Trust does not exist in Spain and nor did Spain sign the Convenio de la Haya 1 -7-1985 ( Trust recognition). So there is not a single rule which uses the word trust but a recent Order from the Ministry of Justice has been published (jus/1256/2019) regarding the mandatory record in the Registro Mercantil of individuals and companies who act in a professional capacity as an administrator or manger of a Trust, even those who only provide a domicile or administrative address. It is a rule within the regulations preventing money laundering.

As Spain does not have the legal entity of Trust, it is a problem dealing with foreig Trusts that involve immovable assets to be inscribed in The Land Registry which is seriously advisable when estate planning involