Blog Image

LEGAL4SPAIN.COM - Blog-Updates


Spanish Wills
Estate Planning
Probate in Spain
Spanish Assets Sales


Estate planning for Expats

How to access healthcare as a permanent resident of Spain

Costs of Selling a Spanish Property

Sale of Spanish Assets Posted on Thu, February 02, 2017 15:28:29

October 14th, 2014

Before setting a sale price, Spanish
property owners who are considering selling should be aware of all the
associated costs and taxes, in order to be able accurately to calculate the net
amount they will receive from the sale.

The costs and taxes on selling a
Spanish property can typically be in the range of 10-15% of the sale price, in
total. The following is a reminder of the principal areas to consider.

1. Estate Agency Fee. The seller usually covers the estate agency fee. The
applicable percentage of the fee needs to be individually negotiated in each
case. It will be determined by the nature and location of the property; its
price; and the detail of the service which will be provided by the estate
agent. The typical range of estate agency fees for ‘ordinary’ Spanish property
sales is 3-5% plus IVA. (A higher % applies if it is a low value transaction).

2. Energy Performance Certificate. In order to market a property for sale, Spanish
property owners are legally required to have an up to date Energy Performance
Certificate. Usually, the estate agent will be able to recommend a local
authorized certificate provider. In terms of pricing, it is a fairly
competitive market now; and there are a number of certificate providers
covering wide areas, so it is easy to determine a fair price for this service.

3. Tax Retention on a Spanish
property transfer.
When a non-Spanish resident
owner of a Spanish property sells, the buyer has to retain 3% of the declared
sale price and pay this to the Spanish Tax Authority. So, this is a 3% deduction
from the amount the seller receives. In some cases, the retention can be
reclaimed subsequently, but the reclaim process can be quite convoluted and
expensive to pursue.

4. Plus Valia Tax. When there is a transmission of a Spanish property
interest, the local Town Hall is entitled to charge Plus Valia Tax, which is
calculated by reference to the rateable value of the property and the period of
ownership. In a sense, it is a hybrid between a stamp duty and a local level
capital gains tax. The amounts in question vary widely from area to area; and
in some areas the charge is surprisingly high. So, it is always essential to
have a clear idea in advance of the Plus Valia which will be payable on a sale.

5. Community Administrator
It will ordinarily be a term
of the sale that the seller pays all outstanding community charges up to the
date of completion. This is confirmed by the provision of a Community
Administrator’s Certificate, which the seller procures (and pays for). The
charge for the provision of this certificate typically ranges from 50-100

6. Capital Gains Tax. A seller of a Spanish property might potentially face
an obligation to account for any profit in Spain and/ or in their home country
(if a non-Spanish resident). But this is a case-specific issue, so advice
should always be sought in both jurisdictions before proceeding with a sale, to
ensure full fiscal compliance.

6. Legal Fees. Expert independent legal representation is essential
when selling a Spanish property (please see our previous Blogs for details).
The cost depends on the value of the transaction and its complexity. But
typically, 0.75- 1% plus IVA (usually subject to a minimum fee level) should be
budgeted for.

7. Bank Charges. Bank charges in Spanish property transactions can be
surprisingly high. Some Spanish banks even charge to receive funds; and always
to transfer funds following completion. Often the charge is a significant %.
So, this should be confirmed in advance. If net sale proceeds are to be
repatriated to the seller’s country of origin, then (if outside the Eurozone),
a specialist Foreign Exchange broker should be used. This will improve on the
direct bank to bank FX rate; and there is then greater control over the timing
of the transfer; and agreement of the applicable FX rate. This specialist
service can also be useful, in case Tax Authority source of funds certification
is required.

8. Mortgage Redemption Charges. If the property is owned subject to a mortgage, then
before agreeing a sale, the terms of redemption of the mortgage (or its
transfer to another property) must be confirmed with the bank. Sometimes a
substantial redemption fee can be payable.

9. Notary Costs. Although technically this should be a shared cost, it
is often the case that the buyer pays the Notary fee. But sellers need to be
aware that this is an area of possible negotiation. The amount of the Notary
fee will depend on the value and complexity of the transaction. But we
recommend that the budgeted figure is around 0.75-1% plus IVA. So it is
important to agree before exchanging contracts, how this cost will be borne.

10. Property Registry. The buyer almost always bears the Property
Registration cost, so this should not be an issue of concern to the seller. But
as an aside, the Property Registration cost also depends on the size/
complexity of the transaction; and also the type of property and its location.
The Property Registration cost is typically around 0.5-0.75%.

In conclusion therefore, most well
advised Spanish property owners will assume a typical range of 25-30% to cover
the ‘in and out’ costs and taxes when assessing the total cost of buying and
then later selling a Spanish property.

This general commentary is not
intended to be exhaustive; and case-specific legal advice should always be

The Legal 4 Spain team provides a
full property conveyancing service (buying and/or selling) throughout Spain. We
are always happy to provide a competitive cost estimate at the outset of a
transaction on a no-obligation basis.

Spanish Succession Tax Under Review Following European Court Ruling

Spanish Succession Tax Posted on Thu, February 02, 2017 15:27:50

September 29th, 2014


The European Court of Justice has
ruled that the Spanish Tax Authority’s succession tax system conflicts with the
European Union principles of freedom of movement of EU individuals and
circulation of money within the EU.

Spain must comply with this EU Court
Ruling by making changes to its succession tax system, to become EU compliant
within 6 months. Otherwise, Spain will face financial penalties.

As yet, there has been no formal
response from the Spanish Tax Authority as to its proposals to comply with the
EU Court Ruling.


Spanish Succession Tax is not
administered centrally; or charged in a uniform way nationally; or at a single
rate; or subject to universal national allowances and reductions.

In many countries, the calculation
and charging of succession taxation is simplicity itself. However in Spain, it
is a highly complex system, which creates a great deal of uncertainty,
inconsistency and controversy.

At the heart of the complexity is
the fact that for Spanish residents, the responsibility for succession tax
administration lies with the 17 individual autonomous communities. Each
autonomous community has discretion as to charging basis; practice; and
allowances/ exemptions.

This fiscal quagmire alone creates
bewildering inconsistencies across Spain.

But the further peculiarity,
(central to the EU Court Ruling), is that for non-Spanish residents, succession
tax is administered by the Central Spanish Tax Office, which strips from
non-Spanish residents, the more ‘generous’ succession tax allowances/
exemptions which the autonomous communities otherwise offer. So, for non-
residents, a meagre succession tax-free inheritance amount of just below 16,000
Euros per spouse/ descendent beneficiary is allowed. Any inheritance received
above that value is taxable.

And as a side issue of great
consternation, it has been acknowledged that many Spanish families living in
Spain also suffer discrimination under the current system, according to where
(in Spain) their family members live.

So the current system not only
unlawfully discriminates against non- Spanish owners of Spanish properties. For
Spanish families also, its haphazardness can be financially ruinous.

The ball is now in Spain’s court, to
see how they will react, in order to bring Spanish Succession Tax into line
with the EU requirements.

It remains to be seen whether this
will be by centralizing/ standardising administration or (if that is deemed too
radical), at least a harmonisation of practice across Spain; and/ or a switch
of criteria from individual place of residency to asset location.


