My friends (not resident in Spain) have a parent who retired in sunny Spain and bought a property there, but whose life prospects aren't that great due to age and deteriorating state of health.

What would they be looking at in terms of local formalities/taxes/fees on the Spanish side should things go downhill?

I was recently introduced to a Spanish lawyer and have just dropped him a message to see if this is an area of law he can answer questions about - I would imagine as a first step having a will in place that is recognised in Spain would be critical.

If the lawyer replies I'll reply here.

Ive recently gone through this process after the death of my mother...... There are quite a few variables

Does the parent have a Spanish will and/or an English will ?
Are they the sole beneficiary ?
Do they intend to keep or sell the property ?

First step is transacting the inheritance, the complexity of this can depend on how many beneficiaries there are and whether there is a Spanish or UK Will or both. Depending on how long the parent has lived in Spain typically the Spanish notary will want to see probate / letters of admin from the UK before they will proceed with the Spanish side (to ensure there is no contrary inheritance in the UK). If its a sole beneficiary it's not that hard, it just takes time. The level of inheritance tax will depend on the local law, many regions now give children 99.999999% discount. Also legal fees which will be based on the complexity of the whole inheritance, potentially in the UK and Spain, Notary fees (not that huge) and then Plus Valia on the property.

Once the property is transferred to the new owner, if they want to sell then this will attract all the fees and taxes associated with a regular property sale by a non resident.

If you have specific questions then I'll do my best to answer.

Edit: Just to mention that it will be essential that your friend has an NIE so get the ball rolling sooner rather than later.

The Spanish lawyer I mentioned in my last post can help with this - feel free to DM me if you'd like his contact details.

It is essential that they have a Spanish will otherwise all property will be divided up using the Spanish laws, which means division between all surviving members of the family, this was almost the first thing we were advised to do when moving to Spain. Spanish inheritance laws are such that it can mean that a property in 'owned' by anything up to 20 or 30 people, a nightmare if someone want's to sell.

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Not quite true but for sure a Spanish will is absolutely the best way to go. If there is an English will and it’s British citizen then typically this will be recognised by Spain in dealing with Spanish assets, hence why a notary will typically want to see grant of probate from the UK for a British citizen, in certain circumstances the English will could supersede the Spanish one.

A Spanish will by a Brit now needs to include a clause which refers to the new(ish) EU law which allows you to choose that British law applies. Previously there was an understanding that if you were not Spanish that Spanish succession law would not apply but it could be challenged. The new EU law has now made it quite clear that you can choose. We had to change our will when the law changed to include that specific clause as the previous assumption that you could use British law no longer applies.

As far as IHT is concerned, Spanish based assets will always be subject to Spanish IHT irrespective of the nationality of the beneficiary. The amount of tax (which is payable directly by the beneficiary unlike the UK where they have the concept of an “estate”) depends on the familial relation of the beneficiary to the deceased but the tax allowances vary enormously from region to region. For example, in Andalucia the tax free allowance to a close family member is €1m. In other regions it can be very much lower.

Good question, I don't know whether there was a will (and on which side) but I will find out the next time I talk to them. It's basically just a son and daughter who would be inheriting (no spouse). If they decide to sell, what ballpark figure (%) would they need to fork out (from the Spanish side) as non-residents?

On a side note can you leave separate wills in each country that you own property in?

Many thanks. I assume they are working with someone already but if they do end up requiring further assistance I will contact you straight away.

Yeah, unfortunately a lot of countries do this. I assume it's only the spouse and kids who partake in sharing the cake?

I assume this doesn't apply to non-resident owners if there is only a foreign will to contend with? Or is it possible to create a Spanish will just regarding the property here, even if one lives elsewhere?

Interesting, I always thought that residency would be key, so I'm not sure whether I understand this correctly: a Brit living permanently in Spain can still choose to have UK law applied over Spanish law simply because of citizenship?

As for Spanish-based assets always being subject to Spanish IHT irrespective of the nationality of the beneficiary, does this apply to both residents and non-residents?

Residency of the beneficiary is not the major issue, it’s the location of the assets. Spanish based assets are always subject to Spanish IHT irrespective of the residency of the beneficiary. Non Spanish based assets left to a non resident are not liable but all worldwide assets left to a resident are taxable

Yes, the citizenship of the deceased determines the succession law that apples to the will, but that choice MUST now be written into the will. Wills written in the past assuming that UK law would apply, no longer will be treated in that way and Spanish succession law will apply to them. New wills would need to be written to include the new law. Codicils are not allowable so it means a new will.

If they inherit and then sell, there will be 24% CGT on any gain between the declared value at the time of inheritance and the sale value (advice here is not to undervalue the inheritance value if they are not liable to IHT.) At the time of sale 3% of the sale value is withheld towards any CGT liability, if its less then the 3% you can claim the difference back. If they use an agent to sell 3%-6% agents fees. Lawyers fees maybe 1%. plus disbursements. There is also plusvalia payable from the time the deceased purchased the property to the date of inheritance, and the same again from the date of inheritance to the date of sale (it will usually be 2 separate amounts as the first one has to be paid before you can sell). The plusvalia can be calculated back up to 20 years maximum. There are some slight regional variations around Plusvalia after death. There will be an IHT liability if there is no reduction in that region for children (Mine was in Tenerife and I had almost 0 IHT to pay)

Yes you can have 2 wills and this is often why a notary in Spain will want to see probate from the UK to check the content and date that the UK will was made in relation to the date of the Spanish will. Likewise the probate office in the UK will often ask for the Spanish will. Even though each of them doesnt necessarily have jurisdiction over the other.

To be pedantic, it is only needed if you do NOT agree with Spanish succession rules.

In my case, I agree that everything can go to my children etc. so there is no need for the clause

Hasn't the rule on succession tax recently changed? I read somewhere that the inheritors can now sell the assets in order to pay the tax whereas in the past tax had to be paid before they inherited

You're welcome. Happy to share his details even if they just want a second opinion.