SueG

Yes they can and it would be much easier to apply for it when they visit you even if you have to pick the NIE up later. Suggest that they keep copies and perhaps you keep the originals with your Spanish Will??

Fred James

Sorry for the confusion.

Each Autonomous Region has different rules about any special regional allowances and exemptions but in most cases the words used are having "habitual residence" in the region. How long that is, is open to debate which is why I said "up to" 5 years.

The normal state rules allow a surviving spouse to get a 95% exemption so long as the house was the habitual residence of the deceased (and if the beneficiary continues to own it for 10 years). In this case 3 years is a more common assessment of "habitual" - like CGT exemptions.

The whole situation is a legal minefield and you must get good professional advice from lawyers in the region in which you live.

Mitzyboy

Ive been told its not a question of filing a tax return every year, just the first one. Mine are nil returns you see, so I did one and then I am not required to do another

Anyway we are going off topic a bit

HBG

I watched the Piers Morgan programme on Marbella on ITV last night and I think I’m on topic.

An Asian businessman from Sunderland was interviewed and revealed that he had sold his English business after becoming a Gibraltar tax resident, although he had never been to the place.

He maintained that he had paid no capital gains tax on selling his business and that his children would not pay inheritance tax either, and that he was happily living in Marbella. He was interviewed aboard his yacht, sipping champagne in the sun, and he did look happy.

Mitzyboy

You missed that he bought a flat in Gibraltar to gain that status?

jdr

I think he will come unstuck.
That cannot be possible otherwise everyone would do it.

Fred James

Yes, filing a first tax return establishes tax residency but if you want to take advantage of the special allowances you may need to prove tax residency for a longer period.

Personally I have filed a nil return for the last 9 years - I do it myself so it costs nothing but guarantees no problem proving long term residency.

SueG

Some Notaries this way also want a padron for a few years but mostly want to just see one tax return

culchie

This is a very interesting thread and I wonder if anyone has any thoughts/advice for a single person with no children.

I have property for which I´d like to give the uso fructo to some family members. I´m thinking 2 generations to avoid tax bills. I´m also thinking about trusts/charities for some other property. Anyone have any ideas on how to be tax efficient about this?

I did speak to my lawyer but he said to stop trying to be tax efficient and start with what I wanted or, importantly, who I wanted to benefit. I really don´t want to hand my hard earned dosh to the state but there seems to be a real bias against me in law.

Are there tax exemptions for charities or charitable trusts in Spain?

any info/ideas gratefully received.

SueG

This one is a bit complicated. I take it that you are English and if so you can leave your Spanish Estate however you wish. In your particular case I would take independent legal advice from a Solicitor. If you do nothing the State will take the property however.

Pebblebeach

This thread has been really useful, but also quite terrifying. Lots of cautionary notes on how differently property/inheritance/gifts work in Spain. In the UK, I was advised for our situation a Trust was the was the way to go, but I believe Spainish law does not recognise these. Our situation is as follows:

My mother retired to Spain about 7 years ago and loves her life there. Unfortunately she has recently become disabled and feels she needs to come back to the UK as she feels she cannot live safely on her own anymore. Luckily her sisters still live in the same area she moved from and wants to move back to. (I am also in the process of moving countries!)

She told me the other day that she had decided to 'give' me her Spanish apartment on the understanding I don't sell it incase she is able to move back. She also thought this would make life easier for me should she die with the property in my name rather than hers. This all seemed good and I am making arrangements to go out, get the magic number (NIE?), transfer the property and help her pack and come back to the uk.

However on researching this a little for her now, I have found that I am going to be faced with a massive (gift) tax bill within 30 days of making the transfer if we go ahead with this). So please be very careful with the decisions you make.

If I say no thanks to the property gift (because I can't afford the tax bill at the moment), she won't be able to get any help with sheltered accomodation in the UK because of having a property in Spain. I found she will have to prove she is habitually resident in the (UK) even though she spent her entire life here (UK) before retiring, before she can get any help. Not having a property in Spain will apparently help with this. I suggested I help her to sell it, but she really can't face that in her current state, wanting to just be able to leave everything as it is.

I am going to get legal advise.

Please plan carefully for your familiy when buying Spanish property. When she decided to move to Spain, my mother was fit, healthy and newly retired, we didn't want to think about her becoming old, frail or what would happen should she die further than have Spanish and UK wills in place. It seems that wasn't enough. This has all come as a very nasty shock.

Loco

British IHT is a matter of Domicle NOT Residence and whilst residence is largely a matter of fact, and can be easily proved, ones domicile is open to interpretation and is a minefield.

For instance HMRC state on thier website that domicile of choice means:

"Where a person has left their country of domicile to live in another country with the intention of settling permanently in the new country."

This appears clear and would seem to apply to many Brits on this site.

However the devil is in the detail. For example, they successfuly imposed IHT on the estate of a multi millionaire who lived and died in Monaco on the basis that, whilst he retained non-resident status, he remained a member of the M.C.C and regularly returned to England to watch the Test matches.

Liability can apply if you just retain a single bank account in Britain or even just express your wish to be buried in Britain.

Given this single point is one of hundreds that need considering my advice to any UK expat is always to pay for a couple of hours of professional advice from the REAL professionals, the likes of the Rolling Stones, Hirst, Phil Green, Branson and the Beckhams use.

Not cheap but at less than a grand IMO it is a real bargain.

Best

Loco

Fred James

Of course you are quite right in pointing out that UK IHT will potentially apply to most Expats in Spain as their domicile is still in the UK.

However you do need to take into account that in the UK the allowances against IHT are huge compared to Spain and in most cases UK IHT is not an issue especially in the case of property jointly owned where there is no tax due unlike in Spain.

Loco

Agreed save that you say UK IHT is not an issue especially in the case of property jointly owned where there is no tax due unlike in Spain.

I attach the latest AGN analysis of the effect of IHT liability across Europe and beyond. It is based on a set of assets I certainly don't have and I guess most reading this also don't have but it illusrates how complex the issues are and the benefit of fiscal IHT planning.

Best

Loco