• A period of just six months is
very tight indeed for Spain to implement a complete overhaul of- and radical
change to- its succession tax system.
• With Spanish elections on the horizon, it is perhaps unlikely the current
Spanish Government will progress matters with great dynamism. Any change will
benefit some, but disadvantage others. Succession tax can be an emotive issue
for voters.
• If the six month deadline is not met, then Spain will face EU financial
penalties; but meanwhile, continue to administer succession tax on the current
• Pending fresh Spanish legislation/ directives, any individual wishing to
challenge a Spanish Succession Tax charge or to reclaim previously paid tax,
will presumably need to bring their own legal case, citing the EU Court Ruling.
• If (to comply with the EU Court Ruling) Spain reduces the succession tax
impact on non-residents, to be equal to the current impact on residents, then
not only would that add fuel to the fire for a potentially massive number of
reclaimants, but this would guarantee a reduced future fiscal income; therefore
being hugely expensive for Spain.
• Conversely, if Spain were to increase the succession tax impact on residents,
to be equal to the current impact on non-residents, then the issue of demands
for refunds could be conveniently complicated. And overall, this would
significantly benefit Spain by increasing future succession tax revenue.
• So, a feasible strategy for Spain could be: to leave matters as they are for
now; and just pay any EU fine for interim non-compliance. Then, after the
elections, introduce new national regulations to standardize succession tax,
with the emphasis on asset location rather than individual residency. And in so
doing, phase out resident reductions, to equalize the impact of succession tax
across the board.
• Perhaps a cynical posture, to react to the EU Court Ruling by increasing
succession tax impact. But with the stark choice between potentially facing a
huge fiscal loss; and increasing fiscal revenue, it would be surprising for
Spain to choose the former option.
• Ultimately therefore, the EU Court Ruling could mark a turning point, from
which the overall impact of succession taxation in Spain, (although
standardized in some form, to satisfy EU requirements), actually increases- in
particular for Spanish residents.
• In terms of reclaims for previously paid tax, even if a clear reclaim route
is established, if the reclaimants had received credits against fiscal
liability in their own countries (e.g. pursuant to double taxation relief
treaties), it is assumed that any Spanish reclaim application would be denied.
• It is also likely that if a clear reclaim route is established, the process
itself would be complex, lengthy and therefore expensive to pursue. It is
unlikely that the Spanish Authorities would be inclined to make it a rapid,
simple and economical process.


As regards Spanish inheritance cases
currently in progress, the current Spanish legal/ fiscal obligation continues,
pending fresh Spanish legislation/ fiscal directions. So, inheritors of Spanish
assets are legally obliged to continue to pay succession tax on the basis of
the current system- even though it has been determined by the European Court of
Justice to be operating contrary to EU rules!

An uncomfortable position for
inheritors in the meantime. And furthermore, if they fail to make tax payments
when due, they may face interest/ penalties on late tax payments. But then
having paid tax sums due, although there are certainty changes anticipated to
the Spanish succession tax system, the exact nature and timing of the changes
is uncertain. And finally, if any reclaim option does arise, it is likely to be
lengthy, complex and expensive to pursue.

We will report further as soon as a
decision on the way forward for Spanish Succession Tax is announced.

This general commentary is not
intended to be exhaustive; and case-specific legal advice should always be sought.

The Legal 4 Spain team provides a
full probate service for properties and other assets anywhere in Spain. We are
always happy to provide a competitive cost estimate in the first instance, on a
no-obligation basis.

New European Law Affecting Wills and Inheritance in Spain

Spanish Wills &Estate Planning Posted on Thu, February 02, 2017 15:27:03

September 15th, 2014

A new European law will come into
full effect on August 17th 2015, with the intention of simplifying inheritance
cases across Europe.

This new law will apply to owners of
Spanish properties.

The problem the new law addresses

There has been legal uncertainty
previously in the estates of many non-Spanish owners of Spanish properties, as
to whether Spanish succession law applies or the owner’s own national
succession law.

The distinction is particularly
important for English owners of Spanish properties, where their own (i.e.
English) succession law effectively enables them freely to choose their heirs
(including as to Spanish assets), without limitation in the majority of cases.

Conversely, if an English owner of a
Spanish property were to choose (or be legally forced) to follow Spanish
succession law, then a strict division of the Spanish estate would be imposed
under Spanish law- with a minimum of two thirds passing to descendents; and
very limited discretion generally as to who receives the Spanish estate.

The solution provided by the new law

The new law gives people affected by
the problem, choice as to which succession law applies to their estate.

Well advised English owners of
Spanish properties will in any event, have already made separate Spanish Wills
in anticipation of the new law, clearly electing for their own national
succession law to apply. So they can be certain that their Spanish estate will
pass as they wish; and not pursuant to the strict Spanish legal requirements
(which in the vast majority of cases, are incompatible with English testators’
actual wishes).

In any event, English (and indeed
other nationality) owners of Spanish properties are advised to take this
opportunity in anticipation of the new law, to review their Spanish Wills with
their legal advisers, to ensure that they have clearly and unambiguously chosen
for their own national succession law to apply to their Spanish assets (if that
is what they wish). Also, to ensure that their Spanish Wills are in all other
respects, fully up to date; legally compliant in Spain; and tax efficient.

In the event of a failure of by an
English owner of a Spanish property to leave a valid Spanish Will electing for
English succession law to apply to their Spanish estate, the position under the
new law will be determined by a new statutory ‘habitual residence’ test, such

• If the English owner of the
Spanish property is habitually resident in Spain at the time of death, then
Spanish succession law will apply to the Spanish estate.
• If the English owner of the Spanish property is habitually resident in
England at the time of death, then English succession law will apply to the
Spanish estate.
• If the English owner of the Spanish property is neither habitually resident
in Spain at the time of death nor in England, then it could be either English
law or the law of the actual country of habitual residence. This scenario would
need to be legally determined on the circumstances of the case.


In order to avoid uncertainty-
bearing in mind also that many people change residential status in the final
period of their lives, particularly due to healthcare considerations- it is
always best not to rely on the ‘default’ position under the new law. Instead,
it is always best practice for a Spanish property owner to sign a professionally
prepared, up to date Spanish Will with a clear statement of their wishes as to
the succession of their Spanish estate. This can also ensure that any up to
date tax saving opportunities are used to their full advantage.

This general commentary is not
intended to be exhaustive; and case-specific legal advice should always be

The Legal 4 Spain team provides a
full estate planning and Will writing service for properties and other assets
anywhere in Spain. We are always happy to provide a competitive cost estimate
in the first instance, on a no-obligation basis.

Costs of Owning a Spanish Property

Sale of Spanish Assets Posted on Thu, February 02, 2017 15:25:39

September 1st, 2014

Before committing to
the purchase of a Spanish property, it is important to have a full
understanding of the on-going costs and taxes associated with Spanish Property

1. Rates (IBI/ SUMA). Town Hall rates are payable by almost
all Spanish property owners (whether resident in Spain or not). The amount is
calculated by reference to the rateable (Catastral) value of the property- an
important figure, also for other taxation purposes. Some Town Halls charge
rates in installments; others in a single annual charge. Following a property
transfer, it can take the Town Hall up to a year to update their records with
the new owner’s name.

2. Rubbish Collection
(Regogida de Basura).
Some Town Halls
include rubbish collection services in the rates charge (above). But, some Town
Halls chare separately for this aspect of local services – either in
installments or annually. In applicable areas, all property owners have to pay
this, irrespective of whether or not they are Spanish resident; and irrespective
of the number of days they occupy the property, actually generating rubbish!

3. Non-Spanish Residents Tax (Renta de no residentes
imputada de Bienes Inmuebles).
This tax is payable annually in arrears by Spanish property
owners who do not live in Spain, but who own property in Spain for their
personal use. For example, the tax is payable by 31 December 2014 in respect of
the calendar year 2013. The tax is calculated by reference to the Catastral
value (see above). The Spanish Tax Authority in effect, charges a tax for the
lost opportunity of renting the property out- (which would otherwise generate a
taxable Spanish income). It is a difficult head of taxation to explain/
justify. Perhaps an assumption at one time was made that non-Spanish resident
property owners would rent out their Spanish property, but would not declare
the rental income to the Spanish Tax Authority. For legally/ fiscally compliant
Spanish property owners, it is generally regarded as an unfair tax; and
therefore an (unavoidable) irritation.

4. Tax on Rental
This head of
taxation is for owners of Spanish properties (whether resident in Spain or
not), who do actually rent out their property. The applicable rate of taxation
is 24.75%. Specific fiscal/ accountancy advice is needed in each case, not just
to meet fiscal filing requirements; but also to ensure that deductions and
allowances are properly applied, to minimize the taxation burden as much as
legally possible. If a non-Spanish resident rents out their property for only
part of the year, then an apportionment has to be made between the period of
imputed rental income (see 3 above) and actual rental income.

