Legal Corner.
By Michael Davies.
Abogado/Solicitor.
Does a non -resident (of Spain ) heir pay inheritance tax in Spain of funds left to him in Jersey by a resident in Spain?
Question:
My deceased father (a resident in Mojacar) made a will leaving his worldwide assets to me (I am resident in London). The estate consists of a house in Mojacar and a bank account in Jersey worth 210000 pounds sterling.
My Spanish solicitor is saying that I have to pay inheritance taxes on the account in Jersey because it was declared on my father´s 720 form (declaration of foreign assets) last year. I have read a book on the subject and my interpretation is that I should not pay inheritance tax in Spain on the funds in Jersey.
What paperwork needs to be presented to the bank in Jersey for them to release the funds to me?
The difference in inheritance tax between presenting the self-assessment forms in Spain including the funds in Jersey or not is over 59000 euro.
Reply:
I can confirm that because you are non-resident you do not have to pay inheritance tax in Spain in relation to the funds in Jersey. It does not need to be included on the self-assessment forms in Spain. You would have to pay if you where resident in Spain. Non-Resident heirs only pay inheritance tax in Spain on assets situated in Spain and on life insurance payments made by foreign insurance companies that operate in Spain. (This will become clear to your solicitor on reading article 7 of the Law 29/1987 of 18th of December in relation to Inheritance and Donation tax) .The declaration of the asset on the 720 declaration makes no difference to this.
Winding up the estate in Jersey is simple and straightforward. Your solicitor in Spain will need to gather some Spanish documents and choose a barrister to obtain probate at the “Jersey Royal Court”. This sounds complicated, but it is not. The procedure is not very expensive and takes two to three weeks if the solicitor in Spain presents the correct paperwork. In Jersey all you will need to pay is a small stamp duty to the “Jersey Royal Court “ (0.5% for the first 100000 pounds sterling and 75 pounds for every additional 10000 pounds sterling) and a Jersey barrister’s fee, which varies from my experience between 1000 and 5000 pounds depending on how much work he needs to do.
REMINDER: PLEASE TAKE A LOOK AT OUR FACEBOOK PAGE WHERE WE HAVE POSTED THE NEW DIRECTIVE THAT AFFECTS THE WILLS OF ENGLISH RESIDENTS IN SPAIN. ACTION NEEDS TO BE TAKEN BEFORE 17TH OF AUGUST 2015. GO TO OUR WEBSITE WWW.daviessolicitors.com and click the F on the top right hand corner. OTHERWISE JUST CALL US ON 950 472775 AND WE WILL TELL YOU FOR FREE IF YOUR WILL NEEDS AMENDING
Michael Davies.
Abogado.
Michael Davies is a Spanish Abogado and has been practicing law in Andalusia since 1993. He is member of the Law societies of Almería and Madrid.
