Did you know that Inheritance tax has been around since the beginning of the Roman Empire?
During the years of the Empire, collections of 5% were made on any inherited property to pay soldiers’ pensions. In the modern day, inheritance taxes are spread around the world, being used for a variety of reasons, and inheritance tax in Europe effects the majority of the continent’s countries, including Spain and the United Kingdom.
Inheritance tax is usually calculated based on the value of assets that are being transferred from the deceased to the heir or heirs. It is then the responsibility of the heirs to pay the taxes. Whereas, in contrast, estate taxes are based on the deceased’s property and to be paid by the estate itself. Some countries have gift taxes, which are levied on property that is transferred from a living individual.
Usually, only inheritance tax or estate tax will be charged. If an estate falls under two separate districts, with different tax rules, then estates can be taxed twice. European Union member countries have put systems into place to avoid double taxation. However, it is necessary to know the systems to make sure you avoid the double tax and understand the process that you may need to go through. This is why it is important to consult a financial adviser early on, to ensure that through thorough financial planning, taxes can be minimised where possible.
Despite policymakers believing in the economic benefits of inheritance tax and the Organisation for Economic Co-operation and Development viewing inheritance, estate, and gift taxes as a way to reduce wealth inequality, not everyone is inclined to agree with the taxes. It is widely known as the ‘death tax’ by many who believe it should not exist at all.
When it comes to the amount of taxes that are applied it does not just depend on the amount that is to be inherited but also on familial closeness and district. When it comes to inheritance and succession there is a lot to factor in. A Wealth Manager can help to ensure that you cover all relevant points to receive the best possible outcome tax wise. It is especially important for expatriates to seek out a financial adviser in Spain, if that is their country of residence, as Spain has an extremely complex tax system. As an expatriate in Spain, not only will you find the taxation rules different from those in the United Kingdom, but they also vary by autonomous region.
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