Ton Batlle Artal Advocat, Artal Grau López, Advocvats, Estanislau Figueres, 22-bis, 43002 Tarragona, España. Tel: +34 977 218 633 Fax: +34 977 230 943 Email: tbatlle@agl.es

Some Helpful Points. 

• Generally speaking, Trusts do not exist in Spanish law.
• Spanish law refers matters of succession (to both moveable and immovable property) to the law of nationality of the deceased. However, in certain circumstances Spanish law may apply to matters concerning succession of a non-Spanish national (e.g. if the deceased’s national law states that Spanish law is to be applied and as a result of this renvoi only Spanish law applies to the deceased’s worldwide estate).
• Capacity to make a Will and to enter into any contracts is governed by the law of nationality.
• Under Spanish law, a lifetime gift is always subject to Spanish tax; and the tax burden will normally be greater than if the same property had been acquired on death.
• Transfers between spouses are not exempt.
• There is no universal nil-rate band. Certain beneficiaries enjoy tax-free allowances, the amount of which will vary depending on the relationship between the beneficiary and the deceased and the age or disability of the beneficiary.
• Spanish inheritance tax is paid by each beneficiary in respect of his/her share. Some beneficiaries may be tax resident in Spain whilst others may be non-resident. Spanish inheritance tax is applied in a different way depending on whether the beneficiary is resident in Spain or elsewhere.
• Spanish inheritance tax is applied on a sliding scale. The size of the gift, the relationship between the deceased and the beneficiary and the pre-existing wealth of the beneficiary are taken into account when applying this scale.
• Under Spanish law, a lifetime gift is always subject to Spanish tax; and the tax burden will normally be greater than if the same property had been acquired on death.

Property Purchase and Sales - A Quick Briefing.           

• A contract for the purchase of land does not have to be in writing. A verbal contract is also binding.
• Searches should always be made at the Land Registry (this is dealt with by the Notary). The searches will reveal the owner of the property and whether there are any charges and or encumbrances affecting the property. Sometimes the land is not registered and this is a matter that has to be addressed- generally by registering the land for the first time after the signing of the Escritura de Compraventa, (this is the equivalent to the title deed).
• The seller´s Esritura de Compraventa will reveal whether there are any matters that affect the property, such as a Uso Fructa ( the permission that is sometimes given to a third party to enjoy certain rights to the property). This is a matter that will also need to be addressed and which any competent real estate provider would be aware of. The cancellation of such rights is also dealt with at the office of the Notary and such a cancellation is written into the new purchase Escritura.
• Where there is construction on the land, it will be necessary to ensure that there is a Declaración de Obra Nueva filed with the appropriate department and that the description of the property in the title deed is correct with regard to the amount of building registered, including surface area and description.
• Where land is being acquired a check should be made with the Catastro to check the surface area of the property and the boundaries.
• Debts in some instances are attached to property rather than individuals, therefore for clear title it is vital to ensure that no such debts are registered against the property at the Land Registry.
• All new dwellings should have a certificate issued by the local planning office confirming that they comply with the various regulations and rules and that they have been passed as fit for human habitation.
• Apartments and villas in complexes will be subject to residents´association rules these should be examined by the prospective purchaser.
• The authorised use of the property will also need to be checked to ensure that the property meets your requirements for example there may be restrictions in residential areas with regards to the letting of property for short term or seasonal purposes.
• There is a law in Spain - Ley de Costas- which prohibits the construction of property within a specified distance of the coast and also imposes limitations on nearby properties. Similarly there are clauses which affect frontline property.
• Residency is an important issue for tax purposes when buying or selling in Spain.
• All formalities when buying or selling a property should be carried out at the office of the Notary - who is independent of both the vendor and the purchaser.
• It is very important to ensure that the appropriate taxes are paid and the documents are registered with the Land Registry. This is the responsibility of the purchaser and at LandBank,  we would always recommend the use of a registered gestor (an accountant) for this purpose to ensure that the matter is dealt with correctly. Failure to do so will result in defective title.

