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TAX IN SPAIN
Inheritance Tax:
 Inheritance tax is different to most other tax systems and if you don't plan it out correctly you could end up paying thousands of euros. Spanish Inheritance Tax (IHT) and Spanish Gift Tax are listed under the same category in Spain. Should there be a death then you are able to inherit a property if they said so, however when you inherit something in Spain you must pay inheritance tax. This must be paid within 6 months of the death. The name of the deeds cannot be changed until this tax has been paid also you cannot sell the property until the tax has been paid. It is possible to file for an extension of another 6 months but if this is done then you will be charged interest as well. (Gift tax needs to be paid within 30days of the date of transfer). You can pay the tax at Provincial Tax Office (Delegación Provincial of the Consejería de Economía y Hacienda). With inheritance tax you need to have a good Spanish lawyer (abogado) who will keep track of all of your forms and help you when necessary. Spanish inheritance tax can be very expensive sometimes it can be nearly a quarter of the amount of your property and if you are not directly related to the person whom you are set to inherit from then the tax is doubled however there are legal ways to minimize the amount you pay. These are:
- If you can prove hat you have lived with that person for a period of at least 2 year and on the condition that you will keep the property that you have inherited for a minimum of 10 years after inheriting it then the amount of tax you are required to pay is reduced by up to 95%. However this reduction is only available to official residents.
- If the mortgage on the property is very high then you will have your taxation amount reduced.
- If you form a family corporation then your tax can be reduced because if somebody should die then you just have to move around the positions of everybody in the company and this way inheritance tax can be avoided however you get other tax costs doing it this way.
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