Those with property or money abroad could face huge increases in inheritance tax on foreign-based estates if the UK votes to leave the EU, according to one UK based lawyer.
Sara Janion works for Worldwide Lawyers and says that the tax liability for those outside the EU inheriting property inside is often much higher, with one US based client having tax liabilities eighty seven times higher than those of his Spanish-based sister.
According to Sara, we are only now starting to feel the effects of the first wave of retirees who made their home on the Mediterranean coast of Spain, with those currently looking to retire abroad hedging their bets before the vote.
Inheritance tax in Spain specifically is different to that of the UK, with taxes paid on what the individual receives rather than the estate as a whole.
Sara said: “There are ways the Inheritance tax regime in Spain can be offset, there are agreements with the EU, but certainly there are a lot of things like the rulings of the European Court on Inheritance tax, they would benefit the UK resident if they’re in the EU but they’re of no help if they’re outside.
“There was a judgement in 2014 which made Spain sort of look at how they look at charging on inheritance for members of the EU, so now anyone who inherits property in Spain is only subject to the same as anyone resident in Spain. That’s one benefit of being an EU citizen.
“We’ve had an example of a brother and sister who inherited in Spain, the daughter inherited was in the EU, her tax liability was 1,000 Euros but her brother who was resident in the US, his tax liability was 87,000, you can really see the difference.”
Sara said: “A lot of people in general don’t necessarily understand that once the vote happens, in the event of a decision to leave the EU nothing will change immediately, there’s a fair bit to sort out, and from the people I speak to, they’re ware of the politics, but people aren’t really aware of what’ll happen and they don’t understand what’ll happen immediately.
“With regards to probate in Spain, we’re in a generation now where people who have been in foreign jurisdictions for some time, and a lot of those people are reaching the end of their lives over in Europe and their children are dealing with their estates.
“People are more global these days, they have partners abroad, investments and the like, so they leave a footprint which could be anything from a bank account to property or even a child, so the international side of things is something that will be with us for a while as lives cross borders
“We assist clients from across the world, putting them in touch with people in our network, on a regular basis on the type of law they need; and we can put them in touch with people in the jurisdiction they need them in.”
To find out more about Worldwide Lawyers visit worldwidelawyers.co.uk