5. Wealth Tax. Both Spanish residents and non-residents
need to consider whether they are liable to pay Spanish wealth tax each year.
The Spanish Tax Authority regularly changes the requirements. Generally, the
exemptions are substantial. In the vast majority of cases of non- Spanish
resident owners of Spanish properties, as it is only their assets in Spain
which are taxable, the allowances are more than sufficient to provide a full

6. Community Charge. The vast majority of Spanish properties
form part of a Community of owners. Each individual owner must pay their
proportionate part of the Community (or block) costs. The amount and regularity
of payments depends entirely on the nature of the Community; its facilities;
and timing of the expenditure cycle (i.e. whether in a period of routine
maintenance/ expenditure, or if exceptional work is to be carried out). In the
purchase of a Spanish property, a buyer must: obtain Community charge payment
history; review recent Community meeting minutes and resolutions; and make
enquires of the Community Administrator, in order to be clear as to the
anticipated liability.

7. Parking/ Street
Some Town Halls
enforce an obligation for Spanish property owners to pay an annual charge/ tax
for a ‘Vado Permanente’, being a right of access from the property on to the
adjoining road (where applicable). Again, this is a difficult tax to explain/
justify, as it presupposes that the property owner has paid the rates on the
property; and local car tax. But then an additional annual tax is levied in
applicable cases, in order to be entitled to move your car from your property
on to the public road! At the time of purchase of a Spanish property, an
enquiry should be made of the local Town Hall to see if this charge applies.
Also in some areas, there are street parking/ local residents’ street parking

8. Utilities/
Spanish property
services costs are very much case-specific; and a full understanding is
necessary before buying a Spanish property. The nature of the services
available varies according to the location of the property and the type of
property. For example, some areas have mains gas supply, others don’t. Rural
properties may have Community arrangements for the (non-mains) supply of water;
some Communities include mains supply water charges in Community charges,
others do not. Most properties have postal delivery services, but some do not.
Also, following the purchase of a Spanish property, in order to have services
contracts put into new owners’ names; independent certification of the
installations (and updating works) may be necessary. So in all cases, this must
be carefully investigated and budgeted for.

9. Insurance. In all cases of Spanish property
ownership (as it differs from property to property), a full understanding is
needed of the extent of the insurance cover which applies through the Community
services/ charges; and the ‘gap’ which the individual property owner needs to
cover- either with their own insurance policy or accepting the risk personally.
In many cases, a good starting point is to ask the insurance agent who deals
with the Community cover. It can be beneficial to have the Community insurance
and individual homeowners’ insurance through the same agency/ insurance
company, in order to avoid the risk of gaps in insurance protection.

10. Bank Account. All Spanish property owners need to have
a Spanish bank account, for the payment of property outgoings/ local taxes,
etc. Spanish banks distinguish between Spanish residents’ bank accounts and
non-residents’ accounts. The account charges also vary according to the type of
account. In selecting a Spanish bank, branch location and facilities are
obviously important factors. However, a full understanding is also necessary of
the applicable charges. Unlike many other countries, banks in Spain charge
separately for everything imaginable- account holder certification; account
‘maintenance’; issue of debit card; obligatory postage of statements (despite
internet access); receipt of funds into the account; funds withdrawal; issue of
cheques; etc. Banking in Spain can be a surprisingly expensive business; and
there are significant differences in charges from bank to bank. So, claims of
‘standard practice’ should be disregarded; and as with other services,
‘shopping around’ is recommended in selecting a Spanish bank.

This general
commentary is not intended to be exhaustive, but a handy guide to some of the
regular costs/ taxes Spanish property owners face.

The Legal 4 Spain team
provides a full property conveyancing service (buying and/or selling)
throughout Spain. We are always happy to provide a competitive cost estimate at
the outset of a transaction on a no-obligation basis.

Costs of Buying a Spanish Property

Sale of Spanish Assets Posted on Thu, February 02, 2017 15:24:53

August 12th, 2014

In budgeting for the
purchase of a Spanish property, buyers should be prepared for all the
associated costs and taxes, to ensure that the total cost of purchase can be
properly assessed.

The associated costs
and taxes can easily add up to an additional 12-15% on top of the purchase
price; and the following is a reminder of the principal areas to consider.

1. Survey/ independent
The buyer must
be satisfied as to the property’s true open market value and its physical
condition, before entering into a contractual obligation to purchase.
Independent professional advice is recommended; and the cost will depend on the
nature and complexity of the property and advice needed. But typically (if not
included in a mortgage budget), 0.5-1% plus IVA should be budgeted for as a
minimum, for obtaining reliable independent professional advice of this nature.

2. Purchase taxes. The rate of purchase tax the buyer faces
depends on where the property is situated. Also, whether the seller is a
developer selling a newly built property; or it is a private/ resale of a
property. But this tax alone can be as high as 10% of the purchase price, so it
is essential for buyers to be clear at the outset as to the applicable tax rate
for an intended purchase.

3. Tax retention on a
Spanish property transfer.
a buyer purchases from a non-Spanish resident seller, the buyer has to retain
3% of the declared purchase price and pay this to the Spanish Tax Authority.
But although the buyer takes responsibility for this retention and accounting
to the Spanish Tax Authority, it is actually an amount paid by a non-resident
seller on account of the seller’s own tax liability. So, although confusion
over this issue does arise, this ‘cost’ is actually a deduction from the amount
the seller receives; and it is therefore a seller’s cost, not a buyer’s cost.

4. Estate Agency Fees. The buyer should only be responsible for
agency costs if a property finding service has been contracted. Otherwise, the
estate agency fee should ordinarily be a cost covered by the seller.

5. Mortgage costs. A buyer who is taking out a mortgage to
fund a Spanish property purchase typically needs to budget on an additional
cost exposure of 2% plus IVA, taking into account: survey/ independent
valuation (to be recommended even if there is no mortgage- see above);
additional Notary/ registration fees; and lender charges.

6. Legal Fees. Expert independent legal representation
is essential when buying a Spanish property (please see our previous Blogs for
details). The cost depends on the value of the transaction and the complexity.
But typically, 1-1.25% plus IVA (usually subject to a minimum fee level) should
be budgeted for.

7. Bank Charges. If the purchase monies are coming from
outside Spain and from non-Euro currency, then a specialist Foreign Exchange
service should be used. Otherwise, up to 3- 5% can be ‘lost’ in a direct bank
to bank FX/ transfer.

Additionally, some
Spanish banks even charge to receive Euro transfers above a certain value. So,
sometimes it can be cheaper to make multiple smaller transfers. This should be
checked in advance.

Spanish banks will
also charge for issuing the bankers’ draft on completion, and that alone can
cost between 0.25-1% of the amount being paid. The type of cheque required and
applicable charges should be specifically discussed with the bank in advance.

8. Notary Costs. Although technically this should be a
shared cost, it has become normal practice in most Spanish property sales for
the buyer to pay the Notary fee, but this is an area for possible negotiation.
The amount of the Notary fee will depend on the value and complexity of the
transaction, but we recommend that the budgeted figure is around 0.75-1% plus

9. Property Registry. The buyer almost always bears the
Property Registration charges. Again, the amount will depend on the size/
complexity of the transaction and also the type of property and location. But
we recommend that the budgeted figure is around 0.5-0.75%.

10. Sellers’ Costs. Thinking ahead to the future sale of a Spanish
property should also be part of the buyer’s assessment at the time of purchase.
In the following weeks, we will post a summary of sellers’ costs in a separate
Blog. But, all matters considered, the total cost of selling a Spanish property
is generally not dissimilar to the total cost of buying (so a typical guideline
range being 12-15% of sale price). Additionally, a seller might also face a
capital gains tax liability following the sale.

In conclusion
therefore, most well advised Spanish property buyers will typically assume a
range of 25-30% to cover the ‘in and out’ costs and taxes when assessing the
total transactional cost of Spanish property ownership.

The Legal 4 Spain team
provides a full property conveyancing service (buying and/or selling) throughout
Spain. We are always happy to provide a competitive cost estimate at the outset
of a transaction on a no-obligation basis.

