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Spanish Inheritance Tax - FAQ's : Part 8

By Malcolm Roach M.I.C.M - Thu 3rd Dec 2009

20.) The Question of Domicile.

In essence, your Domicile is the country which you consider is your permanent home.

This does not mean that it is the country of your birth or the country in which you may be living at present. Neither does it mean citizenship or residence even if you become naturalised in the country you live in and it does not mean that you would automatically become domiciled in that country.

There are four types of domicile. Domicile of Origin, Domicile of Dependency, Domicile of Choice, Deemed Domicile.


Domicile of Origin


To solve the question of their domicile, each person will first need to start with their birth.

When you are born a person acquires the domicile of the person that they are legally dependent on. That person would normally be their father. It is their mother if their father is dead or their parents are living apart and they have a home but not with their father.

Domicile of Dependency


Throughout your early years you continue to have the same domicile as the person that you are legally dependent on. If that person changes their domicile status then you change your domicile this is called Domicile of Dependency. You only become capable of having your own independent domicile when you reach the age of 16 in England or 14 in Scotland, other countries have similar ages.

If it ever becomes uncertain in which country you regard as your permanent home your domicile will revert to your Domicile of Origin. Under UK law your domicile always reverts to your Domicile of origin not your Domicile of dependency.

Domicile of Choice


In most cases a personís Domicile of Origin remains their domicile for the rest of their life.

This domicile can only be changed, to Domicile of Choice through permanent emigration and that means permanent.

Acquiring new Domicile of Choice for tax purposes can be very difficult to prove. This relies on the person proving to the revenue that they will never return to the country.

To establish a Domicile of Choice you will be required in the UK to complete a form P85 you must ensure that you declare your intention to adopt your destination country as your new permanent home.

Take whatever steps are necessary in the destination country to establish citizenship.

Buy a grave plot in your new country; this is given great importance by the tax authorities when looking at domiciled.

Write a Will in the new country

A person who ceases to be domiciled in the UK will continue to have been deemed UK domiciled for Inheritance tax purposes for 3 years after ceasing to de domiciled in the UK.

Deemed Domicile


A person is deemed to be domiciled in Spain if the person has lived there for at least 17 out of the last 20 years; Deemed Domiciled only applies to inheritance tax and not income tax and capital gains tax.

Resident for Fiscal reasons


Most British people living in Spain will be Domiciled UK and resident in Spain for Fiscal reasons.

If you spend more than 183 days in Spain per year you will need to register as a resident for tax purposes and pay your taxes on your worldwide income subject to double taxation treaties.

If you wish to establish Non-Residence in the UK

1. You will need to declare your intentions to HMRC on form P85

2. Buy a Home in Spain

3. Take your family including your pets

4. Take up Employment or start a business in Spain

5. Get on the Electoral roll of the country

6. Visit the UK as little as possible

7. Make sure your former home in the UK is sold or not available for your use

8. Ensure that residential accommodation is not available to you in the UK always stop in hotels

9. Resign memberships of any clubs or associations in the UK

10. Close your UK bank accounts and cancel all Child Credits and Child Benefits.

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