Tax implications of making a ‘gift’ of your UK property assets

    It has become quite common in recent years in the UK, for those of advanced years and uncertain health, to gift their property in the UK to their children and thereby not be forced to sell said assets to pay for care charges that would otherwise be applicable.

    While we do not seek here to deal with the legal ramifications of such actions in the UK, the question does arise with regard to any person resident in Spain who is contemplating making such a gift.  For anyone resident in Spain there are certain considerations to take into account if you want to make a ‘gift’ to a family member or indeed any other individual, of a property you own, that is located outside Spain.

    International Treaties

    The initial issue to determine is whether or not there is a treaty between Spain and the country where the property is located. In this particular case, between Spain and the UK, we have the “Convention  between  the Kingdom of Spain and the United Kingdom of Great Britain and Northern Ireland for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital”. However,  unfortunately this does not apply to “gift  tax” as it is not included in the article 2.3 of the convention, which states that:

    “ The existing taxes to which the Convention shall apply are in particular:

    1. a) In Spain:

    (i)   income tax on individuals;

    (ii)  corporation tax;

    (iii) income tax on non residents;

    (iv) capital gains tax; and

    (v)  local taxes on income and on capital.

    b) In the United Kingdom:

    (i)   income tax;

    (ii)  corporation tax; and

    (iii) capital gains tax.

    Location, location, location

    The second question to resolve is where to proceed to make the gift. At this stage we note two very different scenarios. The first one would be for the case that you make the gift in Spain. As you may be aware, in Spain there is a tax on gifts. This tax has, of course, some exemptions and deductions depending on the Spanish region where you are residing. However, in this particular case none would be applied since the property is located in a different jurisdiction, so you would be paying the whole percentage that applies according to the value of the property. This means that when you pay the tax you will do so directly to the Spanish tax authority – Agencia Tributaria (AEAT).

    The other possible scenario would be to make the gift in the UK where there is not such a “Gift tax” per se. In the UK, the tax system works differently and in the type of scenario envisaged, the gift/donation would be exempt from payment of any tax if the person who is making the gift survives for a period of 7 years following the making of the gift. Otherwise UK inheritance tax would be applicable.

    It is also important to note that, when you are a Spanish national or are resident in Spain, any gift of assets located abroad, would have additional tax implications in Spain as your ‘patrimony’ (total wealth) will increase and therefore you are obliged to make account for that. There do exist a couple of options in this regard, and we would be delighted to assist anyone who requires help with such matters, by getting in contact with us.

    Client Testimonials

    Below is a list of recent reviews received from our clients, obtained via the Wufoo client survey platform:

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      Darren & Gemma Nesbitt, Valencia
      Tuesday, September 11, 2018
      Inmaculada has been of excellent service to us, as a family and in helping to set up a business in Spain. She has now undertaking several project for us and has delivered high quality on all of them. ...Perfect service!
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      Patsy Valentin, Granada
      Tuesday, September 11, 2018
      Extremely accommodating and highly professional and very pro active. Excellent result and service. Highly recommended.
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      Jovie, Malaga
      Wednesday, September 05, 2018
      My lawyer Alvaro was extremely helpful and very efficient. I would definitely recommend his services to friends.
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      Albert Roldan, France
      Tuesday, September 04, 2018
      Alfonso was extremely helpful, particularly since we requested a quick turnaround for the 18 documents needing to be translated from English and French to Spanish.

      He was fluent in our phone conver...sations and email correspondence, he never misunderstood what our requirements were. He was was clear in explaining how this process works and what the price included.

      I would highly recommend him to anyone needing these services.
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      David Grundy, UK
      Friday, August 24, 2018
      Jose was very polite and we received an excellent service from him. Nothing was to much trouble and his communication was 2nd to none. Highly recommended!
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      Mario Klappholz, Miami, Florida
      Thursday, August 16, 2018
      Inma was very helpful, always happy to assist. I particularly appreciated her professionalism. I would not hesitate to recommend her services to friends.
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      Daniel Spitzhorn, Spain
      Tuesday, August 14, 2018
      Miguel in Oviedo helped us during the process of buying a flat in Asturias. He was just brilliant!
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      Tracey Iliffe Bradley, UK
      Tuesday, August 14, 2018
      Rosa dealt with everything efficiently and promptly and went beyond our expectations by helping us to open a Spanish bank account and deal with other minutiae.
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      Erslaan Ahmed, Bangladesh
      Friday, August 10, 2018
      Gave very good advice and provided an excellent solution. Inma is very professional in her work. I would recommend her services to friends.
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      John Ryan, Derby, England
      Wednesday, August 08, 2018
      A perfect relationship between client and professional. Nothing was too much trouble.

      Went over and above his job and more. I would only use his services if I need legal services. I were very lucky... to find Jose first time round.

