Turner Little look at the implications of Inheritance Tax in Spain and what liability is likely to fall on your beneficiaries of the account.
The Situation
When an account holder of a Spanish Bank Account dies then any funds left in the Spanish Bank on his or her death can be taxed by Spain when the beneficiaries of the deceased persons estate inherit. In the meantime, the bank are likely to freeze the deceased’s account leaving beneficiaries unable to gain access to the account until Spanish probate and Inheritance Tax (IHT) has been paid and completed.
This practice is common across Spain and in lots of other jurisdictions. In effect it means that the surviving spouse or other beneficiary cannot use any funds in the account to pay taxes due on any cash or property that they own in Spain. This can be a particularly distressing situation made worse by the fact that there is a strict time limit in Spain for a beneficiary to obtain probate otherwise fines and interest are likely to be charged. The time limit is six months from the date of death.
The Solution
The Turner Little solution to avoid this happening, if you own a property or other assets in Spain, or indeed anywhere, is to invest your property into a UK Limited Company or an Offshore Company incorporated in another jurisdiction which Turner Little can provide. It can facilitate the process from start to finish in around four to six weeks if required.
Once the property is owned by the Offshore Company be it a UK Company or one incorporated elsewhere, the owner receives shares in exchange for their investment. These shares are then the assets owned by them and are not taxed in Spain. One advantage here is that if the owners are British and married and leave their half to each other then they will inherit under UK law. In the UK inheritance tax is exempt between spouses unlike in Spain. In Spain a spouse receives an allowance of only €15957 if they are not a resident of Spain when inheriting.
Once the process is completed the property owners do not need to operate a personal Bank account in Spain and whilst it may be preferable to operate a Company Account instead thus avoiding the possibility of “frozen” accounts, these can be more difficult to open and to operate. A bank account can be set up elsewhere and Turner Little is able to offer all clients assistance in the arrangement of corporate or personal banking. In doing so Turner Little can arrange for the issue of prepaid debit cards from banks across the EU enabling their use for online shopping, stores, restaurants and so on in Sterling or Euro’s and where appropriate US dollars.
Turner Little
To find out more about the implications of Inheritance Tax in Spain and what liability is likely to fall on your beneficiaries or if you simply want to protect assets you have overseas why not contact Turner Little Limited on +44(0)1904783101.
