are also holding an English wills day in Nerja on 21st February 2018 with more days to be announced for all our offices.