Whether you are a Swiss resident or national with assets located both in Switzerland and Spain, or you have been thinking about buying property in Spain, Temis Law has gathered and answered for you the 9 FAQs on Swiss/Spanish succession and estate planning. We hope it will provide you with a good overview of the most important elements to be considered in such circumstances.
We are happy to guide our clients to the complex task of how-to best plan and organise a Swiss/Spanish estate, from acquisition of the properties to the will writing and estate planning.
- Is a Swiss will valid to bequeath assets located in Spain?
As a matter of fact, yes. It is an extended convention among Swiss nationals to prepare a handwritten Last Will and Testament. Handwritten testaments will be accepted in Spain when the national law of the testator authorizes such type of testament.A Swiss national can make a handwritten will, following Swiss law, which may include Spanish assets. When this person passes away, the beneficiaries will have to go through an attestation process in Switzerland in order to obtain the Erbschein – or “certificate of inheritance”, which will declare their right to the testator’s estate, either as heirs or legatees.When assets located in Spain, whatever their nature, are a part of an international estate, a second process consisting in the recognition for the Erbschein and acceptance of the inheritance, under Spanish law and formalities, has to take place in Spain, before heirs or beneficiaries can claim their rights over and take possession of Spanish assets. It also follows that Spanish taxes are to be paid and certain administrative arrangements shall be completed.In order to make this second process in Spain as smooth and straightforward as possible, it becomes important to plan ahead your succession and draft your will in view to that, by having the combined expertise of Swiss and Spanish legal advisers. That is what we do best!
We can help you sort out the tax, understand the processes, draft your Swiss/Spanish will and find the most suitable way for your beneficiaries to deal with both Swiss and Spanish side of the estate.
- Can I have a separate will for Spanish assets?
We have come across some clients which have bought a plot or a property in Spain and have been advised by the Spanish realtor to have a Spanish will referring only to the Spanish asset.This may well work for UK nationals whose succession laws are based on the testamentary freedom, but it is not exactly practical or convenient for Swiss nationals if not done through expert Swiss legal advice, given the set of forced-heirship rules, matrimonial regimes and regulations about validity of testaments.In doing as suggested by the realtor or a local Spanish advisor, who are unlikely to have a good understanding and knowledge of Swiss law, you might end up invalidating your Swiss will, omitting mandatory provisions or complicating the Erbschein process in Switzerland.
Don’t fall into the trap and request advice from an experienced combined team of Swiss and Spanish lawyers.
- How can I find out whether there is a will in Spain alongside a Swiss will?
In Spain there is a centralised venue for registering Wills which are to take effect over Spanish assets: the Central Registry of Last Wills in Madrid (Registro General de Últimas Voluntades) where all Wills are registered, whether a Will has been signed in the Switzerland before an Swiss Notary (provided registration in Spain has been arranged) or in Spain before a Spanish Notary.Custody of a Will is therefore secured against loss, destruction or alteration.Whenever Spanish assets form part of an estate, an application must be filed with the Central Registry in Madrid in order to confirm, whether a Spanish will had been made that may revoke or alter an existing Swiss will upon which the claim of a beneficiary is made.
- What happens if I die without leaving a Testament (intestate) and have assets in Spain?
If you are a Spanish resident at the time of your death:
If the testator has not made a choice of law in a testament, European Union Rules that entered into force in August the 17th of 2015, establish that the applicable law for estates in Spain is the law of your habitual residence. By way of example, if your habitual residence is established in Mallorca your assets would be distributed based on the intestacy rules of the Spanish Law which vary greatly depending on the region where you have established your residence: in a nutshell, it will likely bring into play a combination of stringent forced-heirship rules and life tenancies for spouses.Moreover, an intestate proceeding in Spain becomes mandatory for your heirs to be able to accept and take possession of the assets. Such intestate proceeding is a cumbersome, time-consuming and a costly process that leaves your heirs to face an additional burden: Spanish bureaucracy.
If you are a Swiss resident:
Swiss inheritance law will apply to your Spanish assets, however, your beneficiaries will have to obtain an affidavit of Swiss law, following Swiss laws on intestacy. A second process of intestacy recognition and acceptance of inheritance/assets in Spain is to be carried out in Spain. Spanish law formalities on the transfer of goods and assets will apply for the valid transfer of each type of Spanish asset to the beneficiaries.
With a view to reducing all the above uncertainties and give you peace of mind as to whom is to benefit from your assets following your death, we strongly encourage you to have a clear estate planning and a bespoke will reviewed by your Swiss and Spanish legal experts.
