Thursday, 20 February 2014

Spanish ISD and UK IHT - Comparison

As the old saying goes ‘Like chalk and cheese’

  • Impuesto sobre Sucesiones y Donaciones (ISD)

  • Inheritance Tax (IHT)

  • There is no Double Taxation Treaty or Agreement between Spain and the UK on these inter-linked but very different taxes

This will only be a short article because it is vitally important that you get Professional Advice

What are the principal differences?

Spanish ISD

Married Couples: When is tax payable?

 On First Death                               
On Second Death
Are Rules applied Nationally?
There are Regional differences but these only apply to Spanish residents. Non-residents only get National rules

Yes, all rules are based on a set of UK laws
Who pays the tax?
The beneficiaries pay any tax due
The Estate of the Deceased pays any tax payable

Does the tax rate change according to who is the beneficiary?

Who pays on what assets?
Spanish resident beneficiaries pay on worldwide assets, whilst non-residents pay only on Spanish sited assets

UK domiciled deceased Estates pay on worldwide assets. Residency is NOT an issue
Will Tax Planning reduce or eliminate the tax payable?

Please note that only one answer is common to both ISD and IHT. Tax Planning is vital

Additional reading is also recommended;

ISD in more detail

Five Spanish Taxes affecting Non-Residents

Please email me with any query you may have or to be referred to a Specialist Professional for advice

David Goodall
Financial Pages in Spain