Tom673

Hi
I am thinking about moving to Spain for the long-term in about a year from now but I am unsure about the Spanish IHT rules.
If I am a Spanish tax resident and I receive an English inheritance will I have to pay tax twice because there is no double tax treaty with the U.K. ?
I'm sure things will get more complicated with Brexit but would like to get some kind of idea of the situation now.
Thanks
Tom

Rosemary

Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst BEVS moderates Europe. Moderators are there to ensure that the site runs smoothly within the rules of BE. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge about the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary

spainrico

There is a double taxation treaty between the UK and Spain enabling you to leave the UK income tax system when you have established residency in Spain.
Nothing has changed and will not until the Brexit negotiations are completed. But I think with inheritance you need to pay in the UK and also declare it in Spain and pay any differences in the totals. Timing of your move may be very important if big sums are involved take professional advice.

Tom673

Thanks. I will have to consult a professional then as the difference in IHT allowances between the UK and Spain is considerable.

Loafing Along

This has been addressed on another thread and is complex, you will have difficulty not paying inheritance in the UK even as a Spanish resident due to the rules of domicile , the UK will take precedence.
In Spain the Article 23 of the Law on Inheritance and Gift Tax provides:

“1. When the Inheritance tax is due by personal obligation (residents in Spain) the taxpayer is entitled to deduct the smaller of the following two amounts:

• a) ​​The actual amount paid abroad because of a similar tax that affects the capital gains (from inheritance) subject to tax in Spain .

• b ) The result of applying the effective average rate of this tax to the capital gain (from inheritance) corresponding to assets located or rights that can be exercised outside Spain, where they had been taxed abroad for a similar tax.”

You need expert advice

teejaydee

In the UK, inheritance tax is paid by the estate (or more accurately, the executors of the estate), not by the beneficiaries. You are to be a beneficiary and therefore no UK tax is payable by you (whether you are UK tax resident or not). You will receive your inheritance after the will's executors have paid the IHT to HMRC. The UK IHT allowance does not matter to you as a beneficiary.

I know nothing of Spanish taxes, but I suspect the inheritance you receive may be taxed as a gift. Those living in Spain may know the answer to this.

snikpoh

Be careful, the two taxes are different so the DTT doesn't apply.

In the UK it's inheritance tax and in Spain it's succession tax.


However, some dispensation is allowed - search the forum as @Fred James
has posted about it in length previously.

Tadd1966

Why would it change post Brexit?


The agreement is between Spain and UK

spainrico

Tadd1966 - As the OP mentioned brexit I was merely stating nothing should change before brexit is completed. I agree the tax deal was non EU but these days IMO I do not think anything can be taken as permanent.