Spanish Estate Law and Inheritance Tax in Spain

If you’re thinking of buying a property in Spain or moving to live in Spain permanently you need to consider the Spanish inheritance laws and taxes and how they will affect your estate and your future heirs.

All too often people are seduced by the lure of the Spanish sunshine; they purchase their dream home in the sun and sit back to enjoy it with no further thoughts about the future of that property.  Many British people who move to Spain simply assume that on death their property will pass to their spouse tax free or be included in the assets as detailed in their will for disposal in accordance with that will.

Unfortunately such an assumption is wholly incorrect and could end up being very costly to the estate’s beneficiaries as Spanish inheritance laws differ greatly to the inheritance laws of England and Wales.  In England and Wales a person can gift and bequeath their estate pretty much as they please - which is why you sometimes hear of people leaving millions of pounds to Battersea Dog’s Home!  In Spain the law states that at least two thirds of a person’s estate must be left to their children or grandchildren, thus limiting the amount that can be left to the surviving spouse or other beneficiaries.

If you’re British and own a property in Spain the laws of England and Wales state that your property should be subject to the inheritance laws of Spain.  However, in Spain the law states that property owned by a foreigner should be subject to the inheritance laws of their original country! 

Confusing! 

Currently lawyers are advising British domiciled individuals with property in Spain to write a will under Spanish law stating that they wish to have their Spanish assets disposed of in accordance with their national law, i.e., in accordance with the inheritance rules of England and Wales.  They also advise such individuals to update their British will to take into account their Spanish property.  As Shelter Offshore are not qualified to give legal or financial advice we would say that if you think you might be affected then you should seek qualified and independent legal advice.

So far this method of effectively placing your Spanish property into your British estate for inheritance purposes has been accepted by the Spanish authorities, but that’s not to say the workaround is entirely secure.  Complications could arise particularly if family feel they have been discriminated against by the English inheritance laws.  Just one example of how complications could arise is if a deceased English person with property in Spain had a child whom he chose to ignore in his English law will and who would have benefited from a share of the Spanish property if it had been disposed of under Spanish inheritance law.  The child may be able to instigate legal proceedings to claim that under English law the Spanish property should have been disposed of according to Spanish law.