- Do I have to pay Inheritance Tax in both countries, Spain and Switzerland?
Spain and Switzerland have in place a Treaty against double taxation which covers Wealth Tax, but not Inheritance and Gifts tax. For this reason, it is important to get professional advice when dealing with a cross-border Swiss and Spanish estate so that can work hand-in-hand to make sure you are not paying Inheritance Tax twice. As a rule, Spanish tax authorities will charge a upon death of a Swiss resident:
- Inheritance tax to the transfer of assets of whichever nature located in Spain. Inheritance tax is established and paid to the Regional Government (Comunidad Autónoma) where assets are located. In Switzerland as a general rule, the value of the Spanish assets will be added to the value of the estate in Switzerland (although the amount of IHT settled in Spain should be deducted from your Swiss Inheritance Tax bill) .
- Plusvalía (Local Tax on the Increase of Value of Real Estate) over Spanish real estate assets only This tax is levied whenever the ownership of an urban property is transferred either by an inter-vivos sale or gift or by a mortis-causa act. This is an indirect tax which cannot be deducted from your Swiss Inheritance Tax bill, unfortunately.
From this point onwards, heirs or beneficiaries of assets located in Spain will have to adhere and comply with Administrative, Civil and Tax obligations. Same as anyone owning property, a boat or holding bank accounts in Spain. We can provide you with full overview of your rights, duties and obligations.
- How can I save on Inheritance Tax in Spain and Switzerland?
It is advisable for you to discuss and proceed with estate planning with your Spanish/Swiss legal advisors so that you can effectively devise the transfer of your assets in Spain and Switzerland and ascertain how much Inheritance Tax your heirs and beneficiaries will be liable for. Tax optimisation is also a recurrent request from our clients!
Bear in mind that the exact tax rules are dependent on each Autonomous Community and the Local Council (in case of real estate), so each case should be studied separately. Should you have assets in several Spanish regions, special tax regulations apply.As you can see, there are many different options/solutions to help safeguard your assets, respect your wishes and legacies whilst optimizing the Swiss and Spanish Inheritance Taxes. We can help you with that.
- Is there any tax discrimination between Spanish residents and non- residents for Inheritance Tax purposes?
Fortunately, not anymore! However, between 2014 and 2018 certain rulings from the EUCJ courts and Spanish Supreme Court ruled that Spain was discriminating other non – EU/EEA nationals who inherited assets in Spain in overcharging inheritance taxes levied on estates in Spain. The former regime would not allow non- EU/EEA heirs and estate beneficiaries to apply tax regional reliefs which greatly reduce or supress, the IHT bill.Those non- EU/EEA citizens who have overpaid IHT by reason of not being allowed to use the most generous regional tax reliefs in previous years may be entitled to file a claim and request refund of the overpaid monies. Certain additional procedural and time requirements are applicable.
If you would like to clarify whether, your case would be eligible for a refund, do not hesitate to get in touch and request a consultation.
- Can I sell the Spanish property in the estate during the administration period?
As a beneficiary of an estate with Spanish assets, prior to selling a Spanish property, you must conclude the inheritance process in Spain, that requires you to accept the inheritance or legacy before a Spanish Notary by way of a Public Deed. You are also obliged to have settled any accrued Inheritance Taxes, prior to any sale. Any potential buyer, not necessarily over-cautious, will require you to duly register your right of ownership in the Land Registry. The register guarantees that rights, obligations, limitations and encumbrances over land exist to the extent recorded in such register.It is also essential that beneficiaries of a property are granted a NIE (Foreigners’ Identity Number) by the Spanish administrative authorities for tax purposes.
- Is my Swiss advance care document valid and enforceable in Spain?
In short, yes, it is. But requires some extra formalities:A person with capacity to act may instruct a natural person or legal entity to take responsibility for his or her personal care or the management of his or her assets or to act as his or her legal agent in the event that he or she is no longer capable of judgement (art. 360 para. 1 Swiss Civil Code). Such advance care directive must be executed by handwriting or authenticated by a notary public. Once the adult protection authority learns that a person is no longer capable of judgement it will appoint the chosen person as legal agent and issues to such person an official certificate.If you have assets in Switzerland and Spain, it would be especially useful for your future welfare to be able to enforce your directive in Switzerland, but also in Spain should it be needed.
We help clients draft their care directive in both in German and Spanish. If you then decide to move to or retire in Spain, without changing your care directive, we are able to ensure that the Spanish relevant authorities receive and record a copy of it, so that it will become fully recognised and enforceable in Spain, if the time comes.