Antonio Flores (Columnist)
SPANISH inheritance tax (IHT) is once again a matter of controversy. According to El Pais newspaper, the number of people who have given up their inheritance has gone up by 21% since last year.
And there is only one reason cited for this increase: the inability of many potential inheritors to pay a tax bill unless they first inherit and sell the asset in question, generally a property, in a very challenging market.
Unfortunately for many, Spanish IHT and ways to avoid it has been exploited relentlessly by unscrupulous operators to sell new schemes promising that this tax would no longer be a problem.
The Spanish Equity Release comes to mind just now but also, more recently, the bogus scheme where one transfers their property into a UK limited company so that, on death, the Spanish property is inherited in the UK – in a roundabout way – via the inheritance of the shares of the company.
The Spanish Tax Office closed the Equity Release tax avoidance scheme last year, when it was tagged as tax fraud. And more recently, it has also dealt with the scheme that offers UK companies the chance to circumvent Spanish IHT (Tax Binding Consultation 07383-13) pretty much in the same way, by declaring the following:
“…In relation to the tax scheme consisting in legally transferring a property to a UK company, with the sole purpose of avoiding IHT in Spain through relocation of the taxation of the shares of the said company to the UK, there cannot be a favourable response by this Tax Department in relation to the lawfulness of the scheme. Only via the appropriate inspection procedures will the Tax Office be able to establish whether it conforms to the law or, as the case may be, infringe it in which case, the Tax Office will be able to regularize the anomaly by initiating the required procedures to combat tax fraud.”
These conclusions are hardly consistent with a public promotion of a service whereby if you place your property in a UK company, IHT can be legally avoided.
In fact, the official opinion on the matter embeds a message of warning: if you use this scheme to mitigate IHT, you will have clearly crossed the line separating lawful tax avoidance and illegal tax evasion.
My name is Mark Roach Managing Director of Wincham International Ltd a UK & Spanish Legal, Accountancy & Taxation specialist dealing with Clients who own Spanish property.
We have been established since 1994 and are the market leader in helping clients own Spanish Property within a UK Limited Company. If anyone is concerned about this article written and would like to understand further and to have cleared up the miss-understandings the person who wrote this article has then my Team and I of almost 25 staff consisting of Lawyers, Accountants and Tax Consultants who understand this process 100% then please contact us at your leisure.
We have always done this process and will continue to supply this service (not product)to clients and you may view further information at “www.wincham.com” and “www.winchamiht.com”
Over the years we have written many articles for publication including The Olive Press about this method to help property owners understand this process and I hope The Olive Press will allow this post to be displayed so everyone has the opportunity of making their own minds about who they trust and believe.
We have over 500 Corporate Clients who have done this process and we have an Organisation which is buzzing at the moment as we are completing up to 20 of these transactions every month so why not contact Wincham to see how we can be of help in UK Limited Company ownership.
Can the Olive Press please get an official response from Hacienda regarding Wincham’s claims? Does their product allow one to bypass Spanish inheritance tax or, or not?
Mark,
Clients may be happy with the service you provide, that is, until they out what the Spanish Tax Office has to say about the ‘Wincham Scheme’.
So if you, or your 25 staff for that matter, are interested in knowing that Hacienda says about your proposal, you can look up the Consulta Vinculante with number 07383-13.
I can also send it to you if you wish.
Thank you
Hello Antonio,
When Wincham place a Spanish property within a UK Limited Company the full transaction is disclosed to the Spanish Tax office and Spanish Land Registry’s. We pride ourselves on making the transaction 100% legal in Spain so our Clients receive the benefits. The UK Company has a CIF number and therefore can operate in Spain to own property and we use the Law of Investment so there is no 7/10% Property Transfer Tax on the investment that all of our Clients can confirm.
Once the property is within the UK Company we request from the UK Tax office a Certificate of Residence showing the UK Company is a Tax Resident Company of the UK. This allows the UK Company to own Spanish property and submit a Zero Tax Declaration to Spanish Tax office allowing the Tax benefits to be received.
Something else we are very proud of is Wincham has never acted in Black Money transactions / under-declarations, or allowed any of our Clients to do one, so our Clients can sleep easy at night and enjoy their ownership. I would be interested to know if yourself or any of the organisations you have worked for have taken the policy like Wincham or have you allowed Clients to do Black Money / under-declarations transactions so putting them at risk?
You’ve got ’em twitching Antonio. Go for it !
Hello Readers,
This will be the last comment I am prepared to post on this Forum as it is now down to the readers to make their minds who they trust but when we are still here in the next 12 months supplying the same services then Wincham will be proved correct.
Also when a Client uses services from Wincham they will have a Letter of Engagement with Wincham International Ltd who will facilitate the services. In addition to the services Wincham will supply all Clients are covered by our (PI) Professional Indemnity Insurance so if we supplying services across Spain & the UK which are not correct(that we have never done) then all Clients have this to claim against Wincham if needed.
Wincham Investments Limited and its subsidiary companies are regulated by the
Financial Conduct Authority (FCA) under registration number: 615817
HMRC Money Laundering Regulation Licence (MLR) number: 12606134.
Data Protection Licence Number: Z10049
There is never a straight answer to anything in Spain lol. Do we believe Winchams or Mr Flores? Until the OP get an official response from Hacienda, and publish it here, how can the man in the street know?
Antonio, please publish the Consulta Vinculante on this page please, or provide a link.
Spain has just lost the inheritance tax case in the EU for non-residents, so some refunds for those monies are now owing. It’ll be interesting to see what is paid back, if anything. Just imagine trying to get a refund from Spain lol.
Whether Mark or Antonio are correct remains to be seen but, I have yet to find ANY lawyer in the UK or Spain who is prepared to accept the liability of putting his/her name and that of their bufete to it.
There is never a straight answer from Winchams.
I would advise anyone to do some research on Winchams before dealing with them! Or any other financial company targeting expats in Spain.
Winchams cannot lie straight in bed !!
I am considering winchams advice. Has anybody else got any further updates regarding the legalities commented on. Has anybody reading gained from such a scheme and not paid any taxes .please comment
Some people are like lambs to the slaughter. Take advice from Flores the Lawyer not Wincham. You can use google I suppose!
I have looked into this as best I can. Personally I cannot see the Spanish Authorities allowing this scheme to continue. Any company that offers a financial service (Which I believe Winchams do) has to be Registered and Regulated in Spain. Winchams, I believe, are not.
I think that the most important consideration is if the Spanish authorities deem the Wincham scheme illegal how is your UK company house going to be dealt with when the plug is pulled. Who will pay for it to be returned to a Spanish house. I understand that to return the house into a Spanish house there would be large fees to be paid. Notary, Abogado etc. Then there is the possibility that there may be a capital gains tax to be paid to the Spanish authorities
The other consideration is the large cost to do this. Then there is the annual returns to pay for.
I also see that this is a self perpetuating scheme that will last for ever. Consider…..
I die…. The house goes to my wife
My wife dies… it comes to me
We both die …. it goes to my kids
When they die it goes to ??????? Their Kids ????
When does it stop. At some point, I would suggest, the house needs to be returned from whence it came.
Sorry this is not for me
Correction to Marks statement of the 25th April, 2014 which states:
Wincham registered with the “Financial Conduct Authority (FCA) under registration number: 615817′
The Financial Conduct Authority have no recognition of Reg. No. 615817.