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INHERITING PROBLEMS
Non-domiciled property owners in Spain are sitting on a ticking Inheritance Tax time bomb, warns tax specialists Wincham. Most owners do not know that their heirs and their estate may pay IHT in two jurisdictions, Spain and their country of domicile. In Spain the individual inheritor is taxed, whereas in the UK, it is the estate that is taxed. This could mean that on the death of an owner the surviving partner, or the owner’s beneficiaries, could have a big tax bill on their Spanish assets. Added to this is the cost of Probate in both countries for the inheritors. According to Wincham, simply having a Spanish
Will does not solve all the tax problems and it should not be assumed, with the double taxation treaty between Spain and the UK, that one tax can be offset against the other, as they are different taxes on different entities. Wincham suggests one tax solution is for the owner to invest the property in a UK private limited company, which they own as shareholders. This also saves the seven per cent transfer tax, says Wincham. Under EU Law a UK company is only taxed in one jurisdiction, the UK, and no taxes are payable onward in Spain.
www.winchamiht.com
Conti, a leading overseas mortgage specialist, has entered into a partnership with global tax accountants Property Tax International. Conti clients can obtain advice on filing their foreign and UK tax returns and benefit from an initial free, no obligation review of their international and domestic tax position. If they choose to continue, they can benefit from a five per cent discount on their personal income tax return, as well as PTI’s competitively priced fees. Conti says the new service should be of particular interest to clients who generate an income from a rental property abroad and must declare the amount earned to the respective international tax authority. As a UK tax resident, they also have to declare this income within their tax return.
www.ptireturns.com www.mortgagesoverseas.com
Team work Homes Overseas .29 HO .047
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