Divorce UK Spanish Property: how to register the property in Spain on behalf of the spouse awarded the property; beware tax implications.
The title of this post sets a question with difficult answer: how to deal with a Property in Spain while getting divorced in UK.
Divorce in UK Spanish Property: when a couple from another EU country with property interests in Spain get divorced in their country of origin, the question arises as to how to register the property in Spain on behalf of the spouse who has been awarded the property.
Additionally there are important tax implications that need to be considered.
Reference any Spanish property in the divorce document
The best practice while dealing with this complex divorce UK Spanish Property cases is to include reference to any property belonging to the couple in Spain in the divorce proceedings taking place in their country of origin. In this case, the divorce decree, duly legalised and translated should be taken to the relevant notary in Spain to sign a deed of ‘end of joint-ownership’ to which the divorce decree should be attached .
It is important that there is equality between the spouses , that is, that each of them is awarded assets of the same value in the divorce settlement or , if one spouse is awarded property of greater value than the other, there should be financial compensation. This equality of distribution is important because in this case no taxes are levied. However, if one of the spouses happens to be awarded assets of a greater value , they are liable to pay taxes on the excess allocation compared to the other spouse
Finally, once the above procedures have taken place, the new property deed is deposited with the Land Registry to register the property in the name of whichever spouse has been awarded the property.
Should the divorce proceedings in the country of origin not refer to the Spanish properties, it becomes necessary to draft a deed of ‘dissolution of the joint-ownership’. However the fiscal advantages available when the joint-ownership had ended, do not apply to the dissolution of a joint-ownership. Accordingly, it becomes necessary to pay the ITP sales tax (typically levied at between 8% – 10% of the value of the property transmitted).
One half of the tax is then payable by the spouse who is taking ownership of the property. A price should be stated in the property deed, and it is this figure upon which the tax payable is calculated. If a price is not stated, then it would be considered to be a gift/donation, for which an even higher amount of tax would be levied.
In conclusion, it is vitally important that any Spanish assets owned by a married couple are included in the divorce proceedings that take place in the couple’s country of origin in order to avoid high costs and taxes that would otherwise be levied.
Married in Spain, Divorced Abroad
It is not unusual for lawyers at Advocate Abroad to receive enquiries from individuals who got married in Spain but, for varied reasons, got divorced abroad, often in the UK. In those cases, the divorce, in order to be fully valid in Spain, should be inscribed in the Spanish Civil Registry where the marriage was inscribed.
In those cases where the divorce resolution was issued in the European Union, and according to European Union Regulation 2016/1191 6th July 2016, the divorce resolution should be valid in the whole EU area. But, in practice, each Spanish Registry will require certain specific documentation in order to inscribe the divorce granted abroad: typically, the original divorce decree/sentence issued abroad, showing that it is final, legalized with the Hague Apostille and translated into Spanish by a sworn translator.
Do you need recognition for foreign divorces in Spain?
In those cases when the divorce resolution was issued by a non-EU member state, the interested party (one of the spouses) will probably have to initiate Spanish Court proceedings known as exequatur. These proceedings take rather longer, and additional documentation is required. Once the process is completed, the Court will legalize the divorce resolution that was issued abroad.
Your lawyer will need to obtain the details of the marriage and divorce outside Spain to be able to determine which process needs to be followed.