Last updated on March 19th, 2020 at 03:16 pm.
We all want to preserve as much as we can for our heirs and avoid leaving them with difficult issues to address. In this article we consider how you can pave the way for the family you leave behind.
Legal ways to reduce inheritance tax in Spain
It is understandable if people want to make sure that they use what legal means there is to keep inheritance for their inheritors rather than the taxman. Spanish inheritance tax can often take people by surprise and a little forethought and preplanning can help keep inheritance tax in Spain to a minimum.
There are some key components of Spanish inheritance law that can be used to help you reduce your Spanish inheritance tax:
- The more heirs you have the greater the allowance in total – each inheritor benefits from their own allowance so by dividing up your property between more people you reduce the amount to pay
- Appointing close relatives as heirs makes a big difference to the amount payable
Making the process easier for inheritors
It’s not just about keeping the costs down. You want to make sure that the process is as simple as possible for your inheritors. Ways of doing this include:
- Make a will in Spain to cover your Spanish assets – this cuts down significantly on hold ups and confusions
- Let your future heirs and solicitor in your home country know who your Spanish will is stored with
- If you are a resident make sure you complete your tax declaration annually to ensure you have proof of residency
Keep your heirs informed. They need to know that tax has to be paid before the property is sold. This is an important consideration that can be very different from what your inheritors expect. It needs to be prepared for.
Inheritors also need to consider what they would like to do with the property. If they decide not to sell it there are significant concessions including a much-reduced Spanish inheritance tax bill. However, they must not sell the property for a minimum of ten years. If they do, they will be liable to the full cost of the original inheritance tax as well as the interest on this.