Inheritance tax & gift guide & Kin guide

[byrney]

Thanks mate!

[Tetley]

Thanks Steve.

From this, it seems like we may have been ill-advised.

Thanks goodness you have put me in touch with a proper person!

I might even owe you a Guv'nor or two!

its no problem Paul we are all here to help each  other ,its bad enough loosing a loved one ,without getting  turned over to ad to the stress of it all , Michael will   sort it for you . 

[byrney]

Thanks Steve.

From this, it seems like we may have been ill-advised.

Thanks goodness you have put me in touch with a proper person!

I might even owe you a Guv'nor or two!

[Tetley]

just a bit of general info for the interested taken from a  Seville law firm.


 
How much is paid for an inheritance in Andalusia is a fairly frequent question, since the changes in the Inheritance Tax are constant, which makes people lose the different modifications that occur, and the deductions and bonuses that are approved.
The first most fundamental, the kinship
The amount that can be paid for an inheritance depends first of all on the relationship that remains with the deceased. The Inheritance Tax Law establishes four groups:

Group I for descendants or adoptees, under 21 years of age

Group II. Descendants or adoptees 21 years of age or older. Spouses, ancestors and adopters

Group III. Collaterals of 2nd and 3rd degree by consanguinity or affinity including ascendants and descendants

Group IV. More distant kinship and strangers.




The tax base
The taxable base of the tax will be the valuation of the assets of the deceased at the time of death . Therefore, it will be necessary to obtain a valuation of real estate, accounts and other assets to know the tax base.

From this moment on, a series of reductions and deductions are established that will be applicable according to the specific case.

In this article, we will deal with the most frequent reductions to find out how much is paid for an inheritance in Andalusia, at least in relation to inheritance tax in Andalusia in 2021

Reductions
The first reduction is the one established based on kinship. Thus, for the relatives of Group I, a reduction of â,¬15,956.87 plus â,¬3,990.72 is established for each year less than twenty-one that the heir has; Group II â,¬15,956.87; and Group III â,¬7,993.46

In addition, the relatives of Group I and II will have an additional reduction of up to 1 million euros, so that a child who inherits from his father will not have to pay anything up to the first â,¬1,015,956.87.

The most favored heirs are those of Group I and II who may have reductions of just over one million euros.

In addition , these reductions are improved in the event that the heir has recognized some type of disability . These exact amounts can be consulted on the website of the Treasury Department.

Other reductions
In addition to the above, which are the most frequent, the Andalusian standard , which a few years ago published an inheritance tax simulator in Andalusia for 2020, establishes other types of reductions.

The most important are those relating to life insurance, company acquisitions, the reduction for acquiring the habitual residence or the reduction for the transfer of agricultural holdings.

Of all of them, the most important is the one established for those people who had lived with the deceased in the two years prior to death , and that will be 95%.

The tax fee
Once all the reductions are applied, the base is obtained that must be taken to the scale approved by the Andalusian regulations and that will show the tax quota that must be paid as Tax.

But, notwithstanding the foregoing, in Andalusia there is a bonus of 99% of the quota for those relatives of Group I and II.

EXAMPLE: A 30-year-old son inherits â,¬1,500,000 from his father. If we apply the reductions described, only tax for â,¬484,043.13 and that yields a fee to enter of 107,726.90.

If we apply the 99% bonus, it will turn out that the fee to enter will be â,¬1,077.26

Therefore, how much is paid for an inheritance from parents to children in Andalusia is a low amount when applying this bonus.

Latest news on Inheritance Tax in Andalusia
For the year 2022, Andalusia has approved an important modification of the Inheritance Tax that will favor inheritances between uncles and nephews , so that the maximum limit to be paid for them will be 45% instead of the 70% that they had been paying until moment.

Therefore, how much a nephew pays for an inheritance in Andalusia will be a more affordable amount than it was until now.

The 99% bonus ( as in donations ) will continue to be reserved for relatives of Group I and II , that is, for donations and inheritances between parents and children.

[byrney]

Have got an appointment with Michael on Tuesday teatime.
So we shall see. Fingers crossed.

