De Cotta Law - Official Blog

Jon Sutton, Partner with Law Firm De Cotta Law on iTalk FM

Jon Sutton recently appeared on ‘5 o’clock with Richie Allen’ the afternoon show on the Costa del Sol’s iTalk FM radio station, talking about the legal matters that affect ex-pats and foreign residents living in Spain.

Jon Sutton is an expert in legal issues that face foreigners in Spain, including Wills, Inheritance, and Personal Injury. He is a regular columnist in the local media and has appeared on a number of radio shows.

It is planned that Jon will become a regular guest on '5 o’clock with Richie Allen’ .

You can listen live to iTalk FM by clicking here.

Taxation: Commission refers Spain to the Court of Justice over discriminatory inheritance and gift tax rules

Brussels, 27 October 2011 – The European Commission has decided to refer Spain to the EU's Court of Justice for discriminatory rules on inheritance and gift tax that require non-residents to pay higher taxes than residents.

The Commission had already formally requested Spain on 5 May 2010 (IP/10/513) and additionally on 17 February 2011 to take action to ensure compliance with the EU rules in regard to inheritance and gift tax provisions. However, no amendments have been made to Spanish legislation on the matter.

Inheritance and gift tax in Spain are regulated at both state level and at the level of autonomous communities. The autonomous communities' legislation grants residents a number of tax benefits that, in practice, allow them to pay much lower taxes than non-residents.

The Commission considers that this discriminatory tax treatment constitutes an obstacle to the free movement of people and capital, fundamental principles of the EU's Single Market, and is in breach of the Treaty on the Functioning of the European Union (Articles 45 and 63 respectively).

 

The Coín office is at:

LOCAL 6, Sierra Chica (Opposite La Trocha)

Spanbox B220,

Apartado 178

29100 Coín Málaga

Tel (0034) 951 315 161

Fax (0034) 951 315 162

 or

Email

jonsutton@decottalaw.net

franciscomartin@decottalaw.net

website: www.decottalaw.com

De Cotta Law – Inheritance, Wills and Probate services, supporting CUDECA Foundation

A recent probate case handled by De Cotta Law Partner, Jon Sutton has been recognised with thanks by both the family of the deceased and CUDECA Foundation, the Costa del Sol Cancer Care Hospice.

Jon Sutton successfully administered the estate of the deceased here in Spain on behalf of the family living in the United States, and Jon was also able to facilitate a generous donation of over 30,000 euro from the estate to CUDECA.

In the words of the family, “Jon Sutton worked out a complicated situation over the past year. For this reason, part of what CUDECA Foundation is receiving is also due to his generosity.... We are so pleased he made the connection for us to the wonderful organisation of CUDECA and we are happy to have been able to help support their work.”

Joan Hunt, O.B.E. Founder and President of the CUDECA Foundation added, “Recognition of Jon Sutton is well deserved.  He has been a great supporter of CUDECA for many years, and he is always very pleasant and helpful and a clever lawyer.  He and his partners at De Cotta Law have brought many benefits to us.”

http://www.cudeca.org

http://www.decottalaw.com

Is it all over for the waiting game? One way of evading Spanish Inheritance Tax may be about to end. By Jon Sutton & Francisco Martin, Lawyers at De Cotta Law in Coín

Many people may know that it is a quirk of the Spanish tax system that taxes prescribe. This means that after a certain period of time, if the taxes have not been declared and paid and the Tax Office hasn’t taken any steps to enforce the tax then, it prescribes and the Tax Office is barred from taking any action to enforce the tax.

This method of not paying taxes has always been illegal tax evasion rather than a legitimate avoidance scheme. However it has often been used in Spain, both by Spanish families and by foreigners as a way of not paying the rather harsh inheritances taxes which are levied in Spain and in particular in Andalucía (where allowances are less generous than other regions). The prescription period for inheritance tax is four and a half years from the date of death. Although it has been used successfully to avoid tax by many people in the past, it was never a preferable course of action. As well as being illegal, it was also risky and meant that the property could not be sold for four and a half years at least after the death of the previous owner. Added to this is the significant problem which can be caused if the intended recipient themselves died within the waiting period before having officially accepted their inheritance.

The tax office have now got wise to this particular method of evasion and have come up with quite a clever way of closing the loophole. They are checking through the death certificates of all the people who have died in the locality of the tax office and are cross referencing the names of the deceased people with the Land Registry records. In this way they are identifying estates where the inheritance tax has not been declared.

