Tax in Spain:

The European Court of Justice ruling on 3rd September 2014, stated that Spain was not fulfilling its obligations in relation to articles 21 and 63 TFUE and articles 28 and 40 of AEEE.

These articles prohibit EU member states from differentiating between nationals and non-nationals. Specifically, Spain was in breach with regards to taxation of property donations and inheritance.

Accordingly, UK citizens, and those from any EU member state, currently benefit from the sale reduced taxation rates as Spanish nationals. In areas such as the Canary Islands, Madrid and Catalonia this could be up to 99.9% reduction in inheritance tax.

How will the EU Referendum affect this?

This situation will continue for the time being, whilst the UK negotiates to leave the EU.

It is not clear at the present time what will happen after the Brexit. The UK will have to negotiate and agreements and it is a possibility that UK citizens will not benefit from the same inheritance and property donation tax rates as EU citizens.

Our recommendation after Brexit from the EU:

In the interim period, GB Abogados recommends consideration of property donation. This process takes place between family members and will mitigate any potential increase in inheritance tax rates as a result of the UK leaving the EU.

The taxation rate for property donations between family members is the same as inheritance tax. Therefore, currently UK citizens will enjoy generous rates of tax when donating a property.

If you own a property in Spain and are considering leaving the property to a family member please feel free to contact us. We will provide free advice and give guidance on the process and costs of the donation. Here at GB Abogados we provide a range of legal services, our list of services represent only some of the most common topics. Click here, for information on specific legal matters.