[Tetley]

also Paul as well ,check out when you receive your inheritance gift  as if you are uk fiscal resident ,depending on what rate your dads estate is taxed ,you may receive your gift plus for example a tax rebate from HMRC on the gifted amount received which can be quite a substantial  so its also worth getting good uk tax advice on the estate ( a Neighbor   got 20% back from and 8000 pound estate gift so its well worth looking into )


and generally for anybody that does not know

your UK Gift is declared on the trusts/ Inheritance page of the uk self assessment form at the end of the tax year as part of your normal tax deceleration 

the gift in spain is declared and tax settled anytime of the tax year, within 30 days of gift receipt via for 620 ie within the tax year and not as part of the standard renta deceleration .

so for example great uncle uk Sid leaves you 10k

you ask your uk advisor to see if there is a tax credit when the advisor completes your standard uk self assessment at the end of the tax year

in Spain

you file all the required documentation using form 620 within 30 days of receiving the gift  ,you declare the gift received at the ECB Conversion rate of the day the gift was received ,then the 620 form calculates the tax owed  if there is tax to pay which for most will be determined by kinship ,ie ie relationship to the deceased and then pay at the end by bank transfer 

[byrney]

 

[Tetley]

Sorry to hear about Dan, but good luck to him in his new venture. I'm sure he'll succeed.

onwards and upwards bryns its all about rolling the life dice in our youth   



(i can still roll the dice at 62  ,i just cannot bend down to pick it up if it lands on the floor with the hip arthritis  )

[byrney]

Sorry to hear about Dan, but good luck to him in his new venture. I'm sure he'll succeed.

[Tetley]

I've contacted him and got a response within fifteen minutes!

Unfortunately, he wants to do a "Zoom" consultation whatever that is.

I've asked for a face to face consultation, due to my technical ineptness!

Anyway, so far, impressed.  Thanks for advice.

bryns a lot of the lawyers do zoom now it caught on during lock down ,it just saves everybody travelling/ time & money  ,my kids ex boss had an office on the Murcia coast which he ran daily and Dan ran the Murcia central office all the daily meets were on zoom by virtual office ,Sadly Dan could not agree new contract terms that reflected the 5 to 7 day work load and the Saturday night 11.15 pm calls " must have this  by monday morning  10 am for court "so he left ( much to his bosses suprize ie 4 years training down the shxtter for his boss  )   and Dan will be eventually be opening an office in the coming months alongside   doing a fiscal master,s and extra Bar courses  onward,s & upwards   

also Micheal  has been our family lawyer for the past 23 years and IHT UK/ SP is his field .

[byrney]

I've contacted him and got a response within fifteen minutes!

Unfortunately, he wants to do a "Zoom" consultation whatever that is.

I've asked for a face to face consultation, due to my technical ineptness!

Anyway, so far, impressed.  Thanks for advice.

[lmj52]

Michael Davies is one of the best.

[byrney]

Cheers Steve.

Much appreciated.

Paul

[Tetley]

Thanks for that Steve.  Don't know Michael Davis.  Do you have any contact details please?

https://www.daviessolicitors.com/ 


Address: Parque Comercial Mojacar, 50  04638 â€" Mojacar (Almería)
Telephone : +(34) 950 47 27 75
e-mail: info@daviessolicitors.com

[byrney]

Thanks for that Steve.  Don't know Michael Davis.  Do you have any contact details please?

[Tetley]

My father died last year and left an inheritance to both me and my son.

As the sum left is less than the IHT level in the UK, we don't have to pay tax there.

We have just been to see my son's tax accountant who has told us that our tax liability next year will be in the region of 22% subject to the current regulations not changing.  This seems quite exorbitant.

get a 2nd opinion  both you and your son have a very good allowance and unless you have been willed Cleckheaton main street you certainly should be tax free ,but I do believe you have a bigger allowance  than your son in the kinship line .

also Paul pop and See Micheal Davis  as i believe your gift will be handled by the central Tax office in Madrid ( because your dad did not have an NIE  ect ,Micheal knows the Brit/ spanish IHT inside out and is used to dealing with the central tax office .)

also be aware that the gift tax system in nothing to do with the income tax system ,its a separate job


also be aware that once you are credited with the gift ( converted in value at the ECB pound euro rate of the day for deceleration purposes ) you have 30 days to pay any taxes IF applicable so you need very sound advice from an Inheritance tax lawyer, that understands both systems .

[byrney]

My father died last year and left an inheritance to both me and my son.

As the sum left is less than the IHT level in the UK, we don't have to pay tax there.

We have just been to see my son's tax accountant who has told us that our tax liability next year will be in the region of 22% subject to the current regulations not changing.  This seems quite exorbitant.

[Tetley]

I think Tetley was quoting from his lawyer son. If you get good advice it’s fairly easy, particularly in Andalucia where the limit for IHT is pretty favourable.
He’s correct about getting NIE numbers for any potential inheritors. Again not difficult with the correct lawyer.