      Thank you jose
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      Robert Brownlee, Almeria, Spain
      Wednesday, August 08, 2018
      Everything was as it should be: excellent. Had to pay by bank transfer and maybe would have liked another means of paying.
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      Delbecq, France
      Friday, August 03, 2018
      Cristina, is extremely professional, fast, responsive understand and explain well, she always found appropriate solutions and provide good advices.

      She know how to deal and negotiate, and look self...-confident, and make you feel less stress, you can trust here.

      The value for money is good, and she is up to date with technologies (mail/google app etc… very practical).

      It was a pleasure and a great luck to found here and have here at my side for my case. For anything, i should need a lawyer she will be the one I’ll work with
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      Mohamed Nasir, England
      Monday, July 30, 2018
      My lawyer Carmen is a nice lady ,very professional. I would like to be her client again if I need a lawyer in the future.
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      Michael Harrison, Urb. Camposol Mazarron Murcia
      Friday, July 27, 2018
      Maria was extremely helpful and professional, and put herself out to satisfy my needs.

      I contacted her on a number of occasions and always had very good advise on costs etc.

      Her English was imp...eccable and could always be understood.
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      Michael Bates, UK
      Friday, July 27, 2018
      Francisco was very easy to deal with. Very professional. Would not hesitate to recommend him to friends.
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      Elizabeth Coelho, Barcelona
      Wednesday, July 25, 2018
      Oscar was very helpful and really understood my needs.
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      Janette Payne, France
      Wednesday, July 25, 2018
      Jaime was quick, made good suggestions about remembering to revoke the power in the future, very responsive - changing a meeting to suit our timetable - and even took us round to a DHL office and arra...nged for the document to be courriered after it was signed.
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      Janet/Alex Olsen, Newcastle
      Wednesday, July 25, 2018
      Overall the service provided by Oliver was exceptional.

      My mother and I couldn't of asked for more from him as he sorted out our family affairs. His attitude, attention to detail and promptness wh...ile helping us were second to none.

      His English is top notch and his way of explaining and or guiding you through what needs to be done makes the whole experience easier than expected.

      We'd recommend Oliver to anyone in need of his expertise while dealing with issues in Tenerife.
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      Neil Linter, London
      Tuesday, July 24, 2018
      Cristina immediately understood our requirements and was essential in guiding us through a very tricky process.
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      Jason Yorke, United Kingdom
      Thursday, July 19, 2018
      Beatriz was really helpful and always kept me informed at all stages. She is very professional and a pleasure to deal with.
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      Mr David P Robson, Valancia
      Thursday, July 12, 2018
      My lawyer Francisca offered value for money and was very helpful. Will use her again.
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      Richard Day, London and Barcelona
      Thursday, July 05, 2018
      My initial call to your service desk was responded to by Oscar very quickly.

      I appreciated his time as I outlined my issue, a problem with the building community and administrators. At the end of ...the call he provided clear guidance on next steps.

      Furthermore he quickly turned around the issue with an excellent drafted response for which I could not of hoped to be better worded. It was comprehensive and aligned perfectly with what I felt was needed.

      Excellent value for money and most definitely I would highly recommend Oscar.
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      Søren Aabel Hammer, Malaga
      Thursday, July 05, 2018
      Beatriz was professional and quick to respond. Would definitely recommend to friends.
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      Patrick Crean, Almerimar
      Thursday, July 05, 2018
      Juan was fantastic. Very easy to understand and very pleasant. I would definitely use his service again.
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      Damien Stephan, Benidorm
      Thursday, July 05, 2018
      The whole process from start to finish was straightforward and well explained. I honestly cannot recommend them enough!

      They really went out of their way to be helpful and kept me up to date at ev...ery opportunity. Excellent value for money from some really nice and genuine people. True professionals.

      Wouldn’t hesitate to use again in the future.
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      Claire, Fuengirola
      Wednesday, July 04, 2018
      Alvaro assisted me during my experience at advocate abroad, and he was so kind. He answered any questions I had, and made me feel completely at ease.

      I knew I was in the hands of a professional. H...e could not have done more to help me.
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      Paul and Joyce Rose, Mijas, Malaga
      Wednesday, July 04, 2018
      Extremely helpful and very professional. Will definitely use Alvaro next time we require legal advice.
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      Nigel Whinnett, Esher, UK
      Wednesday, July 04, 2018
      Professional, friendly, efficient service, good value, a pleasure to use the services of the lawyer and his team. In depth knowledge of the relevant laws, taxes etc.

      Would highly recommend and use ...again.
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      Claire O'Gara, Fuengirola
      Wednesday, June 27, 2018
      I liked Alvaroós enthusiasm, and the great level of customer service. He always answered my questions thoroughly.
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      Mrs Susan Vickery, Silves, Portugal
      Tuesday, June 26, 2018
      Good advice, very helpful and fast. Would definitely recommend Luis to friends.

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