When “evaders” have been identified, the tax office levies interest on the tax which is 5% of the tax after six months from the date of death and increases by 5% every three months thereafter up to a total of 20%. More serious than the interest are the fines which the tax office can levy if deliberate evasion is suspected. It is possible that the beneficiaries are distant cousins or suchlike who were not aware of the death in which case they will only be charges the interest. However, if the beneficiaries are close relatives or even co owners of the property, deliberate tax evasion will be assumed. Depending on the size of the estate and the evidence as to whether there was a deliberate attempt to defraud the tax office, the office, the offence will be considered “leves” (light),  “grave” (serious) or “muy grave” (very serious). The fines can vary from 50% to 150% of the tax due which could equate to many tens of thousands of Euros. If the tax is paid immediately, the tax office are likely to be more lenient.

This new initiative has led to some confusion because where there are non resident beneficiaries or the deceased was non resident, the tax declaration is done at the central tax office in Madrid. However the is little communication between the central tax office and the regional tax offices. This has led to a situation where people who have correctly declared and paid their tax in Madrid are receiving tax demands from the local tax office. If this occurs, beneficiaries receive such a demand they need to go to the local office with proof that the tax has been declared, or employ a lawyer to do so.

 As mentioned in a previous article, pressure from the European Union may lead to a dramatic overhaul of the Spanish inheritance tax system. This initiative by the tax office may therefore be short-lived. However, in the meantime, it should not be ignored.

Jon Sutton & Francisco Javier Martín Martín  are both lawyers at De Cotta McKenna y Santafé, a law firm specialising in dealing with all aspects of Spanish Law for English speaking clients. Offices in Mijas-Costa,  Nerja, and Tenerife.

FOR AN UPDATE TO THIS ARTICLE, PLEASE SEE THE ENTRY FOR 31 OCTOBER 2011.

 

The Coín office is at:

LOCAL 6, Sierra Chica (Opposite La Trocha)

Spanbox B220,

Apartado 178

29100 Coín Málaga

Tel (0034) 951 315 161

Fax (0034) 951 315 162

 or

Email

jonsutton@decottalaw.net

franciscomartin@decottalaw.net

website: www.decottalaw.com

 

Is inheritance tax in Spain about to change? By Jon Sutton, Specialist in Inheritance, Wills and Probate at De Cotta Law

Inheritance tax is an important consideration for anyone who owns property in Spain or is thinking of purchasing. The autonomous regions are allowed to set their own inheritance tax levels and allowances. However these allowances only apply for the estates of people who have been resident in that region for five years and the beneficiaries are similarly resident. If both the deceased and beneficiaries do not satisfy the residency requirement then the national state rules apply.

There is a vast difference between the state inheritance tax rules and the regional allowances. Several regions including Madrid, the Canary Islands, the Balearics, Valencia and Murcia have virtually no inheritance tax between spouses or between parents and children. Others, principally those with socialist administrations, have less generous allowances, nevertheless with professional advice the reductions can be utilised so as to significantly lower or eliminate the inheritance tax burden. For example Andalucia allows a gift to a spouse, child or parent of up to €175,000 tax free. This is an all or nothing allowance not a nil rate band so a gift of €176,000 would be taxable on the full amount.

As previously stated, these allowances only apply where the deceased and beneficiaries are residents. If not, the much less generous state rules apply which simply allow a deduction of just under €16,000 from the gift for tax purposes for spouse, children and parents of the deceased. This can mean that non resident beneficiaries pay many thousands of Euros more tax than they would if they were residents.

However help may be at hand for those thousands of non resident holiday home owners or residents of Spain whose principal or reserve beneficiaries (such as their children) are non residents.

On the 16th February this year, the European Commission asked Spain to amend its tax provisions on inheritance and gift tax on the basis that they impose a higher tax burden on non-residents and on assets held abroad. The Commission was of the opinion that the provisions were incompatible with the free movement of workers and capital which are required under European law. In particular, the Commission considered that there was a  breach of the Treaty on the Functioning of the European Union (Articles 45 and 63 respectively). The request takes the form of a complementary "reasoned opinion". Spain has been given two months to respond and If there is no satisfactory response , the Commission may decide to refer the case to the EU's Court of Justice.

However, this may take some time, the Commission previously sent a reasoned opinion to Spain on 5th May 2010 and although Spanish legislation has been amended slightly, it is still not fully compliant with EU law. The Commission has therefore decided to send the latest complementary reasoned opinion requesting Spain to make additional changes to its legislation to ensure full compliance.

The deadline has now passed but so far there is no news of any response.

How Spain will respond, when this will be and how this will change the inheritance tax burden for none residents is not yet clear. The Spanish Government is in financial difficulties as it is and will be reluctant to give up this lucrative, if unjust, stream of revenue. However, Spain is now on notice and to delay the matter may lead to claims from beneficiaries who are adversely affected by Spain's failure to comply. This could lead to a similar situation to Capital Gains Tax which was also discriminatory and ultimately amended to be the same for non-residents and residents alike and also led to a deluge of claims for compensation from people who had paid the higher rate of tax as non residents.

