Residence Tax - Page 3

Jim, we went to your Notary (lovely man) after reading your guides last year and redid our wills, thankyou.

If our wills however have the clause "governed by law of nationality etc etc" will that not negate Spanish IHT tax allowances or only when its held by a non resident?. Should the other survivors new account be in a differrent bank or doesnt it make any differrence.?

Surely anything transferred would show on a statement or does the bank only disclose the balance on the date?

Do charities in Spain pay IHT? I,d hate to think the Government tax them.

I,m sorry if this is taxing your brains but I trust your information to be genuine and well researched.

Regards

Pauline.

Hi Pauline, I knew you'd like José - he's very personable and, from a lady's point of view, according to Margaret, very fanciable.

Don't worry about your Spanish wills, the wording to invoke UK rules doesn't invalidate Spanish IHT allowances etc.

The survivor's account can be with the same bank - no problem there - and it makes the final transfer from the joint account to the individual account a little easier.

I'm not aware whether or not charities have to pay IHT - sorry.

From what I've been able to establish, the bank statement re IHT has to show the balance and percentage ownership at the time the death takes place.

A few months ago I had to research inheritance when a friend died, and was unpleasantly surprised at just how complicated the requirements are. There used to be a simplified IHT tax declaration, but that no longer exists. I looked at the current tax form, intending to do it for the wife of our friend, but had to give up on it at the time. I was told by José that the going rate for having the IHT return done by a professional is €150. It's a topic I intend to pursue at some point, as I don't like to give up, but I don't know when that will be.

Given the length of our time in Spain, and our ages and those of our friends, there have been a few deaths during the last several years, but I don't know of a single widow or widower who has completed the required formalities.

Yes Jim he,s as "fanciable" to any woman as his receptionist is to you men!(you know you "fancy" her). lol.  A very handsome pair.

So am I right in thinking the major reason for drawing up a spanish will is to specify who inherits whatever to your wishes, but does nothing regarding the spanish inheritance tax allowances? But if a non resident will is drawn the IHT is only on the spanish assets leaving the UK assets within the IHT allowances in english law? Therefore an expat resident with both wills would still have IHT levied on all worldwide assets.

I would think your friends have completed the tax side with a lawyer but its not a nice subject to talk about.

I think I,ll raise a seperate post on the driving queries I have then I may get to 99% there.

I,d give you a gold star for all your helpful information, but they took it away! Seriously though I appreciate all your help. Long may you keep going, your still a youngon.

Regards

Pauline.

Thanks, Pauline. Yes, when we originally went to our notary and had done our business, I did tell Ayla that we were a bit disappointed. When she asked why, I told her it was because I wanted to take her home, and that Margaret wanted to take José home. When she'd finished laughing she said that she was going to tell Jose and that he'd like it as well.

Good idea to put the driving/car topic as a seaparate post.

A correctly drawn up Spanish will, invoking UK rules, avoids you being tied to Spanish succession law, where the estate is split a minimum of three different ways. It also ensures that only assets in Spain are subject to Spanish IHT tax. By the same token a UK will, covering only assets held in the UK, ensures that it is only those assets which are subject to UK IHT.

I've probably missed a few comments I should have made, but at this time of day, especially after an outing of more than six hours to Elche hospital re Margaret's cancer, I'm decidedly brain dead. Margaret's just in the process of heating up some wheat bags to ease my aching joints. A couple of minutes and I'll be swaddled up on my recliner, and if you has the distasteful job of looking at me, you wouldn't consider me to be a young-un! 

Shame on you Jim,  you should be pampering Margaret not the other way round. Hope all is well with Margarets treatment. She looks after you well.

Now then in case I,ve missed it, so whether a resident or non resident , a spanish will stops the Uk assets being subject to spanish IHT. Am I correct? (as all assets are taxable in Spain I thought you,d tell me all worldwide assets are subject to IHT) and that would be a clincher re residency.

I bet its not just your joints aching, you must have some headaches from answerring people like me. Settle into your recliner and enjoy whats left of today. 

Regards

Pauline.

Shame on you Jim,  you should be pampering Margaret not the other way round. Hope all is well with Margarets treatment. She looks after you well.

Now then in case I,ve missed it, so whether a resident or non resident , a spanish will stops the Uk assets being subject to spanish IHT. Am I correct? (as all assets are taxable in Spain I thought you,d tell me all worldwide assets are subject to IHT) and that would be a clincher re residency.

I bet its not just your joints aching, you must have some headaches from answerring people like me. Settle into your recliner and enjoy whats left of today. 

Regards

Pauline.

I take your point about IHT Pauline, and it's a good one. Looking at what I said yesterday, I was too blasé in what I said - put it down to being worn out at the time. I'm not going to amend it, as I don't mind admitting my own mistakes.

Whilst it's true that a Spanish resident pays income tax on their worldwide assets, IHT is different because the tax is paid by the beneficiary.

If a resident in Spain dies then the inheritor of their assets in Spain, whether resident or non-resident, is subject to Spanish IHT, so that's clear enough.

If however a resident in Spain dies and leaves assets held in the UK, then I don't know the tax situation, and it's a subject that the double taxation treaty doesn't cover. It's possible therefore that the IHT laws of both Spain and the UK will apply.

I'm all for tax avoidance, but not for tax evasion. However - as part of the settlement of the assets held in Spain, with a will saying it only covers assets held in Spain, an accounting must be made for the value of those Spanish assets, with beneficiaries paying IHT based on those valuations. This accounting obviously won't include the value of assets held in the UK. The only way I can think of that Agencia Tributaria could identify that the deceased also had property in the UK would be that the deceased should at some point have submitted a modelo 720 identifying those assets. Do Agencia Tributaria have some means of identifying such assets when someone dies? I've no idea.

IHT has been on my 'to do' list for a long time, and I doubt I'll be tackling it any time soon - sorry.

Hi with regards to owning a car in the Uk but being resident abroad, you will need a residential address family, friends etc, I have found one on line called Keith Michaels, who specialise in covering expats. I have not used them but below is their email address. Hope it helps.

Email.     [email protected]

This is what I was told by my accountant too. I did make tax declarations because of the way I was covered for the heath service in Andalusia, but he did it anyway but said it was unnecessary. The last 3 years I have not done it however We have just received a gift from an elderly relative which will push us well over this year, so I will need to get in touch with my accountant to see whats what for next years declaration.

It's not a topic I've studied, but I think you'll find that gift tax - Impuesto sobre Sucesiones y Donaciones - has to be done within 30 days and that's it's done on a modelo 651 tax return.