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Spanish Estate Planning – The Coronavirus Effect

Spanish Estate Planning Posted on Sun, May 03, 2020 18:25:12


Understandably, the focus of British owners of Spanish properties has shifted sharply away from Brexit anxiety, to concern about the consequences of the current coronavirus lockdown.

Implications for Spanish Estate Planning and Will Writing Cases

The Spanish property market has been paralysed, in the sense that in transactional terms, without Notaries and Registries operating in the usual way, it is not possible to buy or sell Spanish properties- and this will remain the case until the restrictions are lifted. Even thereafter, it is anticipated that there will be a substantial backlog, leading to significant delays before Spanish property transactions can be completed.

With the backdrop of what many analysts are predicting will be a sharp decline in Spanish property values, it is expected that many people (without an urgent need to sell), will accept that in ownership terms, they are ‘locked in’- deciding to retain their Spanish properties for longer than might have been intended- until conditions eventually improve. (This is in contrast to a very significant percentage of cases we have seen in recent years, where overseas clients have decided to ‘sell up’ in Spain as they get older- specifically to avoid what they see as the exposure to substantial costs and complexities for their families in having to deal with Spanish inheritance).

Indeed, we are already experiencing an increase in the number of enquiries from clients who were previously considering selling Spanish properties; but are now interested instead, in longer term Spanish Estate Planning; and mitigation of Spanish Succession Tax (‘SST’). This is a trend which we anticipate continuing during forthcoming months, possibly years.

Tax Planning

A more detailed analysis of the position will be required once the terms of Brexit have been finalised. However, the most recent Ruling of the Spanish Supreme Court is that citizens of countries outside the EU (thus including the UK, looking ahead, post-Brexit), will continue to enjoy the benefit of Regional SST Rates and allowances rather than reverting to National Rates and Allowances. So, as matters stand, it is anticipated that (post-Brexit) UK Citizens will continue to have the benefit in Spanish inheritance cases, of very substantial allowances (in some Autonomous Regions of Spain), before any SST is payable.

To take just one example, in the Autonomous Region of Andalucía, a spouse or descendent beneficiary can currently inherit assets up to the value of 1 Million € before SST is payable. This is irrespective of Spanish Resident or Non-Spanish Resident status. By contrast, the National Rates and Allowances (if they were to apply), would allow just under 16,000€ of Spanish asset value to be inherited before SST is payable.

So, on the face of it, UK Citizens now have less to be concerned about in terms of the SST / Estate Planning impact of Brexit, than had originally been feared.

But on the other hand, it is anticipated that in coming years (and logically, it should be sooner rather than later, as the current SST assessment system for Spanish nationals/ residents seemingly blatantly contravenes EU principles); there will be a unification of the SST system, meaning uniform rates/ allowances across Spain, rather than there being such vast regional discrepancies, as is the case currently. It is expected that a median will be determined; and inevitably the SST impact will decrease in some areas of Spain; but will increase in others.

As such, it remains extremely important in giving Spanish Will Writing/ Estate Planning advice, to bear in mind asset location-specific fiscal regulations; and to think long-term. Anticipating these awaited changes and incorporating in Spanish Wills, the essential legal machinery necessary (to the extent allowed within the confines of Spanish law and practice), in order to provide for flexibility in terms of succession routes- should that prove to be necessary in the fullness of time, in what promises to be an evolving fiscal environment.

Tax Planning in Spanish Property Purchases

As mentioned in previous articles, the point of acquisition of a Spanish property is the optimum moment to consider future ownership structure within a family, with a view to mitigating SST exposure. In turbulent market conditions, there are always those who are prepared to take advantage of what could possibly prove to be an astute moment to invest. But again, longer-term thinking is important in advising clients in these circumstances- especially if typical Spanish property ownership periods look set to increase. This also underlines the importance of intelligent / tax-efficient ownership structuring from the outset.

Spanish Probate

The current restrictions both in the UK (for legalising by Apostille, documents destined for Spanish legal process); and in Spain, for processing inheritance cases through the Notaries and Registries, are causing significant delays in cases (and will inevitably continue to do so for the foreseeable future- even for the first few months after the restrictions are lifted).

In the vast majority of Spanish inheritance cases, the standard deadline of 6 months from the date of death applies, to complete the Notarial process; to make fiscal submissions and to pay any tax due. Otherwise penalties/ interest are automatically added to the tax amount.

Spanish inheritance cases involving non-Spanish nationals/ residents are relatively more time-consuming (than standard Spanish cases); and generally, no material allowance is made for this in terms of time limits. As such, it is always very much in the interests of executors/ beneficiaries to commence the probate process in Spain (in Estates where there are Spanish assets), as soon as possible following the death. This will enable matters to be concluded within the required timescale and, as such, restrict any tax liability to the minimum possible.


