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Change to Donation Taxes Update

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Posted and filed under Legal Issues in Spain, Taxes in Spain, Wills, Probate, Donation and Inheritance.

Over the past months, we have written many times about transferring  property in Spain from parent’s names to that of your children as a donation, or early inheritance.

A number of people in the last year have donated their properties to their adult children, as the tax allowances in the Valencia region are currently very generous at 100,000€ tax free per adult child from each parent (as long as not step children and blood relatives) and good in the Murcia region too.

Donation Taxes Update

Brexit looked as if it would have an impact on the inheritance and donation taxes as once British people are no longer members of the European Union, it appeared that the concessions would no longer be applicable. We advised of this. Fortunately, in recent months the Spanish government appears to have accepted that it will not take away the right to regional favourable allowances to non-Europeans (something that previously looked very likely).

After that threat had passed, another one appeared in that the Valencian government had stated it’s intention to reduce or erase the favourable tax free allowances of 100,000€ per adult child for donations, and inheritances. They are still very likely to do this. However we have a bit more breathing space than we thought, as the Spanish government is in total disarray at the present time and unlikley to get round to changing this law in the Valencian region yet.

How To Inherit Paying Little Tax

We can quote the costs for a transfer of the property to your children with hopefully no donation tax currently, with just your deeds and a suma bill.

In summary, this remains a very good time to pass the property on to your children. If there is no donation tax in your circumstances, it is not going to get cheaper than this.

We keep saying this, but really, there will not be much longer that these savings remain. Please contact us to discuss donation or early inheritance to your children.

2 Comments

  • Clive Walley

    I have read somewhere that in the Valencia Region, there is no inheritance tax or donation tax between spouses. Currently, my home is worth around €300,000, is in my name alone and I wish my wife to inherit it on my death. We have been married 11 years and I have a Spanish Will which demands ‘English Law’ as to inheritance. Is this information correct and up to date please? Many thanks.

    • Nicola Ryan

      Good Afternoon Clive,

      Thank you for your enquiry.

      Currently, at the time of writing, in the Valencian region there is no donation tax allowance between spouses, that means if a donation or early inheritance was made, donation tax is paid on the full amount. If you were to pass away currently, then there is a 100,000€ tax free allowance between spouses. So tax would be paid on a sliding scale on the tax value (not market value) of the property above 100,000€. The first thing I would advise is that you make a Spanish Will, with a clause choosing your British nationality to govern the probate.

      If you do not have a Spanish Will, Spain will require UK probate (using the UK Will) for the Spanish probate before it can be completed and the property passed to your wife and that will cost a lot more.

      Property in Spain does not go automatically to spouses if joint owners anyway (although you are a sole owner), a Spanish probate needs doing through the Notary by a lawyer, involving tax office and the Land Registry in either scenario. If you wished to contact our legal team we could help with any questions.

      Kind regards
      Nicola

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