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Costs of Divorce & Property Settlements in Spain, how to Minimise expenses

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.

Best Practice

The best practice in order to avoid extra costs of divorce and property settlements 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.

Potential Costs

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.

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Divorce

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1Who is this Service for?

For anyone who wishes to initiate, or who needs to respond to, divorce proceedings or other family law proceedings including separation and annulment.

2What does this service consist of?

  • Initial discussion with a specialist lawyer to understand the current position and options for next steps
  • If initiating divorce proceedings, possibility to refer case to an Advocate Abroad solicitor registered by the Law Societies in the UK to provide consultation on whether divorce proceedings may take place in the UK
  • If proceedings in UK not possible or desired, filing of the divorce petition to the local Courts or formal legal response if responding to a petition for divorce in the local Courts
  • Certificate of English law arranged if applying English-law to the foreign divorce proceedings
  • Negotiation of all terms of the divorce settlement
  • Drafting/Review of the divorce agreement
  • Division and distribution of Matrimonial Assets
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3Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
  • Fees specified in advance and legally guaranteed.
  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
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