B Law & Tax
08 May 2023

Tax advisor: Tax consequences of a transfer of residence from France

A French married couple residing in France is considering moving to Spain and wants to know what tax implications this would have in terms of income tax, wealth tax, inheritance tax and the declaration of their assets abroad.

Regarding personal income tax, the income generated by the French companies to which the married couple belongs can be taxed in Spain under the income attribution regime for entities incorporated abroad, provided that they meet the requirements. If the properties of Sociète Civile Immobilière (to which the couple belongs) are not rented, the corresponding income allocation must be applied for the months in which they have not been rented, depending on the taxpayer’s participation in the company.

With respect to Wealth Tax, the DGT confirms that the ownership of real estate and participations would be subject to this tax in Spain by personal obligation, regardless of the fact that they are also taxed in France according to the agreement that both countries have on income and wealth.  In the event of double taxation, it will be Spain that must eliminate it.

Regarding life insurance in Inheritance Tax, France is one of the few countries that has an agreement with Spain in this area, so that the incorporeal assets, including life insurance, would be subject to taxation in the State where the deceased had his residence at the time of his death, while the real estate will be taxed in the place where it is located. However, in the absence of an agreement, the subjects would be subject to personal taxation in Spain for all the assets they receive.

Finally, regarding the declaration of the assets abroad, the married couple will have to file the form 720 for the total value of the real estate of the SCI, indicating the percentage of participation they have on the same in case of moving to Spain.

B Law & Tax International Tax & Legal Advisors.


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