Naming a charity in your will: What expats in Spain should know before signing

Imagine a British retiree who has lived in Spain for twenty years, has no children, and has always supported a particular charity back home. Naturally, she wants that charity to receive something when she is gone. It sounds simple enough. But it is rarely as straightforward as it seems, particularly once Brexit is added to the mix.

The starting point is usually good news. If you have no forced heirs under Spanish law, you are generally free to leave your estate, or part of it, to whichever cause you choose. Spanish and foreign charities alike can, in principle, be named as beneficiaries in a Spanish will.

Where things get more complicated is on the tax side. Unlike individuals, charities and foundations are not taxed under Spanish Inheritance and Gift Tax. That might sound reassuring, but it does not mean the inheritance arrives tax-free. Depending on how the organisation is structured, it could still face Corporate Income Tax or, if based outside Spain, Non-Resident Income Tax.

Spain does offer a beneficial tax regime for qualifying non-profit organisations, but it is not automatic. The organisation must meet a list of requirements and formally apply for it. And, crucially, this regime has traditionally been available mainly to entities based in the EU or the European Economic Area. Since the United Kingdom left the EU, it appears that UK-registered charities may no longer qualify for this route in the same way they once did, which could mean a higher tax bill than the testator ever intended.

There is a further wrinkle. Some UK charitable structures operate as trusts rather than as charities with their own separate legal personality. Spanish law does not recognise trusts, which can create additional uncertainty over how the inheritance is treated for tax purposes.

None of this means you should abandon the idea. It simply means the details matter. Before finalising a will that leaves assets to a charity, it is worth confirming exactly how that organisation is structured and reviewing what the tax outcome is likely to be under current rules. At White & Baos Lawyers, we help clients get this right from the outset, so that a generous gesture reaches its intended cause as fully as possible. Reach out to us, today, and we will walk you through it.

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Inheritance and Wills in Spain in favour of charities, NGOs, non-profit foundations , social organizations , etc. Legal Advice : The executor.

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Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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