Golden-eye

Decision is made ~ we want back over the pond, however, we are flip flopping between England and Spain...

Potential deal breakers, HEALTHCARE and INHERITANCE TAX

We are both in our 50's, hubby although you wouldn't know to look at him has had some health issues that would make a private policy cost restrictive..

In Canada we pay a monthly Medical Services Plan aka MSP premium, we get great healthcare.

Move to England ~ Residence based ~ would be able to access the NHS

Move to Spain ~ S.O.L. as from what I understand Residencia laws allows only for those there before 2012..
I've read that........ There are plans.. There aren't plans.. It's a go.. IT's a not a go... there is a pay into (not to be confused with private insurance) plan in Spain.. Does this exist in Valencia Province ??

Option 2 ~ ( I'm trying to be creative)
Become Self Employed, I'd rather not work, but my little very part time hobby could provide a small income.. If I registered as Self Employed, paid the 250 Euros' or whatever it is per month I would then be able to get health care for myself & my 'dependants' aka Hubby would also be covered ?
We could go years & years without needing any doctors appointments but I need all bases covered t's crossed and i's dotted, given that my otherwise fit & healthy hubby has had a couple of completely recovered from health scares eg.. idiopathic Pulmonary embolisms..

Am I out to lunch with this 'outside the box' way of thinking ?

We have absolutely no problem declaring overseas rental income, dividend income etc and paying our fair share of taxes in the country of residence... But what I don't want to do is throw money down the drain, which brings me to...

INHERITANCE TAX

It's once of those topics that we are all often uncomfortable discussing, but the reality is that M.I.L. isn't getting any younger, where as we would love her to go on to be a healthy 100 we all know the chances of that are slim... IF she chose to blow it all on herself having a fun time, Awesome, she earned it, she deserves it... But then again if she passes away still with the proceeds of her house in tact, I don't think any Country deserves to get more than the minimum on already Taxed money..

So with this in mind.............

In Canada and the U.k I understand that the Estate is taxed 1st, then the beneficiaries receive whatever $$$ (sorry keyboard doesn't do pounds)amount which is then a non taxable benifit..

In Spain, is it true that the estate is taxed then it is taxed again once it passes into the beneficiaries hands?

I'm all for Tax avoidance NOT tax evasion so if there is any way to avoid this I would like to know..

Then again maybe I've got it all wrong ans someone can post in Plain English.. Pro's and cons of each countries laws regarding these points.

Thanks, I'm sure it's all been said before, couldn't find it..

Pulaski

Partially off topic, hold down the Alt key on your keyboard, then type 156 on the number pad to the right of the keyboard (NOT the numbers across the top), then release the Alt key!

Golden-eye

Awesome !!!

£ £ £ £ £ I just can't stop !! LOL Took me a while to figure it out as nothing seemed to be happening ~ then I lifted my finger off the 'alt' key ..

OMG ~ this is great, you have no idea how often I go in search of a news article or somewhere I can copy and paste a £ from when conversing with my family in the UK
£ £ £ £ £ £ £ £ £ £ £

trottytrue

I think it depends on how much your MIL has to leave. My Mother had just over £100,000 and we didnt have to pay any inheritance taxes but that was a few years ago. Perhaps there is a way you can protect her assets now.

trottytrue

Pulaski.....Thank you for the information on the £ change I had been told how to do it a couple of years ago but forgot. I kept trying but my problem was I kept using the 156 on the mainboard.

Lynn R

Hopefully I can answer some of your questions regarding the position in Spain (I moved there at the age of 50, almost 7 years ago now).

Since July 2012, anyone signing on the official register of foreigners (as you are legally obliged to do after a 90 day period) must show proof of sufficient financial resources and medical cover to demonstrate that they will not be a burden on the state. As far as income is concerned, this can be in the form of regular payments into a Spanish bank account (eg a pension) or lump sum in a Spanish bank account (non Spanish accounts are not deemed acceptable). I believe an income of around €8000 is required. As for medical cover, pensioners from another European country can produce an S1 form which guarantees that their home state will pay Spain an annual sum to cover their health care. In the case of the UK, someone who has been working there and has an up to date record of NI contributions can also apply for an S1 form which will entitle them to treatment under the Spanish state health system for up to 2 years. Anyone else has to provide proof of private health insurance, which as you say can be difficult to obtain if you have pre-existing conditions.

The system which existed in Valencia whereby you could pay a monthly sum to access state healthcare was cancelled, and you are now subject to the above rules there.

If you register as self-employed and pay the autonomo contributions (around €270 per month regardless of income) then you must submit regularly returns (quarterly, I think) to demonstrate that you are actually trading.

Another point to remember is that since last year everyone (even Spanish pensioners) has to pay part of the cost of medication prescribed for them under the state health system - a minimum of 10% even for those on low incomes, can be up to 40%.

