Our death is not a subject we like to dwell on! But, when looking at what it can mean to your dependents if you pop your clogs here in Spain, itÂ’s worth spending a minute or two checking it out. The problem lies with the Spanish inheritance tax laws. A few years back I was made aware, by an international firm of chartered accountants, of the financial nightmare that can ensue. They demonstrated how the tax was assessed and gave me examples as to how much would be payable on differing levels of inheritance. The amounts payable were much higher than I had ever imagined.
There are a couple of things you can do to protect yourself, or rather your beloved dependents. One is the somewhat dubious advice some lawyers impart which is simply, Â“DonÂ’t declare the death.Â” This basically means that, when your judgment day finally arrives, your demise is not declared and registered. There is a statute of limitation of four years for the collection of tax debt and if your beneficiary lives for these four years they can inherit without paying any inheritance tax.
Another bit of advice from the same source is, Â“If they die in Spain and you want to be safe, take the body into Gibraltar and declare the death there!Â” How the Guardia Civil would react to a corpse-carrying car at their new, all-friendly border is anyoneÂ’s guess.
Most of us would find the above options a little unpalatable; after all, our beloved has passed away, left us a packet and now weÂ’re being asked to either ship Â‘em to Gib to officially die there or just brush the whole death thing under the carpet for four years!
On seeing your face drop at these suggestions, other lawyers may suggest that you just under-declare the true value of your property or simply use the Â“valor catastralÂ”. Why? Because on the death of anyone owning property in Spain it is the duty of the beneficiaries to complete an inheritance tax declaration within six months of the death and any property should be valued at Â“a fair market valueÂ”. On todayÂ’s Costas, what is a fair value? Property prices are going up and down faster than a lady of the nightÂ’s garments, so fair pricing has become pretty much guesswork. However, non-completion of such a declaration may be seen as an illegal act and would be punished accordingly.
Alternatively you could talk to professionals who offer sound advice and, if you own your own property here, can suggest tried and tested methods for reducing inheritance tax bills. Inheritance tax is a problem in Spain, so taking advice and planning accordingly is paramount, however unsavory the subject of your own death may be.
One more option open to youÂ… you could opt to bequeath all your worldly possessions to the local donkey sanctuary/dogsÂ’ home and leave your money-grabbing, ungrateful spouse/kids/grandkids nothing to worry about!