INHERITANCE TAX ON WORLDWIDE ESTATE OR ONLY SPANISH ASSETS?

I am resident in Zaragoza, Spain.  My Mother passed away last January in the UK. She left me and my 2 sisters (who are uk residents) 2 properties in London and 2 properties in Spain.  My spanish lawyers tell me I am liable to pay inheritance tax (IHT) on EVERYTHING she left. But I have been speaking to another UK lawyer who is a specialist in this area who says I am only liable to pay spanish IHT on the spanish assets, not the UK assets. 

I am already paying IHT in the UK at the usual 40%.  My spanish IHT tax bill would actually be zero if only I had receipts as proof of payment of UK IHT to show here. unfortunately it is dragging on a long time in the UK and the 6 month deadline has already passed and the spanish tax authorities are asking for 81k Euros. 

I am just wondering if this 81k tax is unlawful if I am indeed not liable to pay spanish IHT on my Mother’s worldwide estate. 

Any knowledge would be welcome… Thank you!

Sorry to hear about your loss.

Could I ask what the outcome of this was and if you managed to obtain any kind of tax relief from the Hacienda in the end? 

All the info on this states that you pay IHT on all inheritances assets whever they are , if you are resident in Spain

Ask a trusted firm like Blevins Franks.

a lot of UK lawyers are not knowledgeable about Spanish taxes

if 81 k is payable, it must be a massive inheritance!

Well George Osborne's 2020 IHT regime suits us down to the ground, if we manage to make it there. We've managed to legally move a good amount to our son but were considering a spending spree in order to show the finger to the tax man, IMHO Spain should become a low tax  regime, thus attracting high wealth spenders, along with lesser incomed spenders who wouldn't mind leaving a bob or two to their kids. 

Look think yourself bloody lucky if you pay IHT it means youve received a S--T load of money which you probably dont deserve 

God some people are beyond greed

Think about the poor B--T--RDS in Spain who are without jobs and cannot afford food pay it in fact pay double

Love Hughsie xx

Neither my wIfe or I will pay IHT, what with us both being dead if and when the bill arrives. As the late Leona Helmsley once famously said, "We don't pay taxes, only the little people pay taxes", this is as true today as it's always been, if you have great wealth you can afford to pay an expert to help mitigate any tax liability both in life and in death.

As for deservedness, we will leave our assets to whoever we wish, I hadn't noticed that we were living in a communist state, jealousy of people who have more than you is just a sad badge of failure.  

Just to clarify as this thread was about tax in Spain.

In Spain the person inheriting is the one who pays any tax which is due, and the amount is based on that person’s situation and varies according to their relationship to the deceased (son/daughter, brother, friend etc,) and their  wealth.  Also IHT in Spain is determined by the Regional Government where the deceased lived,   so it varies from Region to Region.

Also the tax due must be paid before  n asset can be disposed of, thus,  a surviving spouse could not sell the joint owned property to raise the funds to pay the IHT.

At an extreme.  If one were to leave their assets shared between a sufficient number of people, so that the whole amount was covered by the tax free amount each inheritor could inherit, then there would be no IHT.

In UK it is of course IHT paid by the estate of the deceased, before it is distributed.

John, the morality of inheritance was questioned irrespective of it's taxation status, we nursed my late mother through her last years of dementia and inherited her estate, we bought a flat for our son out of it and invested the rest, should we have donated it to a complete stranger/strangers?

All of the 'I don't believe in folk inheriting anything' brigade would be the first in the queue if they heard that their great uncle Fred in Australia had left them his estate, some folkes hypocricy has no bonds.

Hep: hughjardon's post are usually rude and controversial. Don't take them to heart. He's not worth it.

Hep.  I was not making any comment on any particular situation as it relates to any particular person, nor the morality of it.

I was trying to make it clear, for those who may not know, what happens in Spain,  and pointing out that the IHT law in Spain is very different from that in UK ,  and that it varies considerably from Region to Region in Spain.

One of the differences between Spain and UK  is that, unlike in UK,  the whole amount of the estate in Spain is not the factor for determining IHT,   as each inheritor has an amount they can inherit before they must pay tax.

I hope this will not make it even more confusing !

An extreme example.

If the tax-free amount for each person was 10,000 euros, and the estate of the deceased was 1,000,000, then if the deceased had shared the assets equally between 100 people there would be no tax to pay:

10,000 X 100 = 1,000,000. 

If it had all been left to one person with a 10,000 tax free allowance, then there would be tax on 990,000 to be paid by that inheritor:   

1,000,000 – 10,000  =  990,000

Cheers GB, I always think that informing a richard head that they are a richard head is never wasted, after all they might just not be bright enough to grasp the reality.  

John, please forgive me for having a paddy, this guy shouldn't be able to annoy me, but he did. 

Thanks for all your responses… Curious how they all came at once a month after posting.

Since my initial post I have employed a new lawyer as the old one always had the same mantra:  “We have a problem”  and endless horror stories about what could happen under this circumstance or that circumstance. He gave me nothing but stress.

So I AM liable to pay IHT here on the worldwide estate. but several lawyers have said I only pay iht on the spanish assets so I’m wondering if I could have gotten away with it. It’s with the tax authorities now so it’s too late.   The new lawyer says it will be much less than 81k and I should be able to offset whatever I pay here against my UK IHT bill under something called 'unilateral relief'.

Hughjardon, are you always this rude with people? You’ve certainly made this thread more interesting I have to admit. but you’re not doing yourself any favours…  My wife is from India and I have helped a lot of people there financially over the years and intend to do so more when my inheritance is sorted.  We have helped and sheltered a couplel of my son’s friends here in spain who have found themselves without a home. But it seems you would prefer me to sit back and let the Spanish government take it all… Are they the ones who deserve it more than me?

I don't know why, but whenever I read a Hughjardon post I visualise the writer being Graham Norton.  So some are vaguely amusing, most intended to grab attention and none to be taken at all seriously.

My late grandfather would have said that he was eleven pence three farthings.  

Carlyoung:

Despite you have a lawyer now, I am answering your question ( just saw the thread), below in bold green:

I am resident in Zaragoza, Spain.  My Mother passed away last January in the UK. She left me and my 2 sisters (who are uk residents) 2 properties in London and 2 properties in Spain.  My spanish lawyers tell me I am liable to pay inheritance tax (IHT) on EVERYTHING she left. As you are resident in Spain, yes, you need to pay IHT on all you inherited from her. But I have been speaking to another UK lawyer who is a specialist in this area who says I am only liable to pay spanish IHT on the spanish assets, not the UK assets. This is not correct as you are a Spain´s tax resident.

I am already paying IHT in the UK at the usual 40%.  My spanish IHT tax bill would actually be zero if only I had receipts as proof of payment of UK IHT to show here. unfortunately it is dragging on a long time in the UK and the 6 month deadline has already passed and the spanish tax authorities are asking for 81k Euros. 

 Spanish residents who inherit  from a UK resident  a UK asset, can deduct  the Uk tax bill off the Spanish one. You can ask for an extension ( 6 months) of the IHT payment due to the international character of the Tax declaration

I am just wondering if this 81k tax is unlawful if I am indeed not liable to pay spanish IHT on my Mother’s worldwide estate. 

Any knowledge would be welcome… Thank you!

As the Uk limit is much more generous than the Spanish one , it is hardly likely that most would be able to deduct  IHT paid in UK 

How is the unilateral tax relief on tax paid in the UK calculated when an estate has been divided and inherited by more than one person?

Is it something like, if a person inherits 50% of an estate, they can deduct 50% of the taxes paid on that estate from their IHT spanish tax bill?

e.g. a Spanish resident inherits 50% of an estate which is worth £1,000,000 (i.e. their portion of the estate is £500,000), and £200,000 is paid to the UK taxman from that estate, would the tax relief for that person be £100,000 (i.e. 50% of £200,000)?

I know these tax bands aren't real and the tax payable would be much more, I just wanted to illustrate with a simple example.

Is Uk Inheritance Tax taxable amount   the whole value of the asset ?

Is it not, like in Spain, a value which correspond to the value of the portion received by each heir?