Selling A Property - A Quick Briefing.

When a property is sold, the seller is liable for Spanish Capital Gains Tax. The amount of gain is calculated on a sliding scale and is dependent upon the time the property was acquired. There are some exemptions.

• Property acquired on or before 31st December 1986 and that have not been improved will be exempt from tax.
• Property acquired before 1st January 1997. The cost of the property plus associated costs and the cost of any improvement work (having regard to the year when the work was carried out) is increased by applying to that cost to the indexation rates that are quoted and published in the annual Finance Act. The difference between the figure arrived at in this calculation and the selling price is the initial capital gain. This gain is reduced by 11.11% for each year, (not including the first 2 years of ownership) up to the 31st December 1996.
• Property acquired after 31st December 1996 are not entitled to the reduction of 11.11% as above. The gain is calculated as above and the initial capital gain is subject to the applicable tax rate.
• Different rules apply if the vendor is a company.
• If the vendor is non resident the Tax Office in Spain ensures that it receives this gain by placing the burden of collection of this tax on the purchaser requiring that the purchaser deducts 3% of the purchase price and pay it direct to the tax authorities. The vendor must lodge a self-assessment form for Capital Gains Tax and either claim a rebate or pay any further excess.
• There is also a liability when a UK resident sells a Spanish holiday home for them to declare this as it also represents a gain for UK capital Gains Tax, although under the double tax treaty that Spain has with the UK any tax paid for Capital Gains in Spain is credited against the UK gain.

Inheritance and Associated Matters - A Quick Briefing.   

• UK and Irish Wills generally are valid in Spain. However, it is always advisable to have a Spanish will drawn up to cover your Spanish property.
• The are any manner of ways to purchase property in Spain to minimise your inheritance tax liability and for this you would need expert advice to suit your own individual requirements - for this you will require the services of persons who are experts in this field.
• A Spanish Will can be drawn up in the UK, Ireland or Spain and must be registered at the Spanish Central Registry of Wills.
• Should your marital situation change - ie from single to married or married to divorced, you should make a new Will as your original one will be revoked.
• Care should be taken to ensure that any new UK or Irish Will does not revoke your Spanish Will.
• Spanish law allows for certain relatives  (´ statutory legacies´) to be entitled to a share of the deceased´s estate and they can successfully contest the Will if the deceased did not make provision for them in the Will.
• There is legislation that comes into play if a person dies intestate - to dispose of the property of an intestate  person is always more complicated, this is an important factor to bear in mind for your relatives.
• There are certain taxes payable upon death - ´plusvalía´ and inheritance tax, for this it would be beneficial to employ the services of a gestor as inheritance tax is normally paid when documents relating to the estate are filed by self-assessment.
• Tax payments or tax declarations must be filed within 6 months of the date of death, otherwise surcharges and interest charges for late payment will apply. Normally the taxes should be paid in full at the time of making the assessment although in certain cases a deferment can be requested. Interest will be charged. 
• The tax authorities in Spain are able to review a self- assessment over a period of four and a half years, if they believe it to be incorrect or that liabilities have been understated.This is initially from the date of death of the deceased, although if a self assessment is made or information or documentation submitted to the tax authorities for an assessment this period is interrupted and starts again.
• As will all taxes there are allowances and again it is important to secure the advice of a professional in this area to ensure that you receive the correct allowances credited against any inherited gain.
• The rate of tax is based on a sliding scale and currently starts at 7.65% going up to 34% and is dependent on individual circumstances.
• The double tax treaty between Spain and the UK accepts the tax paid in Spain and credits against any inheritance due in the UK for the same assets thereby avoiding a double tax burden on those same assets.

The information contained in this guide is believed to be correct at the time of writing. As this information is a summary of specific laws of Spain LB Real Estate  and LandBank International will not accept responsibility or liability for error, omission or any liability arising from the consequences of using or relying upon this information- which is a mere guide through the complexities of Spanish law.

All individuals are advised to take up their own legal and or fiscal advise from competently qualified individuals.