Tax considerations for a resident in Spain receiving inheritance from the UK following family death - Taxes in Alicante City: Suma, NIE and general tax advice - Alicante City forum - Costa Blanca forum in the Alicante province of Spain
Gentlevan Removals
Jennifer Cunningham Insurances SL
Expat Services
ASSSA Insurance
James Spanish School
interior building work
Blacktower Financial Management
Airport Service Taxi Mil Palmeras  Torre de la Horadada
Costa Blanca Building Specialists
Espana Dream Properties
Car Key Solutions
Gran Alacant Insurances
Thy Will Be Done
AA Free English TV

Join the Alicante City forum

Join the Alicante City forumMy name's Alex and this is my website all about Alicante City in Spain. Register now for free to talk about Taxes in Alicante City: Suma, NIE and general tax advice and much more!

Tax considerations for a resident in Spain receiving inheritance from the UK following family death

Posted: Thu Jan 11, 2024 1:21pm
10 replies5 members subscribed
AndrewM

Posts: 46

9 helpful points

Location: Alicante City

Joined: 20 Apr 2021

Hello, 

I have been a resident in Spain for a number of years. My father back in the UK recently died and left his estate to be divided among his four children. It will likely be about one month before an approximate estate value is known and then (as it includes a UK house that needs to be sold) about another six months before the estate is ready to be distributed. According to UK law, inheritance tax will be paid from the estate to the UK government. I will then receive my share of what's left.

I spoke to my Spanish accountant about this and he is of the opinion that the death is subject to UK law and therefore I do not need to explicitly declare the inheritance in Spain. I am already declaring my UK bank accounts in modelo 720 and patrimonio declarations. He said that I just need to include the inherited amount in the next declarations. This does not sound right to me, so I just wondered if anyone else has had any experience with this?

Thanks,

Andrew

marcliff

Posted: Thu Jan 11, 2024 1:31pm

marcliff

Super helpful member

Posts: 1373

1627 helpful points

Location: Rojales

Joined: 5 Jan 2023

Posted: Thu Jan 11, 2024 1:31pm

Inheritance tax between parents and children has all but been abolished in the Valencia Region with a 99% allowance on receipts. 

If it is declared, under the dual taxation treaty any tax you pay in UK over the £325,000 tax free threshold will more than cover the liability in Spain.  

Not sure if your solicitor is correct in that it can be ignored but you will not have to pay anything. The 1% is nominal as they couldn't actually scrap the law. 

AndrewM

Posted: Thu Jan 11, 2024 2:53pm

AndrewM

Original Poster

Posts: 46

9 helpful points

Location: Alicante City

Joined: 20 Apr 2021

Posted: Thu Jan 11, 2024 2:53pm

marcliff wrote on Thu Jan 11, 2024 1:31pm:

Inheritance tax between parents and children has all but been abolished in the Valencia Region with a 99% allowance on receipts. 

If it is declared, under the dual taxation treaty any tax you pay in UK over the £325,000 tax free threshold will more than cover the liability in Spain.  ...

...

Not sure if your solicitor is correct in that it can be ignored but you will not have to pay anything. The 1% is nominal as they couldn't actually scrap the law. 

Thanks Marcliff. Even though any payment in Spain would be very low and I would likely be able to reduce it to zero with the dual tax agreement my doubt is whether legally I still need to declare it or not. 

That said, I have just read elsewhere that the fine for not declaring is up to 150% of whatever I would need to pay rather than a fixed amount, so it would not be a big fine either and probably worth taking the risk.

Stevec2x

Posted: Fri Jan 12, 2024 12:50pm

Stevec2x

Super helpful member

Posts: 1772

1024 helpful points

Location: Playa Flamenca

Joined: 23 Jan 2020

Posted: Fri Jan 12, 2024 12:50pm

Hi 

I inherited in November 2021, after my Dad died in the UK, and I have been resident in Spain for many years.

I was told that, since he had no assets in Spain, there was no requirement to notify the Spanish authorities in any way. However, as you mentioned, I was required to declare the asset in Modelo 720.

What was/is very unclear to me is that my advisors said (I think) that there would be tax to pay if I brought the money into Spain. I find this to be a confusing concept! I have converted around 20% of my inheritance into euros using Wise, and then used most of it to buy a car here in Spain. So did I bring the money "into Spain"? It moved from a British IBAN  to a Belgian IBAN in my name, and then to a Spanish IBAN  in a car dealers name. I'm certainly not planning to declare this to the Spanish taxman - I wouldn't even know how!

Cheers

Steve

AndrewM

Posted: Mon Feb 12, 2024 1:17pm

AndrewM

Original Poster

Posts: 46

9 helpful points

Location: Alicante City

Joined: 20 Apr 2021

Posted: Mon Feb 12, 2024 1:17pm

So my accountant has just told me that there is actually a much bigger risk in not declaring than I expected.

He says he believes that the 99% "reducción" by the Comunidad Valenciana is considered as optional meaning that any fine for not declaring would be based on the full 100% of inheritance received...

Advertisement - posts continue below

dinnerout

Posted: Tue Feb 13, 2024 1:00pm

dinnerout

Legendary helpful member

Posts: 2172

2415 helpful points

Location: Beniarbeig

Joined: 18 Sep 2015

Posted: Tue Feb 13, 2024 1:00pm

AndrewM wrote on Thu Jan 11, 2024 1:21pm:

Hello, 

I have been a resident in Spain for a number of years. My father back in the UK recently died and left his estate to be divided among his four children. It will likely be about one month before an approximate estate value is known and then (as it includes a UK house that needs to be sold) about a...

...nother six months before the estate is ready to be distributed. According to UK law, inheritance tax will be paid from the estate to the UK government. I will then receive my share of what's left.

I spoke to my Spanish accountant about this and he is of the opinion that the death is subject to UK law and therefore I do not need to explicitly declare the inheritance in Spain. I am already declaring my UK bank accounts in modelo 720 and patrimonio declarations. He said that I just need to include the inherited amount in the next declarations. This does not sound right to me, so I just wondered if anyone else has had any experience with this?

Thanks,

Andrew

I'm not a tax expert so someone will perhaps correct me if I'm wrong here 😎

So, if you're correct that the inheritance in the UK is governed by UK tax law, the only sum that qualifies for taxation in Spain is any interest you earn on the sum.

Steve

Linds

Posted: Thu Feb 15, 2024 10:49am

Posts: 69

13 helpful points

Location: Albir

Joined: 24 Dec 2019

Posted: Thu Feb 15, 2024 10:49am

dinnerout wrote on Tue Feb 13, 2024 1:00pm:

I'm not a tax expert so someone will perhaps correct me if I'm wrong here 😎

So, if you're correct that the inheritance in the UK is governed by UK tax law, the only sum that qualifies for taxation in Spain is any interest you earn on the sum.

Steve

My Husband is due to receive a UK inheritance from his father,  from what he has read the first 100.000 euros is tax free and then the 99% allowance applies to the rest.

Is this correct?

dinnerout

Posted: Thu Feb 15, 2024 10:55am

dinnerout

Legendary helpful member

Posts: 2172

2415 helpful points

Location: Beniarbeig

Joined: 18 Sep 2015

Posted: Thu Feb 15, 2024 10:55am

Linds wrote on Thu Feb 15, 2024 10:49am:

My Husband is due to receive a UK inheritance from his father,  from what he has read the first 100.000 euros is tax free and then the 99% allowance applies to the rest.

Is this correct?

Linds, unfortunately I can't help you there, maybe someone else will.

Kind regards, Steve

marcliff

Posted: Thu Feb 15, 2024 11:16am

marcliff

Super helpful member

Posts: 1373

1627 helpful points

Location: Rojales

Joined: 5 Jan 2023

Posted: Thu Feb 15, 2024 11:16am

Inheritance tax in the Valencia region has all but been abolished. They couldn't cancel it completely as it is a Spanish national law so they gave a 99% allowance as a notional value. 

And yes, the allowance is 100,000 and then 99% reduction on anything owed after that but any taxes paid in UK will be taken into consideration as well. They were talking of increasing the allowance to 800,000 but I haven't heard if that has been authorised or not.

One of the last things to worry about now in this region. 

Stevec2x

Posted: Thu Feb 15, 2024 11:45am

Stevec2x

Super helpful member

Posts: 1772

1024 helpful points

Location: Playa Flamenca

Joined: 23 Jan 2020

Posted: Thu Feb 15, 2024 11:45am

Hi Linds

I inherited from my father in the UK about 18 months ago - and I'm still hazy about the tax situation!

I was professionally advised that because I had not brought the money "into Spain" then there was no tax to pay. The only thing I had to do was to add it my declaration of assets (called Modelo 720). I should clarify that, at the time, it was all held in GBP with Wise.

However I've still yet to come across a precise definition of what "into Spain" actually means! In the intervening time I have converted some of the inheritance into euros using my Wise account - which means it is/was officially held in Belgium. I then spent it in Spain, which means it was transferred into bank accounts held by the relevant retailer (in particular the company I bought my car from). Does that mean I brought it "into Spain"? I haven't a clue!

About the only thing I'm reasonably confident about is that if I had transferred money into my own Spanish bank account then I would have had to declare it on my income tax return.

Please don't rely on my views here - you should obviously seek professional advice.

Cheers

Steve

Sign up for free or login to reply to this topic

Want to reply to this topic? Login or register for free to post your message:

Find more Taxes topics from a particular area:


Register for free!

Login to your account

Gentlevan Removals
Jennifer Cunningham Insurances SL
Expat Services
ASSSA Insurance
James Spanish School
interior building work
Blacktower Financial Management
Airport Service Taxi Mil Palmeras  Torre de la Horadada
Costa Blanca Building Specialists
Espana Dream Properties
Car Key Solutions
Gran Alacant Insurances
Thy Will Be Done
AA Free English TV
Advertise your business here
Advertise your property
Help with my computer