ARE THE LAWS ON INHERITANCE TAX IN ANDALUCIA ABUSIVE?

We pay taxes when we buy, inhabit, and sell our homes.  There is the, transmission taxes, tax on transfers and on documented legal acts signed at notaries.  Then there is the ‘plusa valia’ tax, (capital gains) Taxes on home improvements and on the invoices for the costs and assistance to purchase a property.  Add to this Inheritance and gift tax.  We also will pay annual rates bills (IBI) and the nonresident and resident annual taxes.  We pay for our right to circulate the roads in our vehicles, and also, if you use a toll road.  There are excise taxes for consumption of fuel, tobacco, alcohol and other items.  There are the taxes on our water usage and electricity supply.  Taxes on the privilege of being in employment or personal taxes for the self employed. Corporation taxes.  Taxes when setting up a business or closing one.  We are taxed on our pensions and savings.  There are even taxes on unemployment benefits.  Remember to include for all residents, taxes on all overseas assets.  Taxes on our food, our medication, our phone bills, internet, and now, twenty one percent tax (IVA) on most purchases.  Add to this the surcharges on any taxes not paid due to lack of notification.  Custom duties for goods imported from outside the European Union. Taxes, to import your vehicle, if not imported within the time limit set down by law.

Benefactors will pay inheritance on all assets, vehicles, savings, jewelry, and even the furnishings in the inherited home, no matter the condition or age.  (The authorities will not accept the ‘it is unfurnished’ If the property is inhabited, they are taking this into account that as a resident, you must be living there)  Heirs are allowed up to six months to pay these taxes.  An extension can be applied for to include a further six months.  Take into account that they will be paying five percent interest for this extended period.  If this petition is not made, you will be charged ten to twenty percent accruing interest for the period your taxes are not paid after the initial six months.  Make sure the application is made to the relevant tax authority.  Recently a lawyer, acting for three heirs, one a resident and the other two nonresidents, applied for this extension to the central tax authority, this has meant an enormous surcharge for one of the inheritors with resident status.  The application for her extra six months should have been submitted to the Andalucían tax authorities.  To complicate matters, resident heirs pay their taxes to their regional government’s tax office and nonresident’s successor taxes are paid to the central government.  When acting for inheritors of varying statuses, you need to present the funds to differing banks and the documents to the relevant tax authorities.

We all know that there are capital gains taxes to pay on the sale of a property, but, the local town hall will also charge this tax on succession.  This does not end there, if there is ‘uso fructo’ given to a spouse or other, they will also be charged, extra on the plus valia, for the pleasure of basically, being allowed to stay in their property.  Please note that a spouse is paying taxes on fifty percent of the property if bought with equal shares by both partners. It is important that as with the inheritance taxes, this tax should be paid, within a six month period.  In this case there is no charge for an extension which must be made in writing, and presented with a photocopy to the department of ‘patronato’ at your town hall.  Do not leave without your dated stamped copy.

Being a resident with your copy of the resident certificate or the residency card will not now be sufficient for the authorities to allow you the reductions; you must be a fiscal resident and have the proof.  Any resident, who cannot show fiscal residency status, will be treated as a non resident.

Common law couples should take note; A resident British couple went to visit a consultancy bureau on the Costa, to have their wills drawn up, unfortunately for the couple, the staff did not have adequate knowledge on the laws on inheritance taxes, if they had, they could have advised this couple, to register at the town hall as ‘pareja de hecho’ (common law partners) Not having done so meant, that, instead of receiving a tax bill for around one thousand four hundred euro, the partner ended up paying almost twelve thousand euro tax. The law does not only take into account residency of the beneficiary, but more so, the relation to the deceased.

Are you leaving your share of your property to your spouse and will your spouse then be leaving the property to children or family?  Consider allowing your spouse ‘uso fructo’ only, and leave the property to the younger heirs.  For those who are leaving their property to grandchildren or nieces and nephews, do not be alarmed, even if they are not residents of Andalucía, the government will ensure that discounts, be applicable to family members.

