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What's best to have your pension sent to a Spanish bank

Re: What's best to have your pension sent to a Spanish bank

Postby marcliff » Mon Jul 10, 2017 11:09 am

It will depend on many things, the value of the property, the marital status, intention of remaining in the property, age of the inheritor etc.
However, the tax base has been raised to €100,000 which means that amount is taken from the value of the estate before tax is calculated.
If the survivor has lived in the property for 5 or more years, then a 75% reduction (was 95%) in the remaining value is granted.

Here's an example from Spanish solicitors.
EXAMPLE 1: A+B own a property in Torrevieja (Alicante), Spain 50 % each for a tax value of 250.000 EUR. Both of them are Spanish Tax Residents. Both of them have “mirror wills” passing one each other the property in case of death. They are using the property as permanent residence.

A passes away, and B inherits the 50 % of the A part.

So, the Gross Tax Base from the A part to be inherited by B is : 125.000 EUR (50 % from 250.000 EUR).

– If B wants to be using the property as permanent residence with a minimum of 5 years, then, a reduction of the 95 % of the tax base can be obtained (with a maximum of 150.000 EUR). So, the Net Tax Base of the tax will be of 6.250 EUR.

Following the scale of the tax (not explained here), the tax rate to pay for a tax base of 6.250 EUR is around 478 EUR. This is the Gross Tax Rate.

Then, as B is surviving spouse from A, then, obtains a reduction of the 75 % of the Gross rate, so, the final Net Tax Rate to pay will be of around 120 EUR.

– If B does not want to use the property anymore, and wants to sell it, as surviving spouse, it can be obtained a reduction on the Gross Tax Base of 100.000 EUR. So, the Net Tax Base will be of 125.000 – 100.000 = 25.000 EUR.

Then, the Gross Tax Rate for 25.000 EUR will be of 2.200 EUR (following a scale). And, being the surviving spouse, B would have a reduction on the Gross Tax Rate of the 75 %. So, the final and Net Tax Rate to pay will be of 550 EUR.


Owning a property valued at around €250,000 will mean a very low or even nil tax rate (2 surviving children, for example, will pay 80 euro each if they continue to live there or nil if they sell).
Of course, those in huge mansions will have tax to pay but the allowances will still be there.
Note that this is for the Valencia region. Those in Murcia, for example, do not get the generous 100k allowance but are subject to the national allowance which is only about €16,000.
Oh, and I should say that this will be subject to having a will making the surviving spouse sole beneficiary. Otherwise the assets will be divided between surviving spouse and children so the spouse could only end up having a third of the property. No inheritance tax but could cause problems if 2 children want to sell and the survivor doesn't.
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Re: What's best to have your pension sent to a Spanish bank

Postby tel49 » Mon Jul 10, 2017 2:39 pm

Thanks for all your comments to date, anymore always welcome
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Re: What's best to have your pension sent to a Spanish bank

Postby ajf1950 » Mon Jul 10, 2017 8:20 pm

Thanks again Marcliff, I can see it's a complicated business with a complex formulae. However it is reassuring to see the potential IHT liability could be small and not crippling. Am I correct in assuming the regional allowances for Quesada are those listed for Valencia ? They appear to be a lot better than Murcia.

On a related matter; on death the deceased bank account is frozen, what happens if it is a joint account ? Do the bank just freeze 50% of funds on deposits?
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Re: What's best to have your pension sent to a Spanish bank

Postby marcliff » Mon Jul 10, 2017 8:30 pm

ajf1950 wrote:Thanks again Marcliff, I can see it's a complicated business with a complex formulae. However it is reassuring to see the potential IHT liability could be small and not crippling. Am I correct in assuming the regional allowances for Quesada are those listed for Valencia ? They appear to be a lot better than Murcia.

On a related matter; on death the deceased bank account is frozen, what happens if it is a joint account ? Do the bank just freeze 50% of funds on deposits?



Quesada is in the Valencia region.
AFAIK the bank freezes the account but allows existing direct debits to be paid as well as expenses for funerals. Exactly the same when my father died a few years ago, the UK bank froze the account but paid the funeral directors and continued to pay direct debits until probate was sorted. Luckily my Mum still had her pension paid into the post office.
I've told my missus that, if I pass on, she is to go to the bank with the bank card and draw out 2 x 500 euro a day for the working week before telling the bank that I've gone to pastures new.
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Re: What's best to have your pension sent to a Spanish bank

Postby ajf1950 » Wed Jul 12, 2017 6:21 pm

Thanks Marcliff
You are not the only one to tell me to get cash out of the bank before you report death of a joint account holder. Seems a sensible thing to do.
Sorry it's been a morbid subject but not getting any younger so just lplanning for the future. Not planning on dying any time soon though.
Cheers.
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Re: What's best to have your pension sent to a Spanish bank

Postby tel49 » Fri Aug 11, 2017 8:19 pm

Hi, me again after settling in the area and opening a bank account with Sabadell I have the option to use their service and sign a form to allow them to collect an agreed amount from an UK bank where my pension is paid into. The service is free and they convert the sterling into Euros at a decent rate. Has anyone used this I wonder as I am wondering whether to go that route with Brexit looming in the future?
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Re: What's best to have your pension sent to a Spanish bank

Postby marcliff » Fri Aug 11, 2017 9:39 pm

I doubt the decent rate they give you will be better than the Pension people give you.
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Re: What's best to have your pension sent to a Spanish bank

Postby emwood » Sat Aug 12, 2017 8:45 am

Have your funds transferred direct from CAP guaranteed on time payments, it's safe no 3rd parties involved, plus a a pensioner I get free banking with Bankia
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Re: What's best to have your pension sent to a Spanish bank

Postby jpeg » Sat Aug 12, 2017 9:19 am

If you have a UK bank Account hang on to it and get your pension paid in to it then you can decide when to transfer it over to a spanish account when the rate is good I use Transferwise and the rate with them is always as good if not better than any other plus the transfer is usually done in a few hours
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