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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      Caroline R, Barcelona
      Tuesday, April 24, 2018
      Miguel has been great!

      His English is excellent, he explains everything clearly, emails when he says he will, and is very efficient in the service he provides.

      I'd definitely recommend him to ...friends.
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      George Salib, London
      Monday, April 23, 2018
      Jose Antonio was very professional and has assisted me in every step of the purchase of my flat in Alicante.

      He also assisted me by advising of the most suitable area according to my needs. His com...mitment and dedication is excellent.

      Jose Antonio was very easy to approach and happy to help in any way he can.

      I will definitely recommend him to my family and friends.
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      Liezl Pulido, Philippines
      Monday, April 23, 2018
      Rosa never stopped working very hard, she went way above what she needed to do...she never gave up on me and always did more than I thought anyone would.

      I am so blessed I got Rosa to help me I co...uldn't have gotten a better lawyer she's the best.

      Thank you Rosa from the bottom of my heart you are a wonderful person, I am so grateful to you.
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      KJB, United Kingdom
      Friday, April 20, 2018
      Francisco was professional and efficient. Very good value for money.
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      Julie Smith, Torrellano
      Friday, April 20, 2018
      I can't compliment my solicitor enough.

      From our initial meeting right through to my ultimate divorce (with no unpleasant surprises the entire duration of the entire process), he immediately respo...nded to my many enquiries, always had mine and my daughter's best interests at the forefront of any considerations and was well worth every penny of his extremely reasonable fee.

      Excellent value for money, totally approachable and very professional and understanding. I highly recommend him and will continue to retain his services for other matters in the future.
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      SH, England
      Friday, April 20, 2018
      Very satisfied with the service provided. Miguel was approachable and prompt in replying.
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      Vicky S, UK
      Tuesday, April 17, 2018
      Alvaro answered my emails and all my questions efficiently and helped me were I did not understand through the whole process of moving the tenant and selling the property and arranging and introducing... an estate agent.

      He has exceeded my expectations after being let down by previous lawyers in Spain when its been a very traumatic time for me.
    • Default Avatar75
      Pernilla, London
      Friday, April 13, 2018
      We had excellent service from Esther at Advocate Abroad when buying a property in Las Palmas, Gran Canaria.

      Esther speaks both Spanish and English, and is very friendly, professional and genuine. ...She took care of the whole purchasing process and explained all the steps for us, including giving advice on Spanish bank account, NIE numbers etc.

      We are very pleased with all the help we have received and can highly recommend Esther. Thank you so much!
    • Default Avatar75
      David Pratt, Alhaurin del Grande
      Friday, April 13, 2018
      Alvaro gives me confidence that he understands the issue and gives me practical solutions. He works rapidly and efficiently. I would strongly recommend his services.
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      ESP, London
      Wednesday, March 28, 2018
      Cristina was extremely helpful, she couldn't have done more. Her English is sufficient and I would definitely recommend her to friend.
    • Default Avatar75
      L Marshall, London
      Wednesday, March 28, 2018
      Rosa was excellent. Very efficient and professional.

      Responsive and always available. Extremely helpful - we did not understand the process and she guided us through.

      We would not hesitate to ...recommend her.
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      Phil Loughton, Las Lagunas de Mijas
      Tuesday, March 20, 2018
      Alvaro was extremely helpful and the simple process I needed managed was dealt with quickly and efficiently. I would certainly recommend him to friends.
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      John Burchell, Arroyo De la Miel
      Tuesday, March 20, 2018
      Alvaro was very professional, helpful and friendly. Understood things quickly. Explained things well in English. Very easy to contact at any time.
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      A. Kavanagh, Glasgow
      Thursday, March 15, 2018
      Miguel provided a great service and fully explained to me about the procedures with tax & business registration. My emails and questions where always answered straight away with an immediate response ...or solution.

      Very helpful and very friendly I would definitely recommend to anyone considering using Advocate Abroad
    • Default Avatar75
      Robert Davies, Mallorca
      Monday, March 12, 2018
      Very supportive and clear on producing a suitable divorce settlement. Efficient, understanding and professional.
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      A.Kavanagh, Glasgow
      Friday, March 09, 2018
      Rosa was exceptional at helping me setting up my business abroad.

      This was a big move for me and Rosa fully explained everything to me in detail so I had a full and clear understanding of the lega...l side of things as well as always promptly responding to any emails or questions I had.

      I couldn’t of asked for a better lawyer and I would 100% recommend Rosa to anyone who is deciding to move abroad.

      Great service could not be happier.
    • Default Avatar75
      Adam Clark, Tenerife
      Friday, March 09, 2018
      Oliver was very professional. He explained things very clearly and honestly at all times and in the end we got the best result possible in my particular case.

      Many thanks to him for his high level ...of service.
    • Default Avatar75
      Patrick Martel, Canada
      Wednesday, March 07, 2018
      For being in another country and all our back and forth communicating over emails .. I thought Rosa did a brilliant job. Thankfully she was able to help where no one else was willing ..
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      Robert Scott, UK
      Wednesday, March 07, 2018
      First class service. Rosa's professionalism, advice and patience were all exemplary! Keep up the good work. Will certainly recommend the service to friends!
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      Martina, Plymouth
      Monday, March 05, 2018
      Erardo was fantastic and helped immensely during a very difficult situation.

      He consulted with my lawyer in the UK and explained to her what needed done. Without him the situation would not have be...en resolved. He was very understanding and I would have no hesitation whatsoever in recommending him. Outstanding.
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      M Pearce, Marbella
      Monday, March 05, 2018
      Miguel was extremely helpful, he couldn't have done more:

      Always kept us updated on the progress of our purchase
      Always responded to emails in a professional and timely manner
      Always explained to... our understanding all aspects of the legalities about the purchase
      Very approachable,courteous and professional

      So much better to deal with than UK property lawyers!

    • Default Avatar75
      Tony, London
      Wednesday, February 28, 2018
      The service I received from nada was very helpful.

      The tasks were completed to the highest standard and would definitely use her services again in the future. All correspondence was received in a ...very timely manner. Highly recommended.
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      Holly, Lanzarote
      Friday, February 23, 2018
      The divorce process could have been explained more clearly and accurately so that a more realistic time for completion can be attained.
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      Julia Alcock, Puerto Rico, Gran Canaria
      Thursday, February 22, 2018
      Esther was very friendly and approachable. She was professional and answered any questions I asked. We would definitely use her again in the future.
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      Tamara Malcolm, Mallorca
      Tuesday, February 20, 2018
      Rosa was and is extremely knowledgeable and helpful. Her advice was excellent and i will definitely be using her expertise again in the future.
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      Nick Nicolaou, Oviedo
      Tuesday, February 20, 2018
      Very Satisfied with Miguel's work. He was very helpful and we would definitely use his services again in the future.
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      Gavin Jones, UK
      Monday, February 19, 2018
      It was a real pleasure to have Miguel working on my behalf to file my non-resident taxes. He was extremely helpful, gave reassuring advice and I had a high level of confidence in the transactions.

      ...Miguel is now acting as my fiscal representative in Spain and I plan to continue to use his firm's services for all my tax requirements.
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      Martin Hickey, Benidorm
      Sunday, February 18, 2018
      Very friendly and knowledgeable and professional.

      Juan explained the plus and the negatives on various subjects and allowed us to make up our own mind.

      I have already recommended him to our fri...ends.
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      Andrew Bullen, UK
      Friday, February 16, 2018
      Rosa was very professional at all times when dealing with me. Her English was second to none and she always kept me informed of progress via email promptly.

      I wouldn't hesitate to use Rosa in the ...future for any legal issues I have.
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      Tamara Reeves, Australia
      Thursday, February 15, 2018
      Anna was very knowledgeable and had prior experience dealing with English clients. She spent a lot of time explaining information and I was never rushed.

      I have continued to use Anna since my firs...t meeting as I trust her judgement and know that she will look after my best interests.

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