Latest ruling on IHT from the EU
 

What do the financial experts on this forum think of the ruling by the EU that Spain discriminates against non residents because they are not entitled to the regional allowances for IHT?
Resident ex pats in Murcia are also discriminated against anyway because there are no regional allowances
If there are allowances , a resident has to have lived there for 5 years in order to get them, so for 5 years they are just as discriminated against as non residents.
A big rush for compensation is about to start!
Will this ruling perhaps lead to a universal rate across the regions, or, better still abolish them and have one decent state allowance, and hopefully an exemption for spouses and registered partners, who shouldn't be paying anything on what couples have built up between them over many years.

Re: Latest ruling on IHT from the EU
 

Compensation claims have been going on ever since the complaint was made some years ago on the assumption that the law would change.

It's up to the regions to decide what to do. The worse case is that they scrap all the extra allowances for everyone.

They could increase the allowances on the habitual home as that would not affect non residents as, by definition, they cannot have a habitual home in Spain. That could offset some of the effect on residents when they lose the cash allowances.

Central government could revise the whole thing across all regions but that is a big if.

They could just allow non residents to have the allowances as the number of people affected is very small compared to the number of residents.

It's anyone's guess.

Re: Latest ruling on IHT from the EU
 

Another thing
As residents have to have lived in the region for 5 years before they are eligible for the allowances , how does this affect the non resident who obviously cannot fulfil this criteria and yet is to be treated like a resident?

Re: Latest ruling on IHT from the EU
 

Simple, they just dump the 5 year rule and then everyone gets the increased allowances - assuming they are still there.

Exactly the same happened with CGT a few years ago and the different tax rates for residents and NRs had to be harmonised.

However, the rollover rules do not apply to non residents as that exception is limited to "habitual" residences and NRs, by definition, cannot own them.

The same thing will apply to any of the IHT allowances that apply to the "Habitual" residence so no change there.

Re: Latest ruling on IHT from the EU
 

I can't see why non residents should ever have been treated differentlyin the first place and as one I am happy to hear of proposed changes

Re: Latest ruling on IHT from the EU
 

Because residents pay income tax in Spain and then get better deals on other taxes.

Non residents contribute very little to the total tax take which is why they don't get the other allowances.

It may be discriminatory under EU rules but there is some logic behind it.

Re: Latest ruling on IHT from the EU
 

Fred james I agree - should be some reward for years of paying taxes here.
We were told that there were advantages to being a resident in Spain, less cgt and IHT , but now there are no advantages at all and it's detrimental to your bank account;in fact it's better to stay here less than 183 days, and become non resident.
Some think that if regional allowances are abolished then IBI would be increased. Seems fairer to me.
Someone with a big finca in 3 k metres of land paying less than a100 euros per year, while someone on an urbanisation paying 500 euros makes no sense to me.
Why not set a minimum limit of 300 euros for each property, then add on extras for amenities.
After all we all have access to the services which are funded by IBI, fire, police, ambulance, roads, pavements, beaches, hospitals, schools etc
Before someone says IBI isn't used for these and can be used for whatever the council wants eg a gold statue of the mayor, I'd say well, they should be then!

Re: Latest ruling on IHT from the EU
 

Really? We have what you might choose to call a big finca in 8000m2 of land. We pay nearly €500 a year IBI and have no rubbish collection, no mains water, no sewage disposal, no postal service and a pathetic ADSL speed (in fact we are very lucky to have a land line at all) and until recently, just a track for access.

I would be more than happy to pay a standard charge of €300 plus amenities (none of which we have).

Re: Latest ruling on IHT from the EU
 

Actually non residents living in the EU do contribute, through their taxes, to the EU regional grants that Spanish regions have been receiving for many years. In August Spanish fruit exporters also claimed and received financial help from the EU for the loss of their exports to Russia.

EUROPA - PRESS RELEASES - Press release - Exceptional measures to assist peach and nectarine producers

Expecting aid from non residents whilst discriminating against them is an abuse of the idea of a level playing field for all EU citizens. Remember also that Spanish residents, if they own property in an Autonomous Community in which they are not resident, are also taxed at higher rates of IHT.

Re: Latest ruling on IHT from the EU
 

Fred whilst I agree that there should be benefits in paying income tax etc as a Spanish resident. My point is purely from the point of IHT on a property as a non resident and being inherited by a non resident. A fully legal non resident will have paid annual non resident tax and the person who inherits as non resident (legally) will continue to pay non resident tax on the property. In my view being legal and paying the non resident tax should also give a person some rights as well.

Re: Latest ruling on IHT from the EU
 

Somehow I can't see the Spanish living in a small/medium sized village house going for that, I think they would react in a similar manner to when Maggie tried the pole tax in Scotland!

Sorry fat fingers and tablet hit the wrong reply this is in reply to the suggestion of minimum 300 euro plus charges etc suggestion

Re: Latest ruling on IHT from the EU
 

I agree with you. I was merely pointing out the likely logic used to set up a discriminatory system in the first place.

Residents will always get a better deal on their house as it is their habitual home, whereas non residents will not get the same relief on a holiday home, any more than a resident does on a second home.

It was the same when Spain was taken to task about CGT where NRs paid more tax. The tax rate was harmonised but there are still extra benefits for residents on their home which do not apply to NRs.

Re: Latest ruling on IHT from the EU
 

What are they?

Re: Latest ruling on IHT from the EU
 

For CGT residents can reinvest the money from the sale in another permanent home and there will be no CGT. If tax resident and over 65 the home can be sold and there is no tax and no reinvestment required. In both cases you must have lived permanently in the property for 3 or more years.

For IHT, there is relief on the main home of the deceased of 95%, but the property has to be kept for 10 years. The recipient does not need to be resident but the deceased must be resident.

These are very significant allowances and they apply across the whole country.

They are not are affected by the two ECJ cases as only a resident can own a "habitual residence".

Re: Latest ruling on IHT from the EU
 

The exemption from CGT on the sale of the habitual home is extended to non residents from January 2015. Quite how a non resident has his "habitual home" in Spain if he lives elsewhere is not explained. It is presumably to cover persons who leave Spain and reinvest within the time limit, but it is open to wider interpretation.

Anteproyecto de Ley XX 2014

"En tercer lugar, y también para favorecer la libre circulación de los ciudadanos dentro de la Unión Europea, se permite al contribuyente no residente que quede excluida de gravamen la ganancia patrimonial que obtenga con motivo de la transmisión de la que haya sido su vivienda habitual en territorio español, siempre que el importe obtenido en la transmisión se reinvierta en la adquisición de una nueva vivienda habitual."