Don’t Fall for the Summer Scams in Spain

Spanish Legal Issues Posted on Thu, February 02, 2017 15:24:09

July 24th, 2014

Summer in Spain
inevitably brings an unwelcome visitor– the bogus gas inspector, preying on
those who are enjoying their relaxing holidays. Like all the best scams, this
one evolves from an element of truth. In Spain, mains gas supply is relatively
scarce, so supply is usually by bottled gas- and the pipes and apparatus must
be inspected every 5 years by law.

The scam works as
follows: a ‘representative’ usually wearing a uniform and carrying a clipboard
turns up unannounced, to carry out a ‘compulsory gas inspection.’ An ID may be
fleetingly presented; and even forced entry into your property attempted. After
a brief inspection, the gas installation is condemned, and the financial pain
commences. Several recent cases we have heard of have involved charges of
between 300-500 Euros for replacement of an out of date pipe, yet all the
‘inspector’ did was dust the pipe- usually actually in need of renewal, so
still left in a dangerous state.

Any official company
would make an appointment to carry out an inspection, and their employee’s ID
should be offered for thorough examination. The two principal companies dealing
with gas supply in Spain, Repsol and Cepsa, may contract out the inspections to
authorised companies. Your local Ayuntamiento (Town Hall) should be able to
tell you who is authorised to carry out gas inspections in your area. Make a
note of the name of the company and contact details, so you can check that your
gas inspector is legal.

If you have any doubts
at all, refuse entry and do not sign anything. If your uninvited caller refuses
to leave, threaten to call the Police. This will usually see them on their way.
Sometimes these conmen operate in pairs- one of them ‘casing’ the property with
a view to burglary either then or at a later time; whilst the other one carries
out the ‘gas inspection,’ thus perpetrating two scams in one.

Some very obvious, but
worthwhile precautions are:

1. Never allow any
casual callers into your home.
2. Do not sign anything until it is fully understood; and the service provider
3. Never allow unsupervised access to your home.
4. For official matters, always ensure you speak a common language or have an
interpreter present.

Legitimate company
representatives or tradesmen will not object to your verifying with their
office, and the vast majority of (legitimate) Spanish companies operate an
appointments based system anyway, so you should always receive advance notice
of any inspection visits.

Another property
services related scam in Spain is operated by genuine but unscrupulous
employees of official companies. They may seek to sell other services (eg.
insurance or fumigation services). Sometimes an up-front deposit is requested
for bogus add-ons. Any such offers should be carefully scrutinised and never
agreed to on the spot, without further investigation/ consultation.

These crooks (when
dealing with Spanish and non-Spanish alike) capitalise on supposed ignorance of
householders- so be aware of the scams, to ensure that you are not separated
from your hard earned Euros!

An Introduction to Spanish Probate

Probate in Spain Posted on Thu, February 02, 2017 15:23:20

July 8th, 2014

Discovering that there
are Spanish assets in a non-Spanish estate gives rise to a number of issues in
preparing for the estate administration.

Some key points are:

Location of Death. If the death occurred outside Spain,
then the death has to be proved to the Spanish Authorities as the first stage
of the legal/ procedural work. This enables the compulsory search of the
Spanish Central Wills Registry to be carried out, to establish with certainty,
the presence or absence of a Spanish Will.

Will. A major factor in assessing the
complexity of a Spanish probate case (and of course, actual beneficial
entitlement) is determining whether: there is a valid Spanish Will; no Spanish
Will but a foreign Will covering the Spanish assets; or no Will at all. The
search of the Spanish Central Wills Registry confirms whether or not there is a
valid Spanish Will; and also (if there is), the date and Notarial location of
the last such Will. However, it should be noted that the Spanish Authorities
will admit evidence of later revocation of such a registered Spanish Will by a
subsequent non-Spanish Will. (Hence, drafting of English Wills where there is a
pre-existing Spanish Will has to be undertaken with considerable care).

Location of Assets. Generally, it is unnecessary that the
legal practitioner appointed to deal with the Spanish assets is in the actual
locality of the Spanish assets. Administration of Spanish estates for
non-Spanish individuals is a specialised area of legal practice. So, the key
factor in appointing a legal practitioner is not their actual location, but
that they have the necessary dual-jurisdictional qualification and experience
in dealing with the succession of Spanish estates for non- Spanish individuals.

Asset Type. The exact legal procedures and necessary
documentation in a Spanish probate case will be determined principally by the
type of Spanish assets. In some cases, a simple monetary legacy left in a
Spanish Will can involve the same amount of procedural documentation and legal/
Notarial work as the succession of a Spanish property.

Property ownership. The regime of property ownership in
Spain for multiple owners is the equivalent of tenants in common in the UK.
Spain also has a forced heirship law which may-or may not- apply in dealing
with the Spanish assets of non- Spanish individuals, depending on the

Power of Attorney. A Spanish representative is generally
appointed under Power of Attorney, in order to minimise inconvenience for
beneficiaries, as the Spanish inheritance process involves a significant amount
of personal attendance. Estate administrators may also need to be represented
in Spain (under Power of Attorney), in addition to beneficiaries. The form and
wording of the estate legal documentation will determine this.

NIE Number. Having a Spanish fiscal number is
obligatory for beneficiaries and sometimes for estate administrators also.
Generally the NIE number can be obtained under Power of Attorney, without the
need for the applicant to be personally present in Spain.

Apostille. Non-Spanish legal documents which are
required to prove entitlement (Death Certificates; Grants of Probate, etc) may
need to be Apostilled by the Foreign and Commonwealth Office, in order to be
legally admissible in Spain. In some cases, they must also be translated and
certified by an official translator. An advantage of the existence of a valid
separate Spanish Will is that it reduces the complexity and extent of the
documentation, which has to be produced to the Spanish Authorities in a Spanish
probate case.

Taxation. The Spanish Succession Tax liability in
a Spanish probate case must be very carefully assessed at the outset. The more
remote the relationship between the deceased and the beneficiary, and the
higher the value of the estate, the higher the tax rate. There are other major
differences of approach between Spain and other countries- for example in
Spain, there is no automatic inter-spouse exemption. Also for real estate
interests, in addition to Spanish Succession Tax, there is also usually a local
Town Hall (Plus Valia) tax liability payable on succession. Although post-death
Will variations are not allowed in Spain, depending on the family circumstances
and the estate documentation, it may be possible to achieve alternative
succession routes in the succession process; thus potentially reducing the tax
exposure. Any such strategy in the case handling must be determined right at
the outset, agreed upon with the beneficiaries; and implemented during the
course of the case handling. It cannot be addressed retrospectively.

Banks. Dealing with bank accounts in Spanish
probate cases can often be the longest part of the process. Succession of bank
accounts is not addressed at local bank branch level in Spain. The bank’s
central legal department instead deals with succession matters. Direct contact
with the bank’s central legal department is generally fairly difficult. For the
Spanish banks, succession work is decidedly low priority. So, considerable
patience is required on the part of the practitioner and beneficiaries!

Sale of Inherited
In order for
beneficiaries to be able to sell registered Spanish assets, the Spanish probate
process must be completed first. For relatively minor estate assets such as
vehicles, this can be inconvenient, as there can be a significant delay, before
a sale can be completed.

Conclusion. As the exact procedures and
documentation are always case-specific, an initial full analysis of a Spanish
probate case is always essential. This ensures certainty from the outset as to
the procedural steps which will be required; and the information and
documentation which will need to be produced. Unless a Spanish probate case is
carefully planned and programmed from the outset; and meticulously managed as
matters proceed, there is a very significant risk of delays. Any such delays
can be frustrating and time consuming for the practitioner; and costly for the
beneficiaries- as Spanish tax liabilities can increase over time, with the
imposition of interest and penalties.

The Legal 4 Spain team
is always available to provide preliminary advice on a no-obligation basis in
relation to probate cases, which include Spanish assets.

Always Use independent lawyers in Spanish Property Transactions

Sale of Spanish Assets Posted on Thu, February 02, 2017 15:22:36

June 26th, 2014

It is now a clearly
established general principle for Spanish property transactions, that neither
the seller nor the buyer can or should leave it to the estate agent to deal
with the legal work in the sale or purchase. Otherwise this puts the estate
agent in an impossible position professionally; and the seller/ buyer does not
necessarily get the benefit of the full professional service which they need,
in order safely to deal with Spanish properties.

