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Non-Domici ledproperty ownersin Spain aresitting on a

ticking IHT time bomb. Mostowners do not understandthat their Heirs and theirEstate will pay IHT in twojurisdictions, Spain and theirCountry of Domicile. Thereason for this is that in Spainthe individual inheritor istaxed whereas in othercountries, like the UK, it isthe estate that is taxed. Thiscould mean that on the deathof an owner the survivingpartner, or the owner’sBeneficiaries, could have aTax Bill that virtually wipesout the entire SpanishInheritance. Added to this isthe cost of Probate in bothcountries for the Inheritorstoo. Most Lawyers in Spain

recommend to Owners thathaving a Spanish Will dealswith the problem; this isincorrect as a Will only dealswith the issue when there is adeath and does not removeTaxation in Spain.

Other advice given is thatdouble Taxation treatiesbetween Spain and the UKwill help with the Tax beingreduced, this is true inidentical Taxes but these arenot, as in the UK it is theEstate which is Taxed and inSpain it is the Beneficiarieswho are Taxed. It thereforeshould not be assumed thatone Tax can be offset againstthe other as they are bothtotally different taxes ontotally different entities.Many Owners are advised tore-finance the property asIHT is not charged on the

property amount if there is anoutstanding mortgage andloan, but this may end upleaving the Beneficiaries witha huge debt they cannot payoff. Owning a property withyour children is a favourite,this is not a good idea eitheras their share of the propertymay end being at riskthrough financial or maritalissues and if they die beforethe parents then the parentshave to pay Taxes to get theproperty back.

Our solution to theIHT/ISD problem in Spain isfor the owner/s to invest theproperty into a UK LimitedCompany which they wouldown as Shareholder/s. Therewould be no 7% Transfer taxpayable on this specifictransaction unlike otherproperty transactions inSpain. There is also noCapital Gains tax implicationin Spain when you invest aproperty into a UK LimitedCompany, as the Haciendahas a method of calculatingan investment value basedon the original purchaseprice as shown in the Publicdeed.

This method mayeradicate all Taxes in Spain inthe future, in respect of theproperty, as under EUTreaties a UK Company isonly Taxed in onejurisdiction, the UK, and noTaxes are payable onwardlyin Spain. A UK Company isnot an Offshore Company as

they are charged anannual Tax by Spainof 3% for not beingpart of the EU.

Shares in the UKCompany can bedealt within a UKWill and depending on thestructure of the Company;

the Shares may beexempt from Inheritance Taxin the UK as well. A furtheradvantage of the CompanyStructure is that attributableexpenses can all be TaxDeductible by the Companyand the benefit in kind Taxfor Directors of a UKCompany which ownproperty abroad has nowalso been removed.

This is a simple solutioncosting less than mostprobate and legal fees inSpain when there is a deathof an Owner of the propertyand requires no NIE numbersfor the Beneficiaries toinherit and our uniqueservice is available to allNationalities including bothResidents and Non Residentsof Spain.

We have beendeveloping our systems andprocess for many years as westrive to be the market leaderin this type of transaction sowe have been researchingthe transaction for a longperiod of time. Clients canalso be assured when talkingto Wincham they are dealingwith professionals who areoperating in this type of

business on a daily basis,unlike other professionalswho are not, but still adviseabout the method and due totheir lack of understandingand knowledge confuse orput off interested ownersfrom exploring the concept.We find Clients are failedtime and time again by bothSpanish and UKprofessionals as they areunable to advise on morethan one jurisdiction. TheClients website where theycan register for their freeillustration showing theIHT/ISD liability in Spain iswww.winchamiht.com

Wincham is anInternational organisationthat has been establishedsince 1994 and has offices inboth the UK and Spain andwithin our organisation wehave qualified professionalsin both jurisdictions.

This information hasbeen provided by MarkRoach, Company Directorand Spanish Tax Consultant,Telephone : +44 (0)1260 299700 or 0034 965 830 991.

Av. Santo Domingo, 18 - JALÓNTel./Fax 96 648 04 11 - Mv. 639 271 804

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SPANISH LAWYERS & ENGLISH SOLICITORS

C/ Diana, 19.2o - 03700 Denia (Alicante)

Tel: (34) 966 426 185 FAX: (+34) 965 784 471info@white-baos.com

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� Wills & Probate & Inheritance� Divorce � Company Formations� Tax Advice and Representation

W&B

The Spanish Property Inheritance

Over 15 years experienceproviding legal and tax adviceto English- speaking clients,specialised in the followingareas:

� Purchase and saleof property

� Wills and Inheritance

� Civil and criminal litigation

� Legalisation of properties

� Maintenance of tax and account liabilities for theself-employed and companies

Offices in Valencia,Oliva and AyoraE-Mail:info.valencia@lexconsilium.com

Tel: 963 536 991 or962 838 902www.lexconsilium.com

by Mark RoachCompany Director andSpanish Tax Consultant.

TAX TIME BOMB

legal&financial

This could mean that onthe death of an owner

the surviving partner, orthe owner’s Beneficiaries,

could have a Tax Billthat virtually wipes out

the entire SpanishInheritance.

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