As for inheritance tax, it is complex and rules and rates can vary between the autonomous regions. Basically, inheritance tax is not paid from the estate of the deceased, it is paid by the beneficiaries. It must be paid within 6 months of the date of death, and paid before the inheritance can be transferred to the beneficiary(ies), ie paid up front, whether it consists of a house, funds in bank accounts, etc. There are allowances which vary between regions which can be offset against the tax but these can only be claimed by beneficiaries who are resident in Spain. A friend of ours died a couple of years ago, owning a holiday home in Spain. He left his estate to his sister (closest relative) who is resident in the UK and she had to pay inheritance tax of over €20,000 before she could have the house transferred into her name (and the house is worth only around €100,000). In the case of a couple jointly owning a house in Spain, if both are tax resident in Spain and one dies, the tax can be nil, but the rate of tax increases for beneficiaries whose degree of relationship with the deceased is more distant, and a beneficiary who is not related to the deceased at all could have to pay more than 80%. The wealth of the beneficiary is also taken into account, believe it or not. As I say, it's very complex and you really need the advice of a competent professional.

If you are resident in Spain and receive an inheritance from a relative in another country, then yes, this should be declared on your Spanish tax return and you will be taxed on it.

The new requirement this year for all Spanish residents to declare all their assets held overseas if worth more than €50,000 in a single category (property, bank accounts, shares, etc) is also causing a lot of concern as people suspect the information provided may be used in the future as the basis for imposing a new wealth tax. There are huge fines (could amount to more than the sum not declared) for anyone who is found not to have declared an asset if the Spanish tax office deem it to be tax evasion. See this very long thread in the Spain section of the forum for more info:-


http://britishexpats.com/forum/showthread.php?t=784875

Pulaski

I'm glad you like it!

There are many others, like 130 = é and 0128 = €. Google <Alt codes> and you'll find web sites that list them.

You're welcome!

Auld Yin

In Canada and the U.k I understand that the Estate is taxed 1st.

There is no Inheritance Tax in Canada.

Golden-eye

Thank you very much for you very informative post..

Re: Inheritance ~ From what I understand, you are saying is that despite the parent residing in the U.K and that any inheritance would go through probate in the U.K, taxed accordingly before passing to the benificeries, If we lived in the U.K. that would be it... If we lived in Spain it is then subject to a further tax ?

Medical Insurance

It seems to me that becoming self employed and just having it ticking along with a little income would be cheaper than opting for private insurance...
I could do this, I don't want to work, but could probably generate a few thousand Euros selling my hobby...
I have no problem paying for Rx's as we have to pay 100% for them in Canada..

I don't think we would buy in Spain, but what would happen if something happened to either my DH or myself regarding our overseas investments/ properties that we will be using for rental income?
In Canada and U.K. anything in joint names goes directly to surviving partner without having to pay inheritance or capital gains tax..

If the Spanish Gvmt make this too difficult they will loose out in the long run as many would just go to the 183 day rule..

We have to declare any overseas property or investments on our yearly Canadian Tax return so I don't have an issue with that, seems to me that Spain is just playing catch up with the rest of the world..

Lynn R

If you were resident in Spain and received an inheritance from a parent resident in the UK, if the estate was subject to UK inheritance tax (the threshold is around £350,000 I think), then any inheritance tax paid to HMRC could be offset against the tax liability due in Spain (because of the dual taxation treaty between the UK and Spain). But there could still be additional tax due (impossible to estimate how much, because as I said the rules are different between autonomous regions and the amount of other "wealth" the beneficiary has is also taken into account).

In Spain, there is no exemption from inheritance tax between spouses, so in theory the surviving spouse would be liable for tax on the 50% of any asset they inherit from their husband/wife. However, if both are resident in Spain there are allowances which can be claimed which can, if the value of the inheritance is below a certain amount, wipe out any liability to inheritance tax. Again the position varies between regions so you really need professional advice on this.

Regarding private medical insurance, this can be surprisingly cheap in Spain. Our own policy, with a company called Prevision Medica, currently costs €106 per month for both of us (aged 63 and 56). This covers all doctor's visits, tests and hospital treatment with no co-payments involved, but not the cost of prescribed drugs which we need to pay 100%. This is substantially cheaper than paying autonomo contributions of €260 per month. However, neither of us had any pre-existing conditions when we took the policy out. Our company only covers Malaga Province and part of Cordoba Province in Andalucia, though, so may not be relevant for you.

Lynn R

Duplicate post, sorry

Lynn R

Duplicate post, sorry

JAJ

However, as far as I am aware, in Canada a deceased person's estate is liable for tax on any unrealized capital gains. While in the U.K. these gains are exempt. So Canada's still has "death tax" imposed through the capital gains system.

JAJ

If you choose Spain, are you willing to learn Spanish, become Spanish citizens (in due course) and generally throw in your lot with Spain, including the times when you may be sick or infirm. If the answer is no, then perhaps you should reconsider whether Spain is still a good option.

Lynn R

I agree that learning Spanish is a good thing if you come to live here (and I have), but why do you think the OP would need to become a Spanish citizen? Just like in many other countries, people from all over the world can and have lived here for many years, until they die if that's what they want, without having to renounce the citizenship of the country of their birth.

Some people who move here choose to return to their native country if they become ill or infirm, some don't.