Legal tip 1326. Two ideas on IHT in Spain. The monster is not that ugly!
Wednesday, September 30, 2015 @ 3:59 PM
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The first idea for you is that the monster of IHT in Spain is not so ugly. There are reductions on taxable amounts.
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*In almost all Spanish regions, direct family relatives such as spouses, ascendants and descendants do not pay Inheritance Tax any longer. In the rest of the communities, these relatives can enjoy of reductions in the taxable amount.
*There is no different IHT tax treatment in Spain between residents and non-residents.
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The second idea is that you can OF COURSE; avoid double taxation on IHT despite there being no bilateral UK-Spain agreement on this.
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If you are Spanish tax resident and are also paying IHT tax in the UK:
You can deduct, from your Spanish IHT tax bill, the smaller of the following two amounts:
• a) The actual amount you have paid in the UK as IHT tax.
• b) The amount that those UK assets would pay for IHT in Spain.
If you are a UK tax resident and are legally obliged to pay IHT in regards to a real estate asset you are inheriting in Spain:
You can deduct, from your UK IHT bill the lower of these two amounts:
• a) The actual amount you have paid in Spain for IHT in regards to that asset
• b) The amount that the Spanish asset would accrue for IHT in the UK.
So, despite Spain and the UK not having an IHT bilateral agreement to avoid double imposition, they do use same legal rule when dealing with these potential double impositions.
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We will be pleased to answer your questions with regards to avoidance of double imposition Spain-UK IHT
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Punta Umbría, Huelva, Costa de la Luz, South weste of Spain