Inheriting abroad (2)

In our last post, we spoke about the first steps you need to take when you accept an inheritance as a foreigner in Spain. Today we’re going to look at a very topical matter: which authorities determine who the heirs are. Because, as of summer this year, the authorities of the country of usual residence will be responsible for this, which marks a change from the law in force until now in most European countries.

Around a year ago, we spoke about the important legal changes coming into effect in August 2015 regarding foreign inheritance in all EU countries with a few exceptions in the cases of inheritances of United Kingdom and Denmark nationals ( https://tarracoiuris-advocats.com/blog/en/?p=212 ). After this change, the authorities in the country of residence will usually determine the heirs. And, where no will exists stating otherwise, these authorities will apply the law in force in that country. For instance, for a German national residing in Spain at the time of their death, it will be Spain, in accordance with Spanish law, that will determine who the heirs are by applying Spanish regulations. Until now, the German authorities did this by issuing a certificate of inheritance (applying German law) in such cases. So, from when the new EU regulations on the European certificate of succession come into force, the situation will be the complete opposite.

In Spain, once you have established via the competent authorities that you are the legitimate heir, you need to — especially in the case of property inheritance — sign an Acceptance of Inheritance before a notary public. This is an official notarial document that you can use as proof of title for the banks, the Land Registry, the cadastral register, the vehicle register, etc. But before you can use this document to transfer the deceased’s property to your name, you have to pay any tax due on it, either to the regional tax authorities, if you’re a resident, or the national ones, if you’re not.

As all these procedures are very complex, you really do need the help of an expert for the entire process.

Carlos Prieto Cid – Lawyer

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Inheriting abroad (1)

The death of a loved one is always traumatic. Even more so if, as well as having to deal with the loss, you are the heir and have to go through a lot of complicated administrative procedures. Such red tape, a challenge everywhere, becomes an even bigger one when you live in a different country to where the estate of the deceased is located, or when their countries of residence and nationality are different.

In Europe, to initiate the transfer of ownership of the deceased’s property to your name, the first thing you need is a death certificate officially certifying the death. You get this certificate from the civil registry. For this certificate to be recognised in another country (e.g., for when a foreign national dies outside of Spain while owning property in Spain), it needs to be valid internationally, which can be attained with an official Apostille stamp.

In Spain, as well as certifying the death, you also have to certify the existence or absence of any wills executed in Spain. To do this, when you have the death certificate, you need to request a certificate from the Ministry of Justice’s General Register of Wills. If a will was executed in Spain before a Spanish notary public, the General Register will inform you before which notary public and on what date the deceased signed the will in Spain. As it is easy to be unaware of the existence of a will, the General Register of Wills is a great help and a way of protecting our rights. It also serves to certify when no wills have been executed in Spain.

Carlos Prieto Cid – Lawyer

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Opening a business in Spain as a foreign citizen

When setting up a business in Spain, EU citizens have to meet similar conditions to those required of Spaniards.  In contrast, other foreign nationals, such as Russian citizens, for example, are subject to a special procedure if they want to carry on a business activity in Spain.  In future, it is likely that this procedure will also apply to business start-ups by Swiss nationals.

Unlike employees of third parties, who could be seen as a threat by job-seekers, investors are always welcome.  Investors are both those who make use of their investments personally (a holiday home or retirement residence, for example), and those who invest as entrepreneurs in order to carry on a business activity on their own account.  However, when setting up a business in Spain, foreign entrepreneurs are not all subject to the same conditions.

A lot of dust has been kicked up by the news that a referendum was held in Switzerland in which it was decided to shortly make changes to the law to restrict immigration and the free movement of EU citizens.  One direct consequence of this restriction is that the agreement on free movement and free choice of residence within the Schengen area will have to be revised.  As always used to be the case, Swiss nationals will then no longer be able to settle in Spain and carry on a business without meeting the same conditions as other non-EU citizens, such as Russian citizens, for example.  In contrast, EU citizens from member states in the Schengen area can set up a business in Spain virtually unhindered.

Carlos Prieto Cid – Lawyer

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Under the new Entrepreneurs’ Law, a residence permit can be obtained by purchasing a property in Spain

In enabling this, the Spanish government is attempting to reinvigorate the property market by attracting foreigners from outside the European Union with the granting of a residence permit for investing in Spain, which brings the added benefit of being able to move virtually freely around various member states under the Schengen Agreement.  

Here, too, there is a danger that an investor will view the purchase of a property as an opportunity to do business in Europe.  This can mean that they fail to check sufficiently thoroughly as to whether the purchase of the property is safe and reputable, as they want to take advantage of the opportunity to gain legal residency in Spain.  The risk is the same as for the tourist who wants to enjoy their holiday rather than attending meetings with lawyers.  In this case, too, the investment is a means, not an end, for just as the tourist sees the acquisition of a property as a means that secures them their holiday in Spain, the entrepreneur sees their opportunity to obtain a residence permit by purchasing a property, which then enables them to move freely around the Schengen area.  Both view getting adequate protection for their purchase as unnecessary.  If any problems subsequently arise, they find themselves compelled to find a lawyer to solve the problems arising from their failure to seek independent, professional advice.  However, by then it is often too late, and if there is a solution, it will involve much higher costs than if they had sought advice at the right time.  Well-advised investors can avoid making such mistakes.

Carlos Prieto Cid – Lawyer

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Purchasing property in Spain as an investor, not as a tourist

Each year, many of the millions of tourists who spend their holiday in Spain decide to buy a property in their destination country.  However, when investing their savings in Spain, they often act whilst still in a holiday mood, and make major decisions without due care and attention.

In almost any language, the term ‘tourist’ leaves a slight aftertaste in the mouth.  Airlines offer their cheapest tickets under the heading ‘tourist class’, while in every country that survives on tourism – and Spain is no exception – tourists are seen as easy prey who are only in town for a short period of time and can easily be taken for a ride.  This image of the typical tourist, whom it is easy to hoodwink and escape unpunished, is largely down to their poor language skills and lack of knowledge of the local customs, but also because tourists are on holiday, of course, and want to enjoy their short time away from home and are therefore relaxed and less vigilant.  As a result, they do not act with the same amount of care as they might in a similar situation at home.

Purchasing a property always involves a large outlay.  In many cases, sums are invested which represent many years of saving.  Such a decision should be given the appropriate degree of protection and made with as much information as possible on the potential legal and financial risks.  Sadly, as lawyers, every day we see how foreigners are conned when purchasing a property and lose their money as a result of failing to seek advice.  Often, people think they don’t need any advice, but then comes a rude awakening.  The cost of an independent consultation is minimal compared to the often hidden dangers when signing a contract of sale for a property; and such advice can only be independent if it has no connection with any other professionals involved in the sales contract.

Carlos Prieto Cid – Lawyer

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The risks of giving power of attorney

The event often arises when we would like to sell our Spanish holiday home or freehold apartment but we are unable to be there at the time of the required notarial certification of the contract of sale because we are only there occasionally on holiday.  A common solution in such cases is to authorise someone to represent us in the notarial proceedings.

InSpain, the transfer of a property only becomes valid once the person giving the authorisation has notarially submitted a letter of attorney.

Simple handwritten authorisation is not sufficient as there must be a notarial letter of attorney for such transfers, i.e. one prepared by a notary to make it legally valid and enable it to be entered in the land register.

This letter of attorney must be signed in the presence of a notary to allow them at that moment to verify our identity and legal status in their capacity as a representative of the state.  They are also obliged to inform us of the risks of giving power of attorney.

This formality is a guarantee for the person granting power of attorney, but it can also pose a risk because the document being officially issued by the notary is really a key with which the authorised person can do anything which is written in it when exercising the power of attorney.  Later, with the letter of attorney in their hand, they can act without the knowledge of the person giving the power of attorney, or even against their will, because the validity of the letter of attorney does not depend on the actual wishes of the person giving power of attorney, but on the officially declared wording of the certified wishes which is contained exclusively in the notarial declaration of authorisation.  This gives the third party, who is conducting business with the authorised person in good faith, the guarantee and security that the transactions are as far as possible valid, irrespective of what the person giving the authorisation might think, and Spanish law therefore does not provide any opportunity to restrict authorisation in the internal relationship, provided the letter of attorney is not notarially revoked.  It is therefore recommended that power of attorney should only be given for the benefit of a person we completely trust or that the authorised person is preferably a lawyer whose area of expertise is continually monitored by a relevant authority, such as the Colegio de Abogados (Bar Association).

It is also possible for a lawyer to simply represent us during the notarial sale without documented and express power of attorney, with the person represented confirming the legal transaction afterwards in the presence of the notary.  However, this approach attracts additional costs and can also have further drawbacks.  The transfer to the buyer is provisionally invalid, i.e. the transfer is not valid until the notarial confirmation has been entered in the land register.  This always presents difficulties if the buyer of the property has to bankroll the purchase price and requires a loan guaranteed by a mortgage, for example.  In such cases, the sale cannot take place because the mortgage only counts as a guarantee if it is entered in the land register.

Carlos Prieto Cid, Lawyer