SPAIN Law and Practice Contributed by: Álvaro Checa, Miguel Checa, José María Vargas-Machuca Reyes and Andrea Fernández Grymierski, KINSHIP
its continuity across generations. Moreover, the Span- ish Civil Code allows, in the interest of preserving the family business, the use of other planning mecha- nisms, including: (a) satisfaction of forced heirship entitlements in cash, even using assets outside the estate, as well as the deferral of forced heirship pay- ments; (b) restrictions on division, imposing a period of undivided ownership with defined decision-mak- ing rules; and (c) the creation of different classes of shares, separating economic and voting rights.
particularly in situations where one or both spouses maintain personal, family and economic ties in more than one jurisdiction, and has declared that habitual residence corresponds to the place where a person has established, on a stable basis, the permanent or habitual centre of their interests ( IB v FA , 2022, C-289/20). With respect to matters of succession, jurisdiction is governed by Regulation (EU) No 650/2012 (the “EU Succession Regulation”). As a general rule, jurisdiction lies with the EU member state in which the deceased had their last habitual residence at the time of death. Where no member state has jurisdiction on that basis, the Regulation provides subsidiary grounds of juris- diction, particularly in favour of the member state where estate assets are located, subject to certain connecting factors. If no court has jurisdiction under those subsidiary grounds, a further forum based on the location of the assets may apply, though limited to the assets situated in that member state. Accordingly, habitual residence plays a central role in determining jurisdiction in both family and succes- sion matters, making it a critical factor in cross-border estate and matrimonial property planning. As regards the territorial scope of wills, the prevailing practice in Spain is to execute universal wills cover- ing the entirety of the testator’s estate, irrespective of the location of the assets. Spanish authorities have expressed the view that the execution of multiple wills may give rise to practical and interpretative difficul- ties, especially if the principle of unity of the appli- cable law to the succession, as enshrined in the EU Succession Regulation, might not be respected. As a result, co-ordinated and carefully structured planning is required where cross-border estates and multiple wills are involved. Similarly, the international connecting factor for taxa- tion under Spanish Inheritance Tax (IHT) and Gift Tax (GT) – a recipient-base tax where the taxpayer is the heir – is the residency of the heir. Heirs who are tax resident in Spain – as defined in 2.2 Income Tax Residency , with the particularity that the 183-day threshold is calculated with reference to the 365 days preceding the date of death – are subject to IHT on a
2. Residency and Domicile for Purposes of Wealth and Estate Planning 2.1 Determining Domicile
The concept of domicile, as understood in common law jurisdictions, is foreign to the Spanish legal sys- tem. Traditionally, matters relating to personal law were determined by nationality. However, over recent decades, Spanish private international law – as a con- sequence of the progressive development of EU pri- vate international law regulations – has shifted from nationality towards the concept of habitual residence as the primary connecting factor, particularly in the fields of succession and family law. This transformation is reflected at the European level, where habitual residence constitutes the predomi- nant connecting factor across EU family law instru- ments. International jurisdiction for divorce and legal separation in Spain is primarily determined by Regula- tion (EU) 2019/1111 (Brussels IIb), which provides a series of alternative criteria determining jurisdiction for divorce or judicial separation proceedings. Other EU regulations govern international jurisdiction in related family matters, such as Regulation (EU) 2016/1103 for the jurisdiction and applicable law for the division of matrimonial property regimes, Regulation (EU) 2016/1104 for the jurisdiction and applicable law for matters of the property consequences of registered partnerships, and Regulation (EC) No 4/2009 for mat- ters relating to maintenance obligations, including spousal maintenance. In recent years, the case law of the CJEU has further clarified the criteria for determining habitual residence,
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