It would be cost effective when purchasing a property in Spain to take all the above into consideration.  You may wish to add your heirs to the title deeds when purchasing, by doing so, you will be lessening the tax burden later on.  Consider that every time a property is passed down the government is claiming payment of inheritance tax, and capital gains tax.  This will be taken from you, your children, grandchildren and so on.  I believe it is time this abusive tax is abolished altogether.

Written by; Myra Azzopardi.

My name is Ask Spain

SPAIN AND THE LAW ON? EUROPEAN DRIVING LICENCES

Why do we not all come clean and say “what the heck is going on” I for one will no longer accept, without question the information coming from the various authorities and departments.  Read the last ruling and decrees in the BOE (State bulletin) and you, along with me and the departments who are there to ensure the law is approved and adhered to, and you will be as confused as the rest of us.

So, do we change our European licences once we become residents?  Do we stick to what we believe to be the European ruling, stating that we can legally drive in Spain on any European licence?  Do we look at Spain’s internal decrees and become even more confused?  Maybe we can listen to the differing advice from the traffic police.  One recently presented a traffic ticket to an expat for not carrying a medical certificate with his licence.  Should we now drive with an outdated medical certificate?  (Please disregard this advice.  These medical certificates can only be issued for up to three months for non Spanish permits).  We can also take advice from the numerous expatriate barstool legal experts, or we can choose to read a plethora of contradictory information in several of our local newspapers.  We could pay a visit to Trafico and accept that we can register our licence with them, (looks like the safest bet at present.  At least we can put the blame on them if faced with a hefty fine)

I revisited an office of a well established gestor of vehicles, to see if they could shed any light on this controversial matter.  They too had been in a quandary over the issue.  They asked the College of Gestores for advice and confirmation on the law relating to the use of European permits.  Below is the relevant part of the written response they received.  

“We consulted with the department of traffic several times over this issue.  There is an internal regulation but it is not in writing”.  The communication then follows to say:

That if a foreigner has been living in Spain for two years or more, it is mandatory that they redeem these permits and acquire the Spanish version.

It is also mandatory to redeem permits which are valid indefinitely

For expired permits it is also obligatory to make the change.

Read the above as you will.  To me the three points could have been made in one sentence.  (If you have been a resident in Spain for two years or more, you should change your licence for the Spanish version).

Until this is formally verified with the date and number of the relevant decree, we can say that we are none the wiser.  For those who wish to continue using their European licence (after all why call it such, if it is not valid in Europe).  Be prepared to take the matter up with your European MP, if you wish to argue this case if penalised on the highway. 

  

For once, I am not arguing with the authorities.  I take to my vehicle, content in the knowledge, that in my possession, I have a Spanish driving licence.

ARE FINES FOR TRAFFIC VIOLATIONS USED AS A MEANS TO REDUCE ACCIDENTS?

Drivers need to be even more vigilant on our roads during the Easter period.  Many of us live in tourist areas which means, that we can expect the customary increase in traffic on our roads during this season.  There will be an increase in radar points and speed control unmarked cars.  The aim is apparently to decrease traffic accidents.  It is advisable to respect the speed limits.

 There is a debate at present as to whether the increase in vigilance on our roads for traffic infractions, is more to do with the collection of funds than road safety.  This reasoning is based on the fact that where the most fatalities in road accidents occur, is where there is less, or zero radars.  These detectors appear to be placed in areas where it is more likely to ensure the collection of funds from fines.  

Adding to this theory, from the year 2010 the traffic police were subjected to new regulations.  This was based on a points system.  The individual Guardia Civil will receive for sanctions, one point for small vehicles and up to three for trucks.  Any of the traffic police who do not reach their quota, are subjected to a reduction of 210 00 euro’s from their salaries.  

The approximate amount of money collected annually from fines is the sum four hundred million euro’s.

SELLING AN OLDER PROPERTY

Lawyers of purchasers of properties in Spain, will now amongst the other documentation, ask for a certificate of first licence of occupation.  This is normally available with some hard work, from your local town hall.  Information for older properties will not be available on the computer systems but in one of the hundreds of old archives.  If this relates to your property, you will have to furnish the relevant planning department of a history of the property going back to when and by whom it was built.  There will also be cases that some properties will have been built, without obtaining this licence.