Further improvements to Inheritance Tax in Andalucia

Further improvements to Inheritance Tax in Andalucia

door | apr 4, 2018 | Inheritance, Tax

As you will already be aware if you read our post on “Inheritance Tax reform in Andalucia”, a much needed revamp of Inheritance Tax legislation took place in Andalucia in 2017.

As you may also have heard, thanks to a political agreement between PSOE and Ciudadanos, further improvement on this legislation came into effect on the 1st January 2018 and April 2019, by which a tax allowance of 1,000,000 € was introduced for some direct family members, as well as a fied 1% tax rate in all cases.

Who does this apply to?

This news, as often happens, has given way to some confusion that this in fact refers to a general tax allowance, which is not the case. The 1,000,000 € exemption per beneficiary (in Spain each beneficiary is taxed rather than the estate – for more information check out our post “Inheritance Tax reform in Andalucia”) will only apply to family members that come under Group I and II in accordance with Andalucia’s Inheritance Tax legislation. The groups under this legislation are as follows, and are based on the beneficiary’s relation to the deceased:

Group I Blood or adoptive descendants under 21.
Group II Blood or adoptive descendants 21+, spouses and blood or adoptive ascendants.
Group III Collateral relations of 2nd and 3rd degree (siblings, nephews, nieces, etc.), and other ascendants and descendants (stepparents, stepchildren, etc.).
Group IV Other collateral relations (cousins) and strangers.

This means that the 1,000,000 € tax exemption does not apply to siblings, nephews, nieces, cousins, strangers, etc. These have their own, much lower allowances.

Finally, a further condition to being entitled to this exemption is that the beneficiary’s existing assets are no more than 1,000,000 €.

In addition, a reduced tax rate of 1% applies to these types of beneficiaries, as far as any amount that surpasses this allowance.

Changes to Gift Tax

The 1,000,000 € tax allowance will also apply to the direct family members described above, only in the event that a living gift is made for the purpose of the beneficiary purchasing his/her first home, or for a business startup or expansion. Obviously certain conditions are put on this exemption that will ensure the gift is being made for that purpose.

Once again, the 1% tax rate applies in the case of a living gift to these beneficiaries from Group I and II

In conclusion, despite having some limitations, this is a welcome change that effectively does away with Inheritance Tax in Andalucia for direct family members, except in the case of the “super rich”. It is important when dealing with an inheritance in Spain that you seek the appropriate legal counsel, who is aware of these and other benefits, and who knows how to apply them in both the resident and non-resident field.

Gabriella Mary Trussler Rowland
Lawyer
4408 Ilustre Colegio de Abogados de Almería

Legalisation of illegally constructed properties in Spain: Can my property be legalised?

Legalisation of illegally constructed properties in Spain: Can my property be legalised?

door | jan 4, 2017 | Property

As every foreigner living in Spain is more than aware, Spain has been receiving a lot of media attention for its large amount of illegally constructed properties extended all over the country, and the attempts being made by local and regional governments to facilitate the legalisation of said constructions.

This post applies to properties built on both urban and rustic land in the region of Andalucía, as the details can vary from one autonomous region to another.

Background

Historically building regulations in Spain have been largely ignored, especially in the countryside. As a result Spain has been left littered with all manner of illegal buildings, such as:

  • Properties constructed without any building permission being obtained at all.
  • Properties constructed with little regard to the plans submitted and the building permit issued (i.e. construction in excess of the square metres permitted by the permit).
  • Older properties extended during renovations without obtaining building permission, or registering or declaring any extensions built.


Rustic Land and Protected Rustic Land

Land classification is extremely important in determining if there is a solution. Generally it is possible to legalise buildings on rustic land, but to legalise buildings on protected rustic land is almost unfeasible.

General conditions for legalisation

The regional government of Andalucia (Junta de Andalucía) has attempted to clarify the legal status of such illegal buildings and provide a mechanism to legalise or regularise where possible, as long as certain requirements are met:

  • That more than 6 years have passed since the completion of the construction (previously 4 years under old legislation).
  • The property is not part of an urban planning disciplinary procedure or a judicial process.
  • The construction does not occupy land under special protection or cattle trails.


AFO Certificate (Cerificado de asimilado a fuera de ordenación)

An illegally constructed property, which is able to be legalised, may be legalised by applying for a Certificado de fuero de ordenación or Certificado de asimilado a fuera de ordenación. The process involves synchronising and presenting a series of documentation to the planning department of the local Town Hall.

Each Town Hall charges a local tax in relation to the value of the square meters being legalised. The rate of tax varies from one local government to another and will depend, therefore, on the municipal area the construction is located in.

In addition to this, the property’s Land Registry records will have to be rectified to avoid any future difficulties.

 

Conclusion

This is an incredibly complex process and no two properties are the same. The mere fact that a property pays rates (IBI) and is connected to utilities (i.e. electricity, water, etc.) does not mean that the property is legally sound. It is because of the complexity of this process that we recommend seeking legal advice from professionals familiar with these procedures, so as to avoid unnecessary expense and complications.

Gabriella Mary Trussler Rowland
Lawyer
4408 Ilustre Colegio de Abogados de Almería