- What initial advice do you have for families thinking of moving to Spain?
As far as the lifestyle for you and your family, Spain is a great choice. Lifestyle here is as great as the weather and long sunny days makes a big difference so you should enjoy more quality family time.
There is a wide range of Spanish and International schools available so your children could continue their English schooling or switch to the Spanish Baccalaureate. There are plenty of properties to buy and rent all over Spain so there are lots of options to choose from.
My key advice is to take your time before moving, do your homework on where to live, consider renting for the first year rather than buying and make sure that your business can continue to operate.
- Do the beneficiaries of my Spanish Will need to come to Spain to deal with the estate?
Whilst it is recommended that the beneficiaries of your will come to Spain to deal with the estate, it is not strictly necessary. A lawyer in Spain can act on the beneficiary’s behalf using a power of attorney which can be signed in the beneficiary’s home country.
- Is the process for buying a property similar to the UK?
It is similar in that there will be an offer and an acceptance. However from there onwards the process does vary. The main difference is in Spain all property transactions are completed before a Notary.
A Notary is a Public Official who witnesses completion of the purchase and sale of property which is documented in an escritura (an escritura is a deed and will set out the parties selling and buying a property, the price, a description of the property and whether there are any charges or mortgages on the property.)
Prior to completion your lawyer should carry out searches on the property to ascertain whether or not there are any charges, mortgages, rights of way or easements on the property. They should also check the description of the property by obtaining a land search from the local land registry and compare this to the seller´s escritura containing a description of the property when they purchased.
In addition lawyers should obtain a certificate from the local town hall confirming that the owners have not breached any planning regulations.
- Capital Gains Tax for non residents, how is the tax paid and which tax forms are involved?
The payment of tax is to be made by filing the forms 211 and 212 as follows:
1. The purchaser who is acquiring the real estate to the vendor, regardless the purchaser is a tax resident or non-resident, is obliged to withhold and deposit in one month to be counted from the date of the signature of the notarised sale deed, at the Tax office, the amount of 3% on the sale price, by filing the form 211. For the vendor this withholding acts as a payment on account of capital gains tax arising from the capital gain (current rate 19%). Should the amount withheld be higher than the tax liability, the vendor will be entitled to a refund of the balance.
2. The vendor in four months to be counted from the date of signature of notarised sale deed will either pay the outstanding amount in addition to the 3% (if the tax liability is superior to 3% on sale price) OR will apply for the refund of any balance as mentioned above (if the tax liability is less than 3% or there is a capital loss in such case will apply for the refund of the full 3%). The Tax office should instruct the refund within the following six months and if it takes longer the applicable interests will apply.
- What is a Community Trade Mark?
The European Community Trade Marks and Designs Registration Office states that, a sign or symbol which aims to distinguish the goods and services of one organisation from another and is registered with OHIM and valid throughout the European Union in accordance with the provisions of the CTM Regulations, is a Community Trade Mark (CTM).
A Community Trade Mark has a unitary character and an equal effect throughout the European Community. Its owner has the exclusive right to use the trade mark and to prevent third parties using the same or a similar mark for identical or similar goods or services as those protected by the CTM, without consent.
A Community trade mark shall be obtained by registration and it is valid for 10 years, although it can be renewed indefinitely for the same period of ten years. The main advantage of a CTM is that it is valid and protected in the whole European Union.
- How can I have my contract for sale / purchase registered with the land registry?
The registration of a sale / purchase contract is not compulsory; however, this can protect owners against third parties who may claim other non-registered rights against the property.
The Land Registry’s regulations require that sale / purchase contracts must be notarised before they can be registered. Notarising the document however, is not proof of its validity; therefore, the contract should also be checked to ensure it complies with the law.
- Which are the key documents related to Spanish Urban planning?
1. Building License (“Licencia de Obra”) is the license granted by the authorities to allow the building activity to go ahead on the basis of the technical project produced by an architect/expert technician initially presented to the authorities. It verifies that the building activity proposed is in accordance with URBAN PLANNING SCHEME (PGOU) provisions and minimum requirements (such as “urban” qualified land, building limits, height restrictions etc). This license should be obtained before starting building work.
2. Final Building Certificate ("Certificado Final de Obra")
This is issued by an architect or other expert who can verify that the building activity has been completed in accordance with the initial Building License.
3. First Occupation License ("Licencia de Primera Ocupación"). This confirms that the housing is ready to be occupied and electricity/water supplies can be connected.
- Are losses of earnings recoverable in a personal injury claim under Spanish law?
Net losses of earnings are not usually recoverable under Spanish law. Instead, a percentage based on the victim’s salary at the time of the accident, will be added to the total amount of personal injury compensation.
In order to make a claim for loss of earnings, you will need copies of your P60 certificate or other documentation showing your annual net earnings at the time of the accident.
- Will my English Will cover my Spanish assets?
- Yes your English Will could cover your Spanish assets. However if you have assets in two or more jurisdictions, we would advise you to have an English Will covering your English assets and a separate Will covering your Spanish assets.
- How will my estate be valued?
In order to deal with an acceptance of inheritance in Spain, it is necessary to calculate the value of the assets upon which inheritance tax must be paid.
Accounts and property are the most common assets held by expatriates in Spain. With regard to accounts, the necessary certificates must be obtained from banks and building societies confirming the value of any accounts at the date of death.
If there is a Spanish property in the estate, it is also necessary to obtain a copy of the escritura and the latest town hall rates known as IBI. Once the value of the property and the amount of money held at the date of death are ascertained, the value of the estate is calculated.
Following the deduction of funeral expenses and any other debts, the resulting figure is the taxable value of the estate.
- IBI: What are the charges and how it is calculated?
IBA is a local tax known as IBI which stands for “Impuesto sobre Bienes Inmuebles” charges the right of ownership/usufruct/surface/administrative concession on urban or rustic real estate, being calculated and collected annually by the local authority in charge of the municipality where the property is located.
The calculation is made on the basis of the “Cadastral Value” as per the Cadastral Registry records, which includes the value attributable to the land and the value attributable to the building if any.
When fixing cadastral value several criteria (urban planning circumstances of the land, market value, building circumstances, etc) are taken into account. The cadastral value can be updated by applying certain indexes which may vary in each specific case. It is possible to challenge cadastral values in accordance to applicable Law.
By applying the rate on the cadastral value the payable tax will be obtained. There are maximum and minimum rates which can be increased by each Town Hall under certain requirements. There are certain benefits which may reduce the payable tax if legal requirements are met in certain cases (i.e. official protection property).
- IBI: What happens if it is not paid?
If the IBI receipt is not paid there will be a surcharge and under certain circumstances the local authorities can initiate legal proceedings to enforce payment which could even lead to embargo procedures.
If there are outstanding bills for IBI and the property is sold, IBI debt will be passed on to the new owner who will assume the debt.
- In which country will inheritance taxes be paid on my estate?
The simple answer to this question is that you will pay inheritance taxes wherever your assets are located. So for example if you live in Spain, own a property there and have no assets outside of Spain, the beneficiaries of your will shall be obliged to pay inheritance tax in Spain on their share of the value of the property that they inherit.
- Do we need a lawyer if we buy a property?
Absolutely. Buying a property is, after taking the decision to move to Spain, one of the most important decisions you will make and instructing an independent qualified lawyer who specialises in property matters is highly recommended.
Choosing a lawyer who you can speak to easily and who understands your language as well as the Spanish law is vital for you to fully understand the buying process and to be kept up to date with your purchase as it proceeds.
- Do we need a lawyer if we rent a property?
The simple answer is yes. If you are renting it is important that you have a rental contract carefully setting out the terms and conditions of the rental; when payment is due, the terms and conditions regarding the return of the deposit and a full inventory of the property. These are just some of the important points to be included in a rental contract when considering renting a property.
- What is the limitation period in Spain for personal injury matters?
The easy answer to this question is one year from the date of the accident or one year from the date of a full recovery by the claimant, as certified by a doctor.
We would always recommend interrupting the limitation period within one year of the date of the accident if there are no ongoing legal proceedings.
The limitation period for criminal matters is six months and for civil matters it is one year. However there are exceptions for accidents that occur on cruise ships, in a port, airport, or in government buildings so it is advisable to consult with a lawyer as soon as possible after the accident.
- What happens when someone can't pay his or her mortgage?
During judicial proceedings in these circumstances, there are three options open to the judge:
1. Public auction of the property ("Subasta")
2. Private agreement between parties ("Convenio Privado de Realización")
3. Enforcement by specialised agent or company ("Realizacion por persona o entidad especializada").
- Do I need a Spanish Will?
- It is highly advisable to have a Spanish Will if you own property or have assets in Spain. Having a Spanish will enables you to leave your Spanish assets to who you want to and with some estate planning, you can save on inheritance taxes. Spanish Wills are signed before a Spanish Notary.
- My pension is taxed and deducted in the UK, will I pay tax in Spain and the UK?
- No, due to the double tax treaty between Spain and the UK you will only pay tax in one jurisdiction.
- Should I arrange a survey of a property?
If you are arranging a mortgage to purchase your property then the bank will carry out a valuation of the property. However this is purely a valuation and review of the property paperwork and is unlikely to consider any defects the property has. Therefore is it advisable to instruct independent surveyors or architects to carry out a full survey of the property.
- If property is rented, who should be in charge of IBI; the landlord or tenant?
The tax liability is for the owner so the tax receipt will be issued in the landlord’s name.
- How does the Spanish compensation system for personal injury claims work?
In Spain the amount of compensation payable for a personal injury claim resulting from a road traffic accident is calculated in accordance with a strict scale system. These scales are also used as a guide for claims resulting from other types of accident. The assessment of compensation is based on three main points:-
1. Period of Hospitalisation
This is the number of days a victim has had to spend in hospital as a result of the accident, and a set amount is awarded for each day.
2. Period of Incapacity
This period is divided into ‘total incapacity’ – the time during which the victim is unable to carry out any of their usual day to day activities; and ‘partial incapacity’ – the time during which the victim is able to carry out usual day to day activities, but is still receiving medical treatment. Again, a fixed sum is awarded for each day of total incapacity and for each day of partial incapacity.
3. Permanent Symptoms
These are any permanent symptoms that the victim is left with as a result of the accident, after the period of partial incapacity and when medical treatment has finished. Points are awarded depending on the severity of these symptoms, and each point has a monetary value.
- What happens if I stop paying my Spanish mortgage loan? Is the Spanish bank entitled to claim against my assets in the UK?
The bank can initiate a legal proceeding in Spain by taking legal action if the mortgage monthly charges are not paid. Each bank has its own criteria but usually if there are three consecutive outstanding bills the bank will initiate the proceeding which could lead to the property embargo. However the bank can offer alternative solutions to avoid the proceeding by renegotiating the mortgage loan terms.
Having initiated the legal proceeding in Spain, it will be the Courts decision to instruct a restriction on the Spanish property and sale in a public auction if the customer does not pay the debt.
Since the Spanish property guarantees the loan payments, the claim will be against it. But if the sale of the property does not cover the outstanding mortgage loan, the bank can then claim against other assets owned by the debtor either in Spain or abroad. Therefore the delivery of Spanish property keys to the bank is not accepted as a solution to satisfy the outstanding debt. The debtor’s liability affects any assets worldwide. So if there is a property in the UK in your name it would be possible that the Spanish bank will claim against it.
- Do I have to present a Spanish tax return even if I am taxed at source?
If you are a resident in Spain for more than six months a year there is an obligation on you to present a Spanish tax return between May & June in the year subsequent to you becoming a Spanish resident.
Even if you have very little income or your income is taxed in your home country, there is still an obligation for you as a Spanish resident to present a Spanish tax return even if this is a nil return!
- Do the beneficiaries of my Spanish Will require a NIE?
- Yes. An NIE number will be used to pay inheritance taxes by the beneficiaries in Spain.
If they cannot come to Spain to apply for an NIE number, then an NIE number can be applied for on their behalf using a power of attorney.
- Do I have to become a tax resident in Spain?
- If you live in Spain for more than 183 days a year, then legally you will become a tax resident and should present annual tax returns to the Spanish tax office between May and June each year. You have to take proactive steps to become a resident as the Spanish tax authorities will not contact you to arrange this.