The foregoing is non-exhaustive, general advice. The Legal 4 Spain team is always available to provide preliminary advice on a no-obligation basis in relation to Spanish Wills, Estate Planning and Inheritance cases where there are Spanish assets; also for Spanish property transactions generally.

Spanish Assets- Lifetime Estate Planning Update

Spanish Estate Planning, Spanish Wills & Estate Planning, Uncategorised Posted on Fri, November 01, 2019 20:18:24


British owners of Spanish properties await the Brexit conclusion, to know whether or not the Spanish Succession Tax (SST) reductions which are currently enjoyed by European citizens, are to be relinquished.

But irrespective of the final Brexit outcome, many British owners of Spanish properties are in any event, anticipated to be exposed to increasing Spanish Succession Tax (SST) impact in coming years.

SST exposure and the mitigation of tax liability generally, therefore need to be considered in all cases of Spanish Estate Planning and Will writing. It is also important that these aspects should not be overlooked in Spanish property purchase and probate cases, where there is flexibility/ discretion as to beneficial entitlement.

The Spanish Autonomous Regions and Tax Liability

Spain comprises 17 Autonomous Regions, which are currently able to set their own SST exemptions/ allowances.

In recent years, there has been a move in some of Spain’s Autonomous Regions towards reduced SST impact.

However, the imposition by respective Autonomous Regions of differing SST rules has given rise to discrimination between EU citizens- according to where in Spain the assets in question are situated.

As this situation is considered to be non-EU compliant, it is anticipated that sooner rather than later, the SST system will be required to be unified, and SST impact standardised across Spain. Low SST-impact areas like Andalusia and areas of the East Coast (the locations of a significant proportion of the British owned Spanish properties), could therefore see a substantial increase in SST exposure as a result of this process.

Implications for Spanish Estate Planning and Will Writing Cases

Unlike UK Inheritance Tax (which is assessed on the deceased’s Estate), SST is levied on the individual beneficiary. So, key considerations in seeking to mitigate SST exposure include the relationship between the testator and each beneficiary; and the number of beneficiaries.

Spouses and descendants face the lowest level of SST impact; and generally each individual beneficiary has allowances, and relatively low SST rates on the lowest value-related tranches. So, to have multiple immediate family members as beneficiaries, each with a relatively modest entitlement, is generally a positive way to reduce overall SST exposure.

It is also possible to split beneficial entitlement to (Real Estate) property titles between the ‘Usufructo’ (life interest) and ‘Nuda Propiedad’ (underlying legal title). This can reduce SST impact without adversely affecting (for example) a surviving spouse’s lifetime use and enjoyment of a Spanish property. So, a ‘Trust-like’ ownership structure can be established in this way, even though Spanish Law does not recognise Trust structures in principle.

It is accepted by the Spanish Authorities now, that alternative succession routes (at the discretion of a surviving spouse for example, following the death), can be included in Spanish Wills. So in this way, one can circumvent the fact that (unlike in the UK), post-death Will variations in Spain are in principle, not an option. This feature then enables up to date case-specific fiscal advice (multi-jurisdictional, if applicable), to be obtained following a death (and family circumstances then to be assessed), before a final decision is taken as to the actual succession route to be implemented.

Tax Planning in Spanish Property Purchases

The acquisition of a Spanish property is the ideal point at which to consider future ownership structure within a family, with a view to mitigating SST exposure.

Considering the age and life expectancy of each family member who might be a registered owner of the Spanish property is an important aspect. As is the consideration of whether multiple registered owners might be appropriate (to spread value; and therefore SST impact). The Usufructo/ Nuda Propiedad split mentioned above, can provide an opportunity to pass down capital value a generation or two, whilst retaining beneficial use and enjoyment. But British individuals need to give careful thought to UK tax law rules on lifetime gifting and UK IHT planning/ impact on the UK IHT Nil Rate Band. Also, any gifting of property or money needs to be carefully effected, so as not inadvertently to trigger Spanish lifetime gift tax liability.

Spanish Probate

As mentioned above, it is now possible within Spanish asset Wills, to include flexibility as to the succession route. But even in traditional format Spanish Wills, it is important to assess any alternative options as to succession route which exist by implication, based on the specific Will wording, on a case by case basis. This enables alternative succession routes (and possible SST savings), to be considered before the Inheritance Deed is signed; after which it is then too late.


The foregoing is non-exhaustive, general advice. The Legal 4 Spain team is always available to provide preliminary advice on a no-obligation basis in relation to Estate Planning and Inheritance cases where there are Spanish assets; also for Spanish property transactions generally.