Brexit and Inheritance and Donation Tax update - JMS Lawyer

JMS Lawyer

Spanish law in plain English

Brexit and Inheritance and Donation Tax update

Brexit and Inheritance and Donation Tax update

Old advice on Inheritance and Donation Tax after Brexit

I recently published two articles about Brexit and Inheritance Tax which you can read here and here, advising that making donations of Spanish property to spouse and children before Brexit could be a tax wise saving decision as you would benefit from the bid personal allowances of close relatives foreseen for tax residents in Spain as well as EU citizens and assuming that after Brexit the English people would be treated immediately as non EU citizens and therefore not able to benefit of that generous personal allowances and thus being liable for big Inheritance and or Donation Tax bills.


New advice on Inheritance and Donation Tax after Brexit

But due to recent Spanish Supreme Court decision of 2018 the situation has changed dramatically for good. The Supreme Court understood that to discriminate between tax residents and non tax residents when applying the personal allowances and reductions of the Inhertiance and Doantion Tax is against the free movement of capitals not only between the EU (as it was already set by the European Court of Justice in 2014) but between the EU and third countries as well. So, to summarize any citizen of any country must be treated as a tax resident when dealing with the Inheritance and Donation Tax in Spain and therefore apply the same personal allowances than any other tax resident.


Example in the Valencian Region

In the Valencian Region for instance the main personal allowances are as follows:

Inheritance Tax.- €100.000 for the spouse and for each child.

Donation Tax.- €100.000 for each child.



So for the English people with a property in Spain nothing will change after Brexit with regards as the Inheritance and Donation Tax and they will benefit from all the personal allowances applicable to tax residents in Spain.

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