Quite aside from the
very obvious conflict of interest issues, the skill set and professional
regulation and accountability between the legal and estate agency professions
differ to a significant extent. So, it is very rare that a well informed buyer
or seller of Spanish property will confidently conclude that their interests
are properly protected if represented by the same person for both the estate agency
role and the legal function.

The more experienced
and professional Spanish estate agents recognise and accept this; and due to
the highly damaging publicity of scandals and scams in Spanish property
dealings in the recent property boom, professional operators in the Spanish
property market are more concerned than ever to ensure that clients should not
be exposed to this type of
pitfall in Spanish property transactions.

However, there is a
separate ‘variation on the theme’, which Spanish property buyers and sellers
also need to be wise to; and that is: ‘legal advisers’ who are either connected
to or (perhaps of even greater concern) employed by the estate agent dealing
with the sale or purchase.

As an example, an
associate was recently consulted on a Spanish property sale, with a sale/
purchase contract, which oddly contained extensive skillfully crafted legal
drafting to deal with the protection of the estate agent’s commission. But
then, just brief and sloppy wording as to the sale/ purchase, which left the
seller legally at risk; and unable easily to withdraw from the sale- even in
the event of a buyer’s breach of contract.

This was completely at
odds with the reality of the transaction. What should have happened was that
the property sale/ purchase should have been addressed as the main issue; with
the estate agent’s commission very much as a secondary concern.

It transpired that
this contract had been (perhaps unsurprisingly) prepared by the estate agent’s
‘in house lawyer’. This explained the focus on the estate agent’s commission
rather than the sale and purchase agreement.

Some points Spanish
property buyers/ sellers should bear in mind:

1. The Solicitors’
Regulation Authority in the UK (by way of an example) has expressed concerns
about the high level of risk of a conflict of interests where a lawyer employed
by (and therefore seen to be advising) the estate agent is also dealing with
the legal work for the buyer or seller in the same transaction. There are
specific professional conduct rules; and non-compliance can lead to grave
consequences for the professional in question.

2. As such, it is a
well established principle in the UK (and indeed other countries) that the
estate agency representation on one hand, is one professional relationship; and
on the other hand, the legal representation of buyer/ seller is entirely
separate and independent.

3. Many non-Spanish
buyers of Spanish properties, who are very cautious in their own home
countries, following ‘normal’ conventions in terms of taking independent
professional advice in property transactions, come to Spain, and (for some
curious reason) relax and ‘take their eye off the ball’; and take risks that
they wouldn’t dream of taking at home. The best advice when addressing a
Spanish property transaction is to consider all the steps and precautions you
would take if buying or selling a property in your home country; and as far as
possible, apply the same principles to the transaction in Spain. In fact, in
nearly all respects, there is no reason at all why things should be any
different in Spain. Indeed, if anything, people should proceed even more
cautiously in Spain, given the well publicised cases in recent years
(particularly relating to planning issues) where investors in Spanish property
have lost their property or their investment. This underlines the need for top
quality, independent legal advice in Spain.

4. The reality in
Spain is therefore the same as in the UK/ other countries- that the functions
of the estate agent and the legal adviser are entirely distinct; and should
therefore be carried out by separate and unconnected professionals, to ensure
that the three parties with a substantial interest in a property transaction
(namely the buyer, the seller and the estate agent) are each independently advised.
Each needs their interest fairly protected, to ensure an appropriate balance of
the respective interests.

5. In some cases,
estate agents who disregard these conventions (against the interests of their
clients, it has to be said), convince the client that the client is saving
money; as the estate agency fee of 3, 4 or even 5% (plus IVA) includes legal
representation. But as this is not independent legal representation, properly
safeguarding client interests, it is therefore impossible for this to be seen
as ‘good value’. Better that the corresponding proportion of the estate agent’s
fee in such cases be applied instead to the engagement of entirely independent
legal advice. Economically, this should make no difference to the buyer/
seller, as the same total fee is payable. And it should make no difference to
the estate agent, as one assumes that there is a cost to ‘their’ provision of
legal services in this regard, so unless they are profiting from that also, the
release of this function and the corresponding cost to an independent
professional should be economically neutral for them.

6. If the estate agent
indicates there is no cost to the provision of ‘in house legal representation’;
then that also raises alarm bells, as it is impossible to provide a high
quality professional service such as legal property sale/ purchase
representation without any cost base- unless the skill/ quality/ qualification/
regulatory compliance of the person/ people behind the legal service simply
isn’t what it should be.

7. This article should
not in any way be viewed as a criticism of estate agents in Spain generally. On
the contrary, the reality is that the vast majority with whom we work are truly
skilled and knowledgeable property professionals- expert negotiators and transaction
facilitators. It is unfortunately the very few who potentially spoil it for the
many. And this is a matter of deep frustration for all who are committed to
building confidence in the Spanish property market as a secure destination for
inward investment. You are referred to our Blog of 1st October 2013, with
advice on appointing estate agents in Spain (prepared with the helpful input of
professional Spanish estate agent contacts, as indeed has been this article).

8. Equally, a Spanish
property buyer/ seller has to be extremely careful in selecting a legal adviser
on a Spanish property transaction. You are referred to our Blog of 27th
November 2013, with some general advice/ pointers in this regard. The title
‘abogado/ lawyer’ does not automatically imply all the necessary knowledge and
experience to be able to advise a non-Spanish national dealing with Spanish

In relation to any
proposed Spanish property sale/ purchase, please contact the Legal 4 Spain
team, to ensure you have the best quality, completely independent legal
representation to protect your interests fully; but always at a competitive

10 Points to bear in mind approaching the Spanish tax return deadline

Spanish Legal Issues Posted on Thu, February 02, 2017 15:21:44

June 6th, 2014

Dealing with the
annual Spanish income tax return (‘Declaración de la Renta’) for Spanish
residents/tax payers is not one of our professional service areas.

Nevertheless, it is an
issue that concerns many of our clients and contacts; and we have been asked to
circulate some general information about it.

The final date for
submission of Spanish tax returns is 30 June. However, for cases where tax is
to be settled by direct debit, the cut off point is earlier. In any event, it
is recommended that filing/ payment is submitted by mid June at the latest, to
avoid the risk of last minute ‘hitches’.

This summary does not
relate to non- Spanish residents owning properties in Spain. The rules that
regulate their obligation to file an annual Spanish (non-residents’) tax return
in Spain differ substantially. That subject will be covered separately.

Some points of general
information we wish to publicise are:

1. Key dates. Spanish tax returns to be filed by 30
June 2014 deal with the calendar year from 1 January 2013 to 31 December 2013.
Financial matters from 1 January 2014 to 31 December 2014 will be covered by
the tax return to be filed by 30 June 2015.
2. On line filing. It is recommended that the tax returns are filed
on line (in preference to posted, paper forms); as it is relatively
straightforward and more secure.
3. Professional advice is recommended. It is possible to deal with
Spanish tax returns personally. However, we recommend that a certified ‘gestor’
(administrator/ accountant) is consulted; to submit the tax return for the
client. For straightforward cases, the charge is generally fairly modest.
4. Avoid errors! Errors in tax returns can be unexpectedly complicated
and extremely time consuming and lengthy to regularise subsequently. Accuracy
of the data provided and precision in the completion of the tax form in the
first place are therefore crucially important. As stated above, professional
advice is recommended.
5. Claim allowances! There may be allowances/ credits/ deductions
depending on the specific circumstances of the tax payer. To ensure all
applicable benefits are correctly claimed, professional input is recommended,
as stated above. Also, advance planning and documentation collation is
essential, to ensure nothing is missed in a ‘last minute rush’. Some examples
of the benefits to consider are: the personal tax allowance; additional
allowance for married couples declaring jointly; employment allowance; pension
contribution deductions; and pension benefits.
6. Late filing penalties. Failure to submit a tax return on time
can result in a late filing penalty (usually 100 Euros).
7. Increases in late-paid tax. Failure to submit a tax return on
time when tax is payable can result in additional tax charges- a periodic
increase in the tax amount plus interest.
8. Exemption from obligation to file. There is an exemption from
the general obligation to file a tax return for those earning under 22,000
Euros annually when tax is deducted at the employment income source. But beware
the ‘small print’. In each case when an exemption is relied upon, there are
various exceptions to this general rule. For example, cases where: there is
foreign employment income; or more than one source of income.
9. File early; reduce rebate delays. An advantage of filing the tax
return sooner rather than later is that it brings forward the date of receiving
any rebate due. Rebates can in any event, take several weeks (if not months) to
come through.
10. Information required. In order to complete the tax return, the
information/ documentation varies from case to case; but for employment income,
an employer’s certificate is required; receipts for property rates payments;
end of year certificates for any bank accounts; statements of any investment
income/ disposals/ gains; and any rental income details.