If and when the inheritance laws are changed it would be well worth everyone with a property in Spain to consult their lawyer or accountant to see whether changes should be made to their wills to reduce or eliminate inheritance tax.

 

Centro Comercial La Trocha,

Spanbox B220,

Apartado 178

29100 Coín Málaga

 

Tel (0034) 951 315 161

 

Fax (0034) 951 315 162

or

Email       jonsutton@decottalaw.net

 

website:      www.decottalaw.com

Is inheritance tax in Spain about to change? By Jon Sutton, Solicitor and Registered Foreign Lawyer at De Cotta McKenna y Santafe

Inheritance tax is an important consideration for anyone who owns property in Spain or is thinking of purchasing. The autonomous regions are allowed to set their own inheritance tax levels and allowances. However these allowances only apply for the estates of people who have been resident in that region for five years and the beneficiaries are similarly resident. If both the deceased and beneficiaries do not satisfy the residency requirement then the national state rules apply.

There is a vast difference between the state inheritance tax rules and the regional allowances. Several regions including Madrid, the Canary Islands, the Balearics, Valencia and Murcia have virtually no inheritance tax between spouses or between parents and children. Others, principally those with socialist administrations, have less generous allowances, nevertheless with professional advice the reductions can be utilised so as to significantly lower or eliminate the inheritance tax burden. For example Andalucia allows a gift to a spouse, child or parent of up to €175,000 tax free. This is an all or nothing allowance not a nil rate band so a gift of €176,000 would be taxable on the full amount.

As previously stated, these allowances only apply where the deceased and beneficiaries are residents. If not, the much less generous state rules apply which simply allow a deduction of just under €16,000 from the gift for tax purposes for spouse, children and parents of the deceased. This can mean that non resident beneficiaries pay many thousands of Euros more tax than they would if they were residents.

However help may be at hand for those thousands of non resident holiday home owners or residents of Spain whose principal or reserve beneficiaries (such as their children) are non residents.

On the 16th February this year, the European Commission asked Spain to amend its tax provisions on inheritance and gift tax on the basis that they impose a higher tax burden on non-residents and on assets held abroad. The Commission was of the opinion that the provisions were incompatible with the free movement of workers and capital which are required under European law. In particular, the Commission considered that there was a breach of the Treaty on the Functioning of the European Union (Articles 45 and 63 respectively). The request takes the form of a complementary "reasoned opinion". Spain has been given two months to respond and If there is no satisfactory response , the Commission may decide to refer the case to the EU's Court of Justice.

However, this may take some time, the Commission previously sent a reasoned opinion to Spain on 5th May 2010 and although Spanish legislation has been amended slightly, it is still not fully compliant with EU law. The Commission has therefore decided to send the latest complementary reasoned opinion requesting Spain to make additional changes to its legislation to ensure full compliance.

How Spain will respond, when this will be and how this will change the inheritance tax burden for none residents is not yet clear. The Spanish Government is in financial difficulties as it is and will be reluctant to give up this lucrative, if unjust, stream of revenue. However, Spain is now on notice and to delay the matter may lead to claims from beneficiaries who are adversely affected by Spain's failure to comply. This could lead to a similar situation to Capital Gains Tax which was also discriminatory and ultimately amended to be the same for non-residents and residents alike and also led to a deluge of claims for compensation from people who had paid the higher rate of tax as non residents.

If and when the inheritance laws are changed it would be well worth everyone with a property in Spain to consult their lawyer or accountant to see whether changes should be made to their wills to reduce or eliminate inheritance tax.

Jon Sutton is a Solicitor and Registered Foreign Lawyer at De Cotta McKenna y Santafe, a law firm specialising in dealing with all aspects of Spanish Law for English speaking clients. Their offices are at:

Centro Comercial La Trocha,

Spanbox B220,

Apartado 178

29100 Coín Málaga

Tel (0034) 951 315 161

Fax (0034) 951 315 162

or

Email jonsutton@decottalaw.net

website: www.decottalaw.com

 

Jon Sutton, of De Cotta, McKenna & Santafe, hosts seminar on Talk Radio Europe

Jon Sutton, of De Cotta, McKenna & Santafe, today hosted a live seminar on Talk Radio Europe, on the subject of Wills, Inheritance and Probate. The insightful and useful seminar prompted calls from listeners and Jon was able to take calls live on air and offer advice and guidance. Listen to the show here.

Jon will next be live on air on April 18th and 17.30, offering a seminar on Personal Injury.

