mikeglover

At the moment, i am uk resident (only spend about 5 months of the year in spain). I have a spanish property and my home in the uk.
My daughter, who lives in uk is my sole beneficiary.
Am i right in thinking that under these conditions, should i die, my daughter will be liable for spanish inheriance tax on my spanish place and uk inheritance tax on my uk home and that is the full extent of the taxes. ?
Secondly, if i move here permanantly and so become resident here, will my daughter ALSO pay spanish inheritance tax on my uk property?

Fred James

Your daughter will pay Spanish IHT on your Spanish assets irrespective of whether you are resident or not.

snikpoh

Fred - I think you missed what Mike was asking .... 'Spanish IHT on UK property?'

mikeglover

Ta Fred, but what about my uk assets? is it a case of - if the asset is spanish OR the beneficiary is spanish, then its spanish inheritance tax and if the asset is uk AND the inheritor is uk, then its uk inheritance tax? Further, if my daughter were spanish resident (fiscal only or full), she would be subject to spanish tax on my uk assets AND my uk estate would be subject to uk tax?

snikpoh

To answer your last point - yes, unless she could prove that she was not 'domiciled' in UK.

If she could prove that to HMRC, then she would not have to pay UK IHT on your/her Spanish assets. If she can NOT prove it, then she may end up paying both UK and Spanish IHT. On this point, Fred will argue that you can offset one against the other under double taxation. However, I have been told by my tax accountant that as they are different taxes, this is not possible - so who knows.

mikeglover

So, as long as she doesnt ever decide to move to spain before i cast of this mortal coil, there will be no spanish iht to pay on my uk assets. ?

Mitzyboy

To the best of my knowledge there is no double taxation treaty on IHT

Fred James

The only way you would pay Spanish IHT on UK property is if she was a Spanish resident when she inherited it.

Fred James

That is true but there is a Spanish unilateral rule that any tax actually paid in the UK can be offset against any Spanish IHT due on the same transfer. (Source - Blevins Franks).

mikeglover

Sorry for asking so many questions but, i understand that if a husband and wife have moved to spain and own property jointly in the UK, on the death of one of them, the other will pay spanish inheritance tax on the half that they inherit. However, in the UK, there are 2 ways for 2 people to jointly own a property. Tenants in common, in which case each owns there own share and, upon death, the share of the deceased forms part of their estate. However, the senond way is for the 2 people to own the property as 'joint tenants', in which case, when one of them dies, their half automatical passes to the other person without passing into the deceased's estate. In the latter case, does this mean that the surviver has not technically 'inherited' the share of the deceased, and therefore would not be liable to Spanish inheritance tax?

Fred James

It would be governed by Spanish law so the UK rules would not apply. There is no concept of an "estate" in Spain. Inheritances pass directly to the beneficiary who is responsible for the tax personally.

mikeglover

Looks like it might be best, when i throw off this mortal coil, for the BH to put me in the freezer for 186 days while she goes back to UK and becomes tax resident there

EsuriJohn

Except that the beneficiary has to ACCEPT the transfer. It they should not accept then I imagine there is no tax pay and maybe why there are so many derilict properties in towns and villiages in Spain.

reggiedh

If a relative of mine passes away in a country where there is no iheritance tax will Hacienda claim anything?

mikeglover

I think if you are tax resident in Spain, you will be liable to Spanish inheritance tax on whatever you personally inherit, regardless of where it came from and whether or not the estate was taxed elsewhere