There is a lot of
information about Spanish tax returns on the internet, but much of it is out of
date and/ or confusing. Caution is therefore strongly advised. There is also
the on line guidance provided by the Spanish Tax Authority- indeed, in English
for non-Spanish speakers. But many find that resource complex and unwieldy.

For these reasons (and
the others stated above) in our opinion, a personally appointed ‘gestor’
(engaged in good time), is generally the best option. This assists in avoiding
the pitfalls in this exercise; and ensuring that the benefits due are properly
provided for and claimed- thus ensuring full legal compliance, but tax payment
at the lowest level legally and legitimately possible.

10 Legal Requirements for Drivers in Spain

Spanish Legal Issues Posted on Thu, February 02, 2017 15:21:02

May 23rd, 2014

In light of the
recently updated traffic laws in Spain, we have obtained from the Guardia Civil
an up to date list of the points they are routinely required to check in Spain,
when stopping a driver in a ‘control’ (check point), or in the event of a
traffic offence.

1. A ‘Carnet
de Conducir’ (driving licence)
which is valid for Spain, permitting
the driver to drive the vehicle in question. This must be the original document
or a copy certified by an official Spanish body- eg. the ‘Ayuntamiento’ (Town
Hall) or ‘Jefatura Provincial de Tráfico’ (Provincial Traffic Headquarters).
2. A ‘Documento de Identidad’ (ID document eg. Passport). This
is required to verify the identity of the driver and validate the driving
licence in cases where the driving licence does not include a photo.
3. The ‘Permiso de Circulación’ (vehicle registration
document, showing the vehicle description and registration number; and owner’s
name and address). This should be the original document (or certified copy, as
point 1. above).
4. The ‘Ficha Técnica’ (the statement of technical
specification, which also contains the record (and should have the up to date
stamp) of ITV (periodic vehicle inspection) for vehicles requiring an ITV. This
should be the original document (or certified copy, as point 1. above).
5. The ITV (periodic vehicle inspection) sticker. The ‘Ficha
Técnica’ contains the written record of the inspection history, but it is also
a legal requirement (for a vehicle for which an ITV is necessary) to have the
ITV sticker clearly displayed.
6. The most recent receipt for the local Town Hall car tax.
Although this is not on the official list of requirements, it is recommended to
keep it with the paperwork, to be able to demonstrate compliance with all
national and local requirements.
7. The original current certificate of car insurance (or certified
copy, as point 1. above); and proof of payment of the annual premium.
8. Two warning triangles and a spare set of bulbs.
9. Two reflective safety jackets (kept inside the car-
accessible without leaving the car).
10. A spare set of glasses if the driver wears glasses for

The above is a
current, general guide to the basic requirements, rather than an exhaustive
list. In the case of non- standard passenger vehicles; or any case-specific
individual circumstances, there could be additional requirements. Guardia Civil
‘Cuarteles’ (garrisons, attended by officers for contact with members of the
public) are located all over Spain. If in any doubt, attend in person and
request guidance.

Non-compliance with
these simple and basic rules can lead to fines or penalty points.

So, please SHARE this
with your friends and contacts who live in Spain, or visit and drive in Spain,
to help them to be lawful (and to avoid fines/ penalties!).

New Spanish Traffic Laws Come in to Effect on 9 May 2014

Spanish Legal Issues Posted on Thu, February 02, 2017 15:20:22

May 8th, 2014

On the grounds that
‘ignorance of the law is no excuse’, all drivers in Spain are advised
immediately to familiarise themselves with the detail of the new traffic laws
which are coming into effect on 9 May 2014 (Ley 6/2014 modificando la Ley sobre
Tráfico, Circulación de Vehículos a Motor y Seguridad Vial 339/1990); a mere 21

Among the new
provisions are the following:

1. Speeding fines
apply for exceeding the limit by just 1kph! On some motorways, the speed limit
is being increased from 120kph to 130kph, but in many towns, the speed limit is
being reduced from 30kph to 20kph.
2. If the Guardia Civil observe a motoring offence and note the vehicle
registration number, this provides sufficient evidence to prosecute- no need
for them to stop vehicles.
3. A minimum fine of 1,000 Euros will be payable by drivers caught driving
whilst double the drink drive limit or above; or in all cases for reoffending
drink drivers; and drivers under the influence of drugs.
4. The Guardia Civil can seize any vehicle carrying children without legally
compliant child seats.
5. The very specific rules as to where children must sit in the vehicle
(according to age/ height) must be observed, otherwise drivers face heavy
6. Cyclists under 16 years of age must wear helmets.
7. Drivers have much higher duties to ensure the safety of cyclists of all
8. Speed camera/ radar detectors are prohibited.
9. An EU Directive is to be implemented so that driving offences committed in
one EU country are reported to the EU country of registration of the vehicle in
10. Much stricter rules are being implemented for the Spanish registration of
foreign registered vehicles kept in Spain.

The above is by no
means exhaustive. As can be seen, the new rules are far reaching. Knowledge of
the details and observation of the requirements in practice is of fundamental

It is clear from the
increased powers to prosecute and fine drivers, that the Spanish Authorities
‘mean business’ with these important legal changes.

Please SHARE this with
your friends and contacts who drive in Spain, to help them to be lawful (and to
avoid fines!).

10 Reasons to Register on the ‘Padrón’ in Spain

Spanish Legal Issues Posted on Thu, February 02, 2017 15:19:39

April 28th, 2014

The Padrón is the
register kept by each Town Hall in Spain, of the people who live in the town-
either as property owners or tenants. The closest UK equivalent is the
electoral roll.

It is compulsory for
residents of more than 6 months in an area to ‘empadronarse’- to be registered
on the Padrón (as a separate administrative process from residency applications)
but many fail to do so.

Some of the advantages
of ‘empadronamiento’ (being registered on the Padrón) are:

1. It can provide
taxation advantages (eg. Spanish Succession Tax).
2. It enables children to be enrolled for local education.
3. In the case of limited school places, it is used as one of the criteria for
awarding places (determining catchment area).
4. It is required in order to be registered for local healthcare services.
5. It provides an entitlement to vote in local and European elections.
6. In some areas, it is required to be able to use municipal facilities at
discounted rates.
7. Town Hall funding is affected by the number of people on the Padrón. So,
registering helps boost your local Town Hall’s resources for local services and
8. It is necessary in order to purchase and register a car in Spain.
9. It is necessary in order to marry within the local municipality.
10. It is necessary for benefits/ social services access; and to use the local
employment agency (Job Centre equivalent) facilities.

Registration on the
Padrón is a simple exercise- and is either free or just a nominal charge is
made, depending on the area. Specific requirements in terms of documentation
vary from town to town. So, before applying, it’s always best to make a
preliminary visit to the Town Hall, to get a full up to date list of

Warning of 80% tax charge on Spanish inheritance

Spanish Succession Tax Posted on Thu, February 02, 2017 15:18:49

April 11th, 2014

Spanish tax law can
undoubtedly lead to very unfortunate fiscal consequences in the event of
inheritance by beneficiaries who are unrelated to the deceased- including
unmarried / same sex partners, particularly if the relationship is not
‘recognised’ with civil status.

So, the bad news is
that advisers who warn of the exposure to Spanish Succession Tax rate of 80%
(or even slightly more) are confirming what could theoretically happen.

