March 6

Expats die too…

Whether your great-aunt leaves you a coastal villa in Marbella or your grandfather bequeaths you his fashionable Madrilenian flat, one thing is certain: the hassles have just begun. The funeral over, you must begin to unravel Spanish red tape and prepare to pay your newfound Spanish tax liabilities…

Administering Spanish and UK estates differs greatly. Who pays inheritance tax (“IT”) is an example: Spanish IT is paid by beneficiaries, whereas in the UK it’s the deceased’s estate that foots the bill. To have Grandpa’s flat registered in your name (essential if you’re ever to sell it subsequently), you must first pay Spanish IT. Rates vary throughout Spain and depend on the familial relationship that links the beneficiary to the deceased (if related). Contrast this with the UK, where IT is paid at a flat 40% rate above a sizeable non-taxed sum.

To move in to your great-aunt’s villa, in addition to Spanish IT you must also pay local value increase tax (known as plus valía) to the town hall in Marbella, as well as Land Registry and Notary’s fees. The villa itself and all her other Spanish assets of significant value must be listed in an inheritance acceptance deed, including her Spanish bank accounts, her red Ferrari and her collection of Salvador Dali lithographs.

October 25

Differences in Spanish/English divorces

Clients may have a choice of where to divorce.  Here we examine some of the very different procedures and possible outcomes that may arise if a couple has the right to divorce either in Spain or in England and Wales (which from now on in this blog post we’ll refer to as ‘England’).

If one spouse perceives either of these two jurisdictions as being advantageous (London being billed as the ‘divorce capital of the world’, the levels of its punchy financial orders not being seen in Spain, and Spanish courts not making the asset redistribution orders that an English court does), there may be a race to ‘get in first’, thereby ensuring that the divorce is heard in one jurisdiction as opposed to the other.  Where time is of the essence, drafting the necessary paperwork to win that race and divorce in England is likely to be a quicker process than it will be in Spain.  In England, one can launch a divorce process and follow up with the financials later;  whereas in Spain, to start a divorce, one must do all the very careful drafting (including regarding financial claims) before filing in court, this then being a brake on filing first.

Another big difference between divorcing in Spain and England is that, in the English court, there are strict rules to stop a spouse misleading their other half – and hence the court – by lying or committing perjury.  Spouses divorcing in England who deliberately set out to hide the extent of their wealth or the location of their assets may find themselves in deep trouble, perhaps even in jail.  Contrast Spain, where there’s no perjury for spouses in a divorce process.  So you could say a Spanish judge expects the husband and wife not to be telling the truth.  It follows that where there’s a high level of doubt about the extent or location of a spouse’s assets (perhaps they’re hidden off-shore, for example), it’s more likely they’ll be rooted-out in the context of an English divorce than in a Spanish one.

It’s because of that key difference that one won’t see sworn statement (known as ‘affidavit’) evidence in the context of Spanish divorce proceedings;  a Spanish court is not so much interested in what someone says happened as how that can be proved independently:  hence a wife who says “He hit me more than once” had best back up her statement by having reported his violence to the Spanish police (otherwise, her recounting of events is unlikely to carry weight in court).

Finally, depending on which region of Spain is relevant in a divorce, ‘matrimonial regimes’ may largely dictate financial results.  Some Spanish regions (Madrid being an example) uphold a shared matrimonial regime (known as gananciales):  this means that assets acquired by one spouse after marriage will be treated upon divorce as being shared:  thus, a house which is bought as an investment after marriage in just the wife’s name will automatically be treated in a Spanish divorce regulated by this regime as being half owned by her husband.  This form of sharing pursuant to a matrimonial regime is not seen in English divorces, where the starting point will be more akin to the second form of Spanish matrimonial regime (applicable in Barcelona, for instance) under which what’s bought or earned by him after marriage is his and what’s bought or earned by her is hers (this regime being known in Spain as separación de bienes).

For more information on these of any other Spanish law issues, please contact Christopher Lee at cl@domenechabogados.com or on (00 34) 93 415 0677.

 

© 2017 Legal Advice in Spain, S.L.

Kate Wasyliw and Charlie Wilson enjoying work experience with Doménech Abogados