One of Life’s Certainties

Like taxes, death is one of life’s certainties, yet we often don’t think about the plans that need to be considered. As always, it pays to have a Spanish will for Spanish property and a UK will for UK property. However, some of you may be thinking beyond your portfolio and considering whether to donate your body to medical science. If so minded, you should contact your local health centre, complete the forms and receive your donor card. However, please note that certain criteria apply, namely your body must be made available for dissection within 24 hours of death, you cannot have died from an infectious disease (for obvious reasons) and you cannot have been subjected to an autopsy – necessary where there is doubt as to the cause of death.

 

Similarly, in the event of a serious accident rendering you medically vegetative, should you wish that your life support machine is turned off, you will need to have previously registered your wishes with the Junta de Andalucia in Seville and have two doctors confirm that you are indeed in a position of no return.

 

Original copies of the Spanish death certificate are obtained from the Registro Civil and are required by particular bodies for particular reasons. For example: the Central Wills Agency in Madrid – in order to obtain a Certificate of Last Will; the Department of Work and Pensions – if you received a state pension; the Paymaster General – if you received payment from the State or received a company pension; the Inland Revenue – if you paid tax in UK; the Probate Office - if you had a UK will and, or property in the UK; banks - with which you held an account and; insurance companies - with which you had a life policy. Generally, speaking, I advise that ten or so should do the trick and remember that if the particular body is UK based, it will also require a sworn translation of the certificate.

 

In order that a death may be formally registered in the United Kingdom, one needs to inform the Consular authorities of the death, provide the death certificate, a sworn translation and confirm the deceased’s passport details as well as the details of the next of kin. Although not obligatory, experience suggests that registering a death in Spain with the UK authorities makes for tidier paperwork and less stress.

 

Some people prefer to be buried or cremated in their country of origin, which can add an extra 4,000€ or so to the cost and give rise to extra administrative requirements such as notifying the relevant UK district Registry of Births, Deaths and Marriages and, or seeking permission from the Home Office for cremation. You may also wish to bear in mind that freight charges are premised on weight – so flying a coffin back to blighty is significantly costlier than flying an urn.

 

If you wish more information on this particular topic or would like to discuss any matter raised therein, contact Rob Westwater or Reyes Gomez Llorente, De Cotta McKenna y Santafe, on 952 527 014. Offices in Mijas Costa, Coín, Nerja, Granada and Tenerife.

 

De Cotta McKenna y Santafé

Calle Diputación, 6-2º-A

29780 Nerja

Málaga

Spain

 

Tel.: (+34) 952 52 70 14

 

Fax: (+34) 952 52 34 28

 

Email: robwestwater@decottalaw.net

 

website: www.decottalaw.com

 

 

Foreign Residents' Meeting invites De Cotta McKenna y Santafé to speak

Myles Jackson, English Lawyer with local Nerja law firm, De Cotta, McKenna & Santafé gave a free talk  yesterday, Tuesday, 2nd March to the members of El-Valle Asociacion, ex-pat group, in the Camping Bar by El Viñuela.

The talk was well attended with over 70 foreign residents.

The focus of the talkwas Wills & Inheritance Planning, but there was also a successful 'Questions & Answers' session where foreign residents were able to raise issues of concern and get advice.

If you would like to have De Cotta McKenna y Santafé speak at your foreign residents meeting, please contact your nearest office or contact:

Myles G. Jackson

English Lawyer

De Cotta McKenna y Santafé

C./ Diputación, 6-2º-A

29780 Nerja

(Málaga)

Telephone:        952 52 70 14

Facsimile:         952 52 34 28

email:                mylesjackson@decottalaw.net

website:            www.decottalaw.com

FREE Talk – Wills & Inheritance Planning – Tuesday, 2nd March, El Viñuela, 7pm

 

Do you have property here in Spain?  Have you retired here?  Or maybe you have a family or work here?

Ex-pats in Spain must take a proactive role in their inheritance planning, with a Spanish Will and adequate planning.

Local Nerja law firm, De Cotta, McKenna & Santafé is giving a free talk on Tuesday, 2nd March to the members of El-Valle Asociacion, ex-pat group, in the Camping Bar by El Viñuela.

The talk is from 7.30pm.

Please note this talk is for MEMBERS ONLY of El-Valle Asociacion, but if you are interested to learn more, contact us for the next open talk, offered by De Cotta Law.

 

For more information or directions, please contact:

De Cotta McKenna y Santafé

C./ Diputación, 6-2º-A

29780 Nerja

(Málaga)

Telephone:        952 52 70 14

Facsimile:         952 52 34 28

website:            www.decottalaw.com

 

 

De Cotta McKenna & Santafé, English solicitors, and lawyers, and Spanish Abogados, in Marbella, Andalusia, Spain