However, it should be
stressed that such a high rate of taxation would only apply in the very worst
Spanish tax case scenario. For example, with a very high value Spanish estate;
already wealthy beneficiaries; and no family or marriage connection between the
deceased and the beneficiaries.

But in any event, even
with Spanish estates of more modest value, the impact of Spanish Succession Tax
can still be unexpectedly harsh. So, it’s clear that planning is essential in
all family situations involving Spanish property ownership, to prevent the risk
of legally avoidable Spanish tax liability arising.

Advising non-Spanish
owners of Spanish properties is complex and specialised area of Spanish legal
practice, and without the correct advice, major Spanish tax problems can easily

We are happy to talk
through any potential cases (without obligation). Together we can explore the
solutions that are available to achieve succession wishes, in a tax efficient

Does Spanish Residency Mean Painfully High Taxation?

Spanish Legal Issues Posted on Thu, February 02, 2017 15:18:03

March 24th, 2014

Spain’s fabulous
weather, its rich culture, its relatively modest cost of living, and its close
proximity to other European countries, have always meant that it is a dream
destination for many, to reside and to savour all the country has to offer. For
those who are prepared to ‘take the plunge’, the demographic changes in Spain
over recent years; and the economic impact of the financial crisis have in many
ways only added to its desirability and feasibility as a potential country of

Official figures
confirm that 13% of Spanish nationals have emigrated from Spain in the last 2
years. And as a result of the impact of the economic crisis and concerns over
taxation changes, a huge number of non-Spanish nationals have returned to
residency in their countries of origin over the same period. So, the total
population of Spain now stands at around just 70% of the UK population. But
Spain is almost 4 times larger than the UK!

Also, the
over-building in Spain during the pre-crisis period and subsequent Spanish
property price crash mean that there remains a significant over-supply of
properties- in many cases, owned by very keen sellers. So, a relatively
under-populated country offering clear quality of life benefits and incredibly
attractive property investment opportunities…

OK, so where’s the

Many who have abandoned
Spanish residency over recent years have expressed concerns about taxation- in
particular, the impact of the Spanish Wealth Tax and Spanish Succession Tax.

The Spanish
Government’s recent reintroduction of the Wealth Tax; and obligation for
Spanish nationals and Spanish residents to disclose (and be taxed on) overseas
assets, was met with dismay by many. But in fact, the impact has been found by
the vast majority to be far less harsh than was originally feared.

Also, much has been
made of the reductions in allowances in Spanish Succession Tax. But again,
under Spanish tax law, when expert estate planning advice is obtained and
implemented, there are many ways quite legally and legitimately to reduce the
impact of succession taxation.

As regards Spanish
income tax and other direct taxes, there are agreements and practice directives
in place between the Spanish Tax Authority and those of many other countries,
to ensure fair fiscal treatment in dual jurisdictional cases. So, for those who
are properly advised and correctly meet their tax declaration and payment
obligations, the position (in most cases) is neither as complicated nor as
onerous as might be feared.

Of course, individual
circumstances always need to be considered carefully- it is never a case of
‘one size fits all’ when it comes to Spanish taxation and estate planning.

Many factors are
relevant to determining tax liability, including even which part of Spain you
are dealing with.

In conclusion, we
always recommend that before any decision or investment commitment in Spain is
made, our clients take the opportunity to understand fully their fiscal
obligations, and to implement their tax and estate planning accordingly. By
planning intelligently to reduce tax liability as far as Spanish law permits,
and then promptly filing tax returns and paying the tax that is due, one
invariably achieves the most efficient result.

Ignorance of Spanish
tax law is no excuse; and equally, proper awareness and fiscal compliance (in
accordance with expert professional advice) need not be as financially
devastating as many fear to be the case.

How to get an N.I.E. Number for Spain

Spanish Legal Issues Posted on Thu, February 02, 2017 15:16:57

February 27th, 2014

In many cases,
particularly for Spanish property sales and purchases; and inheritance matters,
N.I.E. numbers (Spanish fiscal numbers) are of critical importance. They are
usually required extremely urgently, in order to avoid delays in legal
transactions and/or increases in tax liabilities.

There are three
principal ways to obtain N.I.E numbers:

1. In person, in Spain
at a National Police office. This usually involves three stages: the attendance
to present the paperwork and ID documentation; payment of the issuing tax; and
finally, return (in person) to collect the N.I.E. Certificate (usually after
7-10 days). There are independent service providers available, who assist with
the paperwork and provide guidance on the process. So, for individuals who are
able to be in Spain for the period indicated for this process (and whose
knowledge of the Spanish language is adequate), it is quite straightforward.

2. In person, at a
Spanish Consulate office (for example, in the UK: in London, Manchester or
Edinburgh). In this case, the process can be extremely lengthy and
inconvenient, as the Spanish Consulate operates as a ‘post box’ for submitting
the application to Madrid; and thereafter, communication has to be to a Spanish
address. We would only usually recommend this option in exceptional and
non-urgent cases.

3. Through an
authorised representative, in Spain. There have been changes of practice and
procedural requirements over the years; and also documentation requirements
differ between areas of Spain. ID and legal representation has to be
specifically proved, so expert/ professional representation is generally
essential, to avoid problems and delays.

The issue of N.I.E.
numbers is one of the first points to be covered in any of our client cases. We
provide full guidance and assistance to our clients in overcoming this legal
hurdle. Obtaining N.I.E. numbers is not usually a ‘stand alone’ service that we
provide (although there are others who specialise in this service). However, we
do have a system in place for our client cases, where we can quickly and simply
obtain our clients’ N.I.E. numbers for them, when needed.

Can Spanish Succession Tax be reduced by having a Spanish Will?

Spanish Succession Tax Posted on Thu, February 02, 2017 15:15:58

January 27th, 2014

In many cases, the
answer is: yes!

It is often possible
to deal with Spanish estate planning and structuring so as to reduce the impact
of Spanish Succession Tax within the Spanish Will.

If you have a Spanish
Will, this can assist in reducing Spanish Succession Tax in the following ways:

1. It ensures that you
have the flexibility you are legally allowed to select your beneficiaries; so
that the most tax advantageous succession route in the circumstances can be
identified and provided for.

2. It secures the best
legal basis for a fast and economical succession process, following a death.
This helps to ensure that the legal process can be completed within the very
tight timescales allowed under Spanish tax law. Conversely, any failure to
comply with the statutory timetable (for example, delays caused by not leaving
an up to date and valid Spanish Will) can expose beneficiaries to increased tax
liability, through the imposition of interest and penalties on the tax debt.

It is perfectly legal
and acceptable to organise your estate succession in Spain, so as to minimise
the exposure to Spanish Succession Tax- as far as legitimately possible in the
circumstances. In advising our clients, we consider all available routes to
achieve this. As our team is independent and not tied to any single process or
structure; we are able to provide objective and case- specific advice in each
individual client scenario. This ensures the most cost effective estate
planning solution within the constraints of each case.

Tax Shock for Poorly Advised Buyers of ‘Bargain’ Spanish Properties

Sale of Spanish Assets Posted on Thu, February 02, 2017 15:15:12

January 8th, 2014

Expert professional
legal advice is always necessary when purchasing properties in Spain, both to
avoid legal problems; and also to avoid unwelcome tax surprises.

A detailed fiscal
analysis is essential in order to evaluate costs and taxes at the time of the
transaction. But furthermore, to assess the risk of exposure to future tax

Anyone who has bought
or sold property in Spain will be aware that Spanish properties have two
values- the market value; and the official fiscal value.

Prior to the collapse
in Spanish property prices over the last 5 years, in the majority of cases, the
market value exceeded the fiscal value. But now in many cases with reduced
market values, the fiscal value exceeds the market value.

Buyers of Spanish
properties pay a transfer tax of 8-10% of the declared purchase price.

But if the fiscal value
of the property is greater than the declared purchase price, during the 4 year
period following the transaction, the Spanish Tax Authority can demand an
additional amount of transfer tax, by substituting the (higher) fiscal value
for the declared purchase price.

For example, take a
Spanish house previously fiscally valued at 500,000 Euros. Quite commonly, this
may now be sold for 250,000 Euros. The buyer now pays the transfer tax of
25,000 Euros. However, the buyer must budget for a further 25,000 Euro tax
liability, which may be demanded (along with interest/ penalties) any time
within the 4 years following the purchase.

This is nothing new-
but it is convenient for many advisers involved in Spanish property
transactions to ‘play down’ the risks. Also, many advisers are inexperienced;
or lack legal and fiscal expertise; and are therefore simply unaware of the

At Legal 4 Spain, our
mission is to be clear with our clients as to the risks and liabilities in
Spanish property dealings. This ensures that all relevant legal and financial
details are ‘factored in’ to the negotiation of a price and budgeting.

Armed with the correct
advice and knowledge, property investment in Spain needn’t be viewed as the
risky proposition many commentators would have you believe.

Spanish Residents also facing 3% retention tax on property sales?

Spanish Legal Issues Posted on Thu, February 02, 2017 15:14:18

December 17th, 2013

The understanding
since its introduction has been that the 3% tax retention on Spanish property
sales by foreign owners is applied only to non- Spanish resident sellers.
Conversely, Spanish resident sellers should not suffer the same deduction.

However, the recent
tightening of the rules and practice guidelines in this area has meant that in
many cases, sellers who are Spanish residents are falling into the traps for
the unwary; meaning they are also losing 3% of the proceeds of their Spanish
property sales, in tax retention.

The reclaim process in
applicable cases can be very lengthy and convoluted. So, many Spanish property
sellers end up simply ‘writing off’ the 3% even though really, they should be
entitled to have the tax retention refunded, hence the reference to the loss of
the 3% in practice.

It is important to
appreciate that in this context, Spanish residency has two component elements.
The first is legal or factual residency (generally evidenced by a Certificate
of Residency). The second aspect, which is of equal importance, is that the
positive step must also be taken to become fiscally resident in Spain; and
annually to file the corresponding tax declaration in Spain. (In most cases,
this is an obligation of Spanish property owners, in any event).

Provided that these
fiscal obligations have been complied with in all respects and for the
requisite period; when a Spanish property sale is agreed, the Spanish Tax
Authority should issue a Certificate of Fiscal Residency. This, combined with
the evidence of factual residency, should satisfy the Notary and the Spanish
Authorities that no 3% tax retention should be made.

It should be noted
though, that even for non-Spanish residents, a later tax assessment can be made
following the sale, and capital gains tax charged, depending on the facts and
figures of the case in question.

Additionally, all
sellers (Spanish resident and non- Spanish resident alike) still have to pay
‘Plus Valia’, the municipal tax on Spanish property sales. This is calculated
by reference to Catastral (rateable) value and the period of ownership.

In conclusion, it is
essential to have reliable professional guidance on tax issues and
transactional costs, before agreeing terms for a Spanish property sale.
Otherwise, there is no certainty as to the net sale price which will be
received. Please speak to our team at Legal 4 Spain, for clear advice and
competitively priced legal representation on Spanish property sales.

When to Gift Spanish Properties to Children

Spanish Wills &Estate Planning Posted on Thu, February 02, 2017 15:13:23

It occurs to many
existing owners of Spanish properties that transferring their properties into
their children’s names could provide future inheritance tax savings.

Unfortunately, once the
Spanish property has been purchased and registered in the parents’ names, it is
often too late in economic terms, to achieve this.

For non- Spanish
nationals, the tax consequences of passing a Spanish property down to the
children need to be extremely carefully considered- both in Spain and also in
their own country.

In Spain, a lifetime
gift is subject to taxation at a level which is, in many cases, even higher
than the tax payable in the event of a parent’s death. As an alternative to a
gift, a sale/purchase between parents and children can result in a lower tax
liability; but the transaction has to be meticulously executed to avoid it
being treated by the Spanish Tax Authority as a gift in any event; and
therefore taxed at the higher rate.

There does exist in
certain circumstances, however, a further alternative option- the property
ownership structure can be collapsed, to reduce the number of co-owners in a
comparatively tax efficient manner. But this only enables transfers to other
co-owners. For example, a transfer can be made from one co-owning spouse to
another; or (if children are already registered co-owners of the property), in
favour of children.

So, for families to
avoid being ‘locked in’ to a Spanish property ownership structure which stores
up unnecessarily onerous tax liabilities in the long term, careful thought
needs to be given at the outset- when the property is first purchased- as to
the most efficient holding structure.

But (as an example of
the complexities which can arise) even for English buyers of Spanish
properties, it is not simply a case of ‘buying in the children’s name’. There
are also UK taxation ‘gift with reservation’ issues which need to be addressed.
If the parents pay for the Spanish property, then register it in the children’s
name but continue to use the property themselves, they then need to pay (and
carefully document) an appropriate rent or contribution towards outgoings.
Failing that, the gift of the money to buy the Spanish property could end up
not leaving the parents’ UK IHT estate.

In summary therefore,
when acting for clients on the acquisition of Spanish properties, it is
essential that the legal adviser provides full advice both under Spanish tax
law and also having regard to the buyer’s own national tax law, as to the most
efficient way to hold the Spanish property. This enables the buyer to secure
the best overall tax position; and to ‘keep their options open’ as regards future
tax and estate planning within the family.

Avoiding the pitfalls with Estate Agents in Spain

Sale of Spanish Assets Posted on Thu, February 02, 2017 15:01:06

October 1st, 2013

In Spain, many estate agents offer a
high quality, professional service at a fair cost. But (as is also the case in
many other countries), since professional accreditation in Spain is voluntary,
there are many less reputable operators in the real estate sector; and a quick
scan of postings on the internet predictably confirms many ‘horror stories’.

Reasons for problems in estate agent
appointments include:

• A lack of clarity at the outset on
target sale price and charging structure.
• A demand for an excessive commission (bearing in mind that officially
recommended commission levels are generally 3-5% plus IVA).
• An agreement that the estate agent receives money from a buyer/ holds money
for the seller. Funds should always pass under the responsibility of a
professionally regulated lawyer; and should only go to the credit of a
designated client bank account.
• An estate agent offering to secure a fixed price for the seller, but
receiving commission instead, from the buyer. That can mean the estate agent
(and not the seller) keeps any amount secured for the property over and above
the figure stated. Instead, the estate agent should always be appointed as the
agent of the seller; and be paid an agreed percentage (or fixed fee) by the
seller, which accords with official guidelines.
• Where an estate agent says that independent legal advice is unnecessary; or
recommends the use of the estate agents’ own lawyer. This does not guarantee
best impartial professional advice; but instead creates a real risk of conflict
of interests.
• Exclusivity generally; and automatic extension of an exclusivity period.
• Failure to secure confirmation of any of the points listed at the end of this

A client of ours who is an elderly
widow, asked us to address this subject. Unfortunately she had consulted us
only after being persuaded to sign (incredibly) a legally binding automatically
renewable exclusive term contract with a city centre estate agent in Spain,
which effectively guaranteeing a minumum property sale commission of 21% plus

By way of a contrast, having
consulted one of the principal (voluntary) professional bodies in Spain (the
Colegio Oficial de Agentes de la Propiedad Inmobiliaria); their recommended fee
scale for a property sale in an equivalent case is usually in the range of 3-5%
plus IVA.

So, whilst clients are best
protected by appointing an estate agent who is officially an ‘Agente de
Propiedad Inmobiliaria’ (or proven current member of equivalent professional
body or association); the points you should check with an estate agent in Spain
before appointing them include:

• Proof of relevant official
professional qualification by a nationally recognised academic/ professional
• Confirmation of professional regulation and complaints procedures.
• Certification of current valid professional indemnity insurance, to provide
cover in the event of negligence.
• Demonstration of experience and knowledge of the market generally, in order
to be able to provide reliable advice, so as best to protect clients’
• Demonstration of detailed knowledge of the title to the property in question;
and its local and regional planning law status.
• Confirmation of willingness to work alongside and cooperate with other
professionals (e.g. lawyers) involved in the transaction in question.
• A clear explanation of the nature and extent of the service to be provided-
in writing; in a form approved by your lawyer; in your own language; and signed
as agreed. The terms must include full details of all applicable charges.

« PreviousNext »