Spanish Succession - Owning Property in Spain

On 4 July 2012 the European Parliament issued what is known as the “Brussels IV” regulations with the purpose to harmonise how estates located in different EU states are treated.

These days over 760,000 Brits own property in Spain either as holiday homes, investment properties or as their place of retirement.

Spanish and British inheritance law and procedures are very different and, to complicate matters further, the various Spanish regions are completely autonomous, so different rules apply to procedures and inheritance tax depending where in Spain a property is situated.

There are two main differences between British and Spanish succession law:

1. In England & Wales you can leave your estate to whomever you want in your Will, whereas Spanish inheritance law limits who you can leave your assets to (forced heirship). This is to protect the family and provide for the children who will receive two-thirds in preference to the spouse. The default position with Spanish property is that it is owned as tenants in common, which means the deceased's property share would not pass to the surviving co-owner, but pass under the Will or intestacy and will therefore be subject to the forced heirship rules, leaving the surviving spouse or partner vulnerable.
2. The second major difference in Spanish succession law is that it is the beneficiaries (and not the estate as in the UK) who have to pay inheritance tax on their legacy.

On the death of a British owner of a Spanish property, the beneficiaries are therefore faced with many difficulties: which rules and procedures apply, communication problems, cultural differences, level of professional regulation, standards and expertise within that region and a different inheritance tax and capital gains tax regime. A British Will is recognised in Spain (after a costly process of translation and legalisation for Spanish purposes), but the UK Grant of Probate won't be. All this can make the estate administration difficult, lengthy and costly.

The aim of Brussels IV is to eliminate the complex rules which differed from state to state and which resulted in long and costly delays. It affects the residents and citizens of and everyone who owns property in one of those states. The key is not where the deceased came from or lived, but where their property is located and, if that is in a Brussels IV state, they will be bound by it. This new regulation is a complex piece of legislation, dealing with multiple scenarios, but for most people, the key aspects are:

1. Property owned by a deceased foreign national will be governed by the law of the country in which the deceased was resident; or
2. the Deceased’s property will be governed by the law in the country of their nationality, if the deceased had made an election in their Will that their property should be governed by the law in the country of their nationality. If they have multiple nationalities, they can choose any one of them.

This is good news for many UK nationals and residents who own property in Spain as they can now make an election in their Will that the property is to be governed by British law which, in England and Wales, means they can leave their assets to whomever they want.

However, even with Brussel's IV in place, it is advisable for those who own land or property in Spain to make a Spanish Will and a separate Will for the assets in the UK, with either or both Wills containing a clear election of British law. Those who decide not to make a Spanish Will should at the very least make an election in their UK Will that British law is to apply to all their assets.

Fitzhugh Gates Solicitors Comment

This is good news for many UK nationals and residents who own property in Spain as they can now make an election in their Will that the property is to be governed by British law which, in England and Wales, means they can leave their assets to whomever they want. 

However, even with Brussel's IV in place, it is advisable for those who own land or property in Spain to make a Spanish Will and a separate Will for the assets in the UK, with either or both Wills containing a clear election of British law. Those who decide not to make a Spanish Will should at the very least make an election in their UK Will that British law is to apply to all their assets.

Ursula Tanner, Probate Executive