THE NASTY EFFECT BREXIT WILL HAVE ON INHERITANCE TAX FOR NON-RESIDENTS OF SPAIN.
The amount of inheritance tax paid by beneficiaries of a Spanish estate up to now has been the same for Spanish nationals and for non resident of Spain as long as the non-resident was indeed a resident in a country member of the European Union.
This was thanks to a sentence of the European Court of Justice that made it illegal for Spain to charge residents in any European country more than Spanish nationals. The sentence does not stop Spain from charging more inheritance tax to non European Union citizens.
When Brexit take place non-residents of Spain that are residents in Britain that inherit a property in Spain will not be entitled to claim any of the exemptions that are offered by each autonomous region of Spain which represent the major part of the exemptions and have a huge effect on inheritance tax. Presently these exemptions allow many close family members (spouse and descendants to not pay any inheritance tax in Spain)
I will explain what I mean with an example?
Before Brexit:
A mother leaves her villa in Malaga worth 300000 euro to her two sons. (one lives in Australia and the other in London). The son living in the u.k. would pay no inheritance tax as he could claim the same exemptions as if he had lived in Andalucia (as a European Union member he is protected by the sentence of the European Court of Justice ) The Australian son would have to pay over 18000.
After Brexit takes place:
Both brothers would each pay over 18000 euro as the sentence of the European Court of Justice no longer protects the U.K. resident.
Needless to say we will keep you informed.
In our office we hate Brexit, it´s consequences and everything it represents. We would welcome a new referendum.