All my own research  IMJ  but Jnr did file the 650 for me ,when i am not spannering im reading & researching or even better researching and Spannering wi telly on in shed   

In that case well done mi amigo!!

to be honest i dont like to do his head in when he is busy  ,i do all my own book work and he just files the electronic forms for me, when i did my relatives estate ie gathered the figures Spain was fairly straight forward but  both the gifter and the gift receiver  were spanish resident which made it fairly straight forward  the UK Probate was a different job all together and the UK Lawyers fees with 90 % of the info provided to them ,so no more than probably a 2 days work .....were a licence to print money which came out of the estate .

[lmj52]

I think Tetley was quoting from his lawyer son. If you get good advice it’s fairly easy, particularly in Andalucia where the limit for IHT is pretty favourable.
He’s correct about getting NIE numbers for any potential inheritors. Again not difficult with the correct lawyer.

All my own research  IMJ  but Jnr did file the 650 for me ,when i am not spannering im reading & researching or even better researching and Spannering wi telly on in shed   

In that case well done mi amigo!!

[Tetley]

I think Tetley was quoting from his lawyer son. If you get good advice it’s fairly easy, particularly in Andalucia where the limit for IHT is pretty favourable.
He’s correct about getting NIE numbers for any potential inheritors. Again not difficult with the correct lawyer.

All my own research  IMJ  but Jnr did file the 650 for me ,when i am not spannering im reading & researching or even better researching and Spannering wi telly on in shed   

[lmj52]

I think Tetley was quoting from his lawyer son. If you get good advice it’s fairly easy, particularly in Andalucia where the limit for IHT is pretty favourable.
He’s correct about getting NIE numbers for any potential inheritors. Again not difficult with the correct lawyer.

[tandas]

the inheritance tax level for children of a deceased was raised in the Andalucian area so you may find you have nothing to pay depending on the level of inheritance you received.  of course if you invest it in the UK you may need to do a Mondeo 370

[byrney]

Thanks Tets.

I knew it would be so simple!

I will leave it to my accountant to sort out.

"Byrns just get a lawyer who knows the game to do it for you."

Correct Angleseyite!

[Angleseyite]

Byrns just get a lawyer who knows the game to do it for you. That's my philosophy, the less stress the better. 

[Tetley]

Having just inherited a sum from my father who sadly died last year.
Any idea what my tax situation will be.
After all, I don't want to buy a push bike and find they're going to screw me.
Am going to seek professional advice once the estate is finalized, but wonder if you have a guide?

from the Junta tax info



The Inheritance and Gift Tax is a state tax. It is regulated in Law 29/1987, of December 18, on Inheritance and Donations Tax  and the Regulation that develops it is Royal Decree 1629/1991, of November 8 .

Within the framework of the financing system, the State has given the Autonomous Communities 100% of its collection and the exercise of certain regulatory powers. In the specific case of Andalusia, the regulation of the powers exercised on the Tax are collected:

For taxable events carried out as of January 1, 2022 in  Law 5/2021, of October 20, on Assigned Taxes of the Autonomous Community of Andalusia.
For taxable events carried out before January 1, 2022 in Legislative Decree 1/2018, of June 19, which approves the Consolidated Text of the provisions issued by the Autonomous Community of Andalusia regarding assigned taxes (hereinafter TR).
It should be noted that the  taxation of the tax is established by virtue of the kinship relationship of the heir or legatee, therefore, it is necessary to take into account the classification by Groups established in the state regulation, as well as the assumptions of equalization established in Andalusia . :

groups

Group I. Descendants or adopted, under 21 years of age.
Group II. Descendants or adopted, 21 years or older. Spouses, ascendants or adopters.
Group III. Collaterals of 2nd and 3rd degree by consanguinity or affinity. Ascendants or descendants by affinity
Group IV. More distant and strange degrees of kinship.
Comparisons  (applicable for the purposes of establishing reductions to the tax base, multiplier coefficients and bonuses).

De facto couples registered in the Register of De facto Couples of the Autonomous Community of Andalusia will be equated to spouses.
Persons subject to permanent family foster care and custody for the purpose of adoption will be treated as adoptees.
People who carry out permanent family foster care and custody for adoption purposes will be equated to adopters.
And for taxable events carried out as of January 1, 2022 , in addition to the aforementioned assumptions of equalization, common-law partners registered in any register similar to the register of common-law partners of Andalusia, of other public administrations, are equated to spouses.

Taxable Event
The tax is levied on capital gains obtained for profit by natural persons, specifically:

The acquisition of goods and rights by inheritance, legacy, or any other inheritance title.
The acquisition of goods and rights by donation or any other free and inter vivos legal transaction .
The perception of amounts by the beneficiaries of life insurance contracts, when the contracting party is a person other than the beneficiary.
Passive subject
The taxpayers are:

The heirs and legatees in mortis causa transmissions .
The donee or person favored by them, in donations and other lucrative transmissions inter vivos .
The beneficiary, in life insurance.
tax base
It constitutes the tax base of the tax:

In transfers mortis causa : the net value of the individual acquisition of each successor in title.
In donations and other lucrative transmissions inter vivos , the net value of the goods and rights acquired.
In life insurance, the amounts received by the beneficiary.
General reductions
They are regulated in article 20 of the Tax Law and vary depending on whether it is a transfer mortis causa  or an inter vivos transfer . In addition, they respond to various subjective or objective reasons: the relationship and pre-existing assets of the taxpayer, their disability, the receipt of life insurance, the consecutive transfer of assets, as well as the acquisition of assets of a different nature: habitual residence, assets of the historical heritage or individual companies, professional businesses and participations in entities of the deceased.

Law 19/1995, on the Modernization of Agricultural Exploitations also provides for various reductions in Inheritance and Donation Tax.

Autonomous reductions and improvements to state reductions
They are regulated in articles 20 to 33 ter of Legislative Decree 1/2018, of June 19, which approves the Consolidated Text of the provisions issued by the Autonomous Community of Andalusia regarding taxes assigned for taxable events carried out before of January 1, 2022 and in articles 26 to 40 of Law 5/2022 of October 20, on Taxes of the Autonomous Community of Andalusia for those after this date. There are established:

Improvements over state reductions.
Own reductions, applicable after the state ones.
For mortis causa acquisitions , the following are established:
For taxable events carried out prior to January 1, 2022:

1. Improvement of the reduction of the tax base for the mortis causa acquisition of the main residence .

2. Autonomous reduction of the tax base for spouse and direct relatives due to inheritance .

3. Autonomous reduction of the tax base for taxpayers with disabilities due to mortis causa acquisitions .

4. Autonomous improvement in the reduction of the tax base for the mortis causa acquisition of individual companies, professional businesses and participations in entities, both for those persons who are related to the transferor and for those who are not related .

5. Autonomous reduction due to the mortis causa acquisition  of agricultural holdings .

For taxable events carried out after January 1, 2022:

1.  Improvement of the reduction of the tax base for the acquisition "mortis causa" of the habitual residence.

2.  Improvement of the reduction of the tax base for the acquisition "mortis causa" by people with a relationship.

3.  Improvement of the state reduction of the tax base for taxpayers with disabilities for "mortis causa " acquisitions.

4.  Improvement of the state reduction of the tax base for the acquisition "mortis causa" of individual companies, professional businesses .

5.  Improvement of the state reduction of the tax base for the acquisition "mortis causa" of shares in entities.

For inter vivos acquisitions , the following are established:
For taxable events carried out prior to January 1, 2022:

Along with the general reductions established by the state, there are these other regional reductions:

1.  Own reduction for the donation of money to descendants for the acquisition of the first habitual residence .

2.  Own reduction for the donation of habitual residence to descendants with disabilities .

3.  Own reduction for donation of money to relatives for the constitution or expansion of an individual company or professional business .

4. Regional improvement in the reduction of the tax base for the inter vivos acquisition  of individual companies, professional businesses and participations in entities, both for those persons who are related to the transferor and for those who are not related .

5.  Own reduction for the acquisition "inter vivos" of agricultural holdings .

For taxable events carried out after January 1, 2022:

1.  Own reduction for the donation of money to descendants for the acquisition of the habitual residence.

2.  Own reduction for the donation of habitual residence to descendants.

3.  Own reduction for donation of money to relatives for the constitution or expansion of an individual company or professional business.

4.  Improvement of the state reduction of the tax base for the acquisition «inter vivos» of individual companies, professional businesses .

5.  Improvement of the state reduction of the tax base for the acquisition "inter vivos" of shares in entities .

To know these reductions in detail, the following LINK is offered.

Full and tax fee
For taxable events carried out as of January 1, 2022, the full amount will be obtained by applying the tax scale established in article 37 of the Law to the tax base . Coefficients established in the regional tax regulations (article 38 of the Law) will be applied to the amount resulting from said operation,  depending on the degree of kinship with the deceased, obtaining the tax quota.
For taxable events carried out prior to January 1, 2022, the full amount will be obtained by applying the tax scale established in article 33 of the TR to the tax base . To the amount resulting from said operation, some coefficients established in the state tax regulations will be applied based on the pre-existing assets of the taxpayer and their relationship with the deceased, obtaining the tax quota.
Both the tax scale and the coefficients can be obtained in the annex to the instructions for forms 650 (inheritance) and 651 (donations).

Fee bonuses
State:
Bonus in the ceuta and melilla quota (article 23 bis of the LIS).

Autonomous:
Mortis causa acquisitions
From April 11, 2019, taxpayers included in Groups I and II of those provided for in article 20.2.a) of Law 29/1987, of December 18, on Inheritance and Donations Tax, or in the event of equalizations established in the law that corresponds according to the moment of realization of the taxable event, will apply a bonus of 99% in the tax quota derived from “mortis causa” acquisitions, including those of the beneficiaries of life insurance policies.

Inter vivos acquisitions
From April 11, 2019, taxpayers included in Groups I and II of those provided for in article 20.2.a) of Law 29/1987, of December 18, on Inheritance and Donations Tax, or in the event of equalizations established in the corresponding law according to the moment of realization of the taxable event, will apply a 99% bonus in the tax quota derived from “inter vivos” acquisitions, provided that it is formalized in a public document (and the origin of the funds is justified). in cases where the donation is cash).

[Tetley]

Having just inherited a sum from my father who sadly died last year.
Any idea what my tax situation will be.
After all, I don't want to buy a push bike and find they're going to screw me.
Am going to seek professional advice once the estate is finalized, but wonder if you have a guide?

bryns you have a very good allowance  ( see the link i posted everything is on there ) ie farther/ son  from memory ,you will need to declare the gift in spain within 30 days of the estate been finalized ie the receipt of your gift  to do this you will need

a copy of the uk death cert legally translating into spanish

the will legally translating  into spanish

(the will and death cert may need an Apostle stamp but your advisor will determine this ,with it been a non Spanish registered will also be aware the documents have a 90 day presentation life span ,after this its another set of documents )

a copy of the receipt of gift  legally translating into spanish ie a bank statement or uk property transfer doc to you from the uk land register

then your advisor can electronically file you Inheritance  gift  tax payment online with the supporting documents scanned through  ( i think its form 650 ) the filing online automatically works out any tax payable once you and your dads details are entered .

But if your dad was not a spanish resident ie no NIE reference for the Gift, this makes it more difficult so if i was you i would pop and see M Davies lawyer Mojacar  because you need specialist advice  but its all sort-able.

also remember if you file a 720 this will need amending in December if the estate is sorted this year ,and if the gift is over 50k euro equivalent and you do not currently file a 720 you will need to, if you are leaving the gift out side of spain

also to work the inheritance gift  out from uk pounds to euro ,you use the bank of spain/ ecb rate of the day you receive the gift and NOT a yearly uk pound to euro avrage

again all only a guide, as i did all this with Jnr 18 months ago when a relative passed ,the spanish side was done and dusted 6 weeks ,the uk side spent 20 months in probate and a 28k uk lawyer bill .......

[byrney]

Having just inherited a sum from my father who sadly died last year.
Any idea what my tax situation will be.
After all, I don't want to buy a push bike and find they're going to screw me.
Am going to seek professional advice once the estate is finalized, but wonder if you have a guide?

[Tetley]

this translates and  show,s IHT Allowances Subject to Kin

Husbands & Wifes & civil registered  partners,children  have a good allowance (Andalusia )

an un married un civil registered partner does not ,also same deal for cousins & friends .....so loads of tax to pay if applicable within 30 days of the electronic submission been accepted (after 30 days late payment fees are applied )

https://www.juntadeandalucia.es/organismos/haciendayfinanciacioneuropea/areas/tributos-juego/tributos/paginas/impuestos-cedidos-sucesiones.html

also be aware that if the person receiving the gift  is non resident without an NIE the estate falls under the national competency @ the Madrid central tax office and not our Andalusia tax office and the tax allowance may differ as Andalusia has very favorable IHT/ gift tax allowances for residents   

also be aware if you have a uk economic connection and you fall within UK Probate ,the UK will want a valuation of your Spanish  assets  for probate purposes  .
https://www.gov.uk/applying-for-probate


up shot ,plenty of planning required if home buying and investing in Spain and to consider about getting the kids name on the purchase with an NIE.