Inheritance tax planning Norway-Spain

In many instances, you can make significant inheritance tax savings through sensible tax planning. Tax planning doesn’t have to be a costly affair and it is important in order to safeguard a favourable inheritance distribution in the future.

Distribution of estates belonging to deceased persons

ABW Global assists in matters relating to the distribution of estates belonging to deceased persons in Norway-Spain. In such instances, we provide assistance by representing the heir.

Real estate in Spain

Buying a home is an important investment. Prevent future problems from arising by carrying out a professional inspection of the house’s legal and technical condition, while also receiving assistance with negotiations during the purchase process.

Spanish tax returns

Anyone who has purchased real estate is obliged to submit a tax return in Spain. This applies even if you have no income in Spain and only own real estate in the country.

Wills

A comprehensive assessment of your affairs in relation to inheritance, including checks on your will, will require both Norwegian and Spanish legal expertise.

We provide independent consultancy services to clients with financial interests in Spain.

Inheritance tax planning Norway-Spain

Advance of inheritance, gifts and making wills are examples of tax planning.

In many instances, you can make significant inheritance tax savings through sensible tax planning. Tax planning doesn’t have to be a costly affair and you can easily save a significant amount.

A few keywords that can help save on inheritance tax:

  • Divide the inheritance by as many people as possible.
  • Divide the inheritance between people who are entitle to special exemptions according to the lex specialis.
  • Plan the inheritance before signing the deed when buying real estate.
  • Avoid the undivided estate issues.

Every case must be evaluated individually. Unfortunately, your neighbour’s situation will not necessarily apply to you as well.

Please get in touch for a no obligation conversation regarding your inheritance situation.

Contact: Joan Planas.

Distribution of estates belonging to deceased persons

ABW Global assists in matters relating to the distribution of estates belonging to deceased persons in Norway-Spain. In such instances, we provide assistance by representing the heir.

Our assistance mainly includes:

1) Spanish

This is for cases where the deceased was domiciled in Norway, but owned property in Spain. In these cases there has to be an assisted distribution conducted by a Spanish Notary. In this kind of case, Norwegian inheritance law is normally the foundation, but the actual distribution and calculation of inheritance tax is regulated by Spanish law.

2) Spanish global distribution

This is for cases where the deceased was permanently domiciled in Spain and had an estate in both Norway and Spain. In this type of case all of the estate – also the estate in Norway – should be distributed in Spain.

In other words, a Spanish inheritance distribution certificate is issued for the entire estate. The starting point is that Norwegian or Spanish inheritance law should be used, while inheritance distribution and calculation of inheritance tax should be done according to Spanish law.

Inheritance distribution in Spain is a bureaucratic process, which normally takes 6 – 12 months. It is therefore important that you contact a lawyer quickly if you are the heir of an estate in Spain. The inheritance tax must be paid within 6 months, after which interest will accrue.

The Notary will conduct the distribution process. Andersen & Bache-Wiig AS will only represent the heirs, source the necessary documentation, make an inheritance distribution draft and as part of this calculate inheritance tax, give advice regarding values and send this to the Notary. ABW Spain SL will assist with power of attorney before the Notary and as part of this transfer the inheritance tax.

In some inheritance distribution proceedings there is conflict between the heirs. We also assist in negotiations between the heirs. If it isn’t possible to find settlement between the heirs, the case will go through the Spanish court system. This is normally a long and costly process. ABW Global therefore has limited assistance in “public inheritance distribution” through the Spanish court system.

Please contact us for a no obligations conversation and we can give you an overview of how much inheritance distribution in Spain will cost. The whole inheritance distribution will be done in Norwegian.

Contact: Joan Planas.

Real estate in Spain

Buying a home is an important investment. Prevent future problems from arising by carrying out a professional inspection of the house’s legal and technical condition, while also receiving assistance with negotiations during the purchase process.

It is our philosophy that predicting problems is the best way to prevent them from arising.

Key factors when buying property:

Choice of ownership structure in the buying transaction

The right choice of ownership structure in the purchasing transaction will avoid financial and personal problems that could arrive in the future. Consider the form of property law that best suits you:

  • Purchasing under your own name. Will you need a pre-nuptial agreement?
  • With your partner, spouse, and potentially other family members, to achieve future tax relief, e.g. for inheritance tax.
  • Through a Spanish or Norwegian company.

Negotiating the terms of the reservation or purchase agreement: When you sign a contract buying a property, be it a reservation contract or a purchase agreement, you take on several obligations in regards to Spanish law. In most cases, the contract benefits the vendor, not you, and you should therefore not blindly trust the vendor. Get advice from a lawyer before you sign a document.

Making a legal report of the property

Due diligence is a report where the legal conditions of the property is scrutinised. Did you know that:

  • In some parts of Spain, letting property to tourists is illegal, so that the owner can face fines of up to EUR 40,000
  • If your future property has been the object of illegal expansion, you can be required to demolish the illegally expanded part and/or pay substantial fines.
  • If your future property does not satisfy Spanish coastal law, a judge can order it to be demolished even if it was built decades earlier.
  • The new owner is responsible for paying a quota share to the communal ownership that the previous owner may have neglected to pay for a period of four years prior to the date of purchase.
  • Your future property can be liable for debt from previous owners for unpaid or incorrectly calculated taxes.

Checking the international payments needed

When you buy real estate in Spain, you have to pay large sums to cover the price and expenses in connection with the purchase.

You should make sure that the recipient of the money in Spain is a trustworthy company.

The purchasing of a property does not end with the signing of notarial documents and handover of keys. You should, among other things, ask yourself the following questions.

  • Who will represent you to the different public offices in Spain?
  • Who will perform the tasks needed from the vendors and pay the different taxes and fees?
  • Who will check the cancellation of liens and payment of potential debt the property is liable for?
  • Who will take care of registration of your ownership in the property register?
  • How will you pay periodic bills such as electricity, water, quota shares to the communal ownership, local taxes etc.

Contact: Roberto Ortega, Joan Planas, Tonje Klevengen.

Spanish tax returns

Anyone who has purchased real estate is obliged to submit a tax return in Spain. This applies even if you have no income in Spain and only own real estate in the country. In the latter case, there will be a kind of percentage tax and the basis of calculation is the Spanish tax value (valour catastral).

The deadline for submitting a Spanish tax return for residents is December 31, every year. When buying real estate in the current year, you are not obliged to submit a tax return until the next year. That’s to say, if you buy a property in 2019, you need to submit a tax return by December 31 2020.

Please note that a tax return must be submitted per owner, per permanent dwelling. If spouses with joint ownership own 1 home and 1 garage, as a rule a total of 4 tax returns must be provided. According to Spanish tax law and for practical reasons, assignments related to Spanish tax returns and other tax obligations in Spain are done by the Spanish firm ABW Spaniard SL.

If you receive rental income as a consequence of renting out the property in Spain, the income must be taxed in Spain. The tax return for taxation of the rental income must be provided every 3 months. In addition, a tax return must be submitted per owner for benefit taxation for the weeks you use the property personally.

For rates relating to our assistance and more information about providing a Spanish tax return, please contact:

Contact: Tonje Klevengen, Joan Planas

Wills

A will that regulates inheritance in Spain is one of the main areas where Norwegian and Spanish law meets. A comprehensive assessment of your affairs in relation to inheritance, including checks on your will, will require both Norwegian and Spanish legal expertise.

A will that only takes into account Norwegian inheritance law will, for example, be inadequate in connection to the evaluation of the consequences of inheritance tax in Spain.

At Andersen & Bache-Wiig AS in Norway, we have both Spanish and Norwegian lawyers and can therefore make a complete evaluation of your inheritance situation.

Is it necessary to make a will if, for example, I have property in Spain?

With a will you can plan how the inheritance you leave behind will be distributed. The content of the will has to respect the inheritance law and this can be either Norwegian or Spanish inheritance law.

If you are permanently domiciled in Norway and own holiday property in Spain, we recommend setting up a simple will comprising “everything you own and possess in Spain” at the time of death.

The most important argument for setting up a will is that you create clarity regarding who will inherit and that in most cases it will be easier to carry out inheritance distribution in Spain.

If you haven’t made a will, it might be necessary to document who the heirs will be. For example, confirmation of law must be in place and these need to be translated, attested and legalised.

A Spanish will normally makes inheritance distribution in Spain much simpler and quicker. If you are a Norwegian national who is permanently domiciled in Spain, it’s important to make a will. Within the EU, there are now new regulations and the main rule is that if you are domiciled in Spain, then Spanish inheritance law is normally applicable.

Spanish inheritance law has different rules regarding distributing inheritance, for example, the surviving spouse’s right to inheritance is substantially reduced in comparison to Norwegian inheritance law. The new EU regulations open up for partly being able to chose inheritance law, but this has to be done in the form of a will.

Can I make a will in Norway, or do I need to make it in Spain?

A will made according to Norwegian formal requirements is valid in Spain. In other words, it’s not necessary to go to Spain in order to make a will.

Andersen & Bache-Wiig AS will assist in making a will according to Norwegian law. The will is sent for registration with the Spanish will register and to be held with the District Court.

Does my will affect the Spanish inheritance tax?

The content of the will can greatly affect the extent of the inheritance tax. In Spain there are different rules for inheritance depending on where in the country you live. Therefore, it’s useful to get an idea of the Spanish inheritance tax rules that will apply if you pass away.

A will can reduce the inheritance tax for your heirs if you for example, set up the will so that you within the different special stipulations achieve the greatest possible basic deductions or other special exemptions.

What will it cost me to make a will?

This type of case varies in extent and the fee will depend on the family situation and also the complexity of the case.

Mainly, the Norwegian lawyer My Vuong and the Spanish legal advisor Joan Planas from Andersen & Bache-Wiig AS assist in this type of case.

Contact: My Voung, Joan Planas.

Advokatfirmaet Andersen & Bache-Wiig

Advokatfirmaet Andersen & Bache-Wiig are specialists in Spanish-Norwegian legal matters.

Advokatfirmaet Andersen & Bache-Wiig