Those who open a trust in Spain will use this structure to transfer ownership rights to a beneficiary, who will thus own various types of assets or part thereof. Our team, which can help you with company formation in Spain, can offer in-depth advice on the main benefits deriving from a trust.
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Parties to enter a Spanish trust
A Spanish trust is established between three main entities. A fiduciary relationship will be set up between the settlor and the trustee. The latter will be in charge of managing the trust’s assets in accordance with the stipulations presented by the settlor.
Persons interested in starting the procedure of company registration in Spain for this structure will also need to appoint a beneficiary. This can be only one party or several parties who will benefit from the assets placed in the trust, as per the instructions of the settlor.
Some of the main uses for those who open a trust in Spain include:
- Asset protection: by placing assets in a trust, the settlor can protect these from creditors;
- Estate planning: a trust in Spain is an instrument that can be used to control how the settlor’s assets are transferred for inheritance purposes;
- Wealth transfer: similarly, a trust can be used to transfer wealth in a different manner, one selected by the trust founder;
- Charitable purposes: the assets placed in a trust can be used to support charities, according to the settlor’s instructions.
Persons interested in opening a company in Spain can usually structure it in a manner that may include different tax advantages or treatments.
How are trusts treated in Spain?
There is no specific law in Spain that governs the formation of trusts, which also means that there is no particular tax treatment for these vehicles. Nonetheless, a trust is subject to important legal provisions, as the fiduciary relationship between the parties is governed by specific rules, and the trust, as an entity, should observe matters concerning anti-money laundering.
Those who open a trust in Spain should know that its tax treatment can vary on a case-by-case basis. Moreover, the trust must always be structured as a legally recognized business entity in Spain.
A trust in Spain can be seen as a fund that does not have a legal personality.
Our team of company registration agents in Spain can offer further assistance on the provisions of different rules and regulations that concern those who open a trust in Spain.
How are trusts taxed in Spain?
One significant advantage of trust use is the ability to control the manner in which the assets placed within it are distributed. However, an important aspect to keep in mind for those who open a trust in Spain is that the local tax authorities interpret trusts on a case-by-case basis.
This means that, unlike in the case of company incorporation in Spain, the formation of a trust is not subject to definitive tax treatment. Reviewing the terms of the trust is a key part of its tax treatment, especially concerning the inheritance tax in Spain.
For the general purpose of taxation, we remind those who are interested in opening a trust in Spain that the inheritance tax has variable rates:
- The inheritance tax rates range from 7.65% to 34%. The tax is calculated according to the taxable income;
- For a taxable income of up to EUR 7,993.46, the rate will be 8.5% (below this amount,t the rate is 7.65%);
- In the case of a taxable income of up to 47,930 EUR, the tax rate will be 12.75%;
- The highest rate of 34% applies to a taxable income of up to EUR 797,555.
Our accountants in Spain can provide more in-depth information about the inheritance and gift tax upon request.
Our team can not only help you open a company in Spain, but we can also answer important questions about the creation of trusts and their use for asset planning purposes.
Those who want to set up a Spanish trust are invited to contact our team of consultants in company registration in Spain, who can offer more details on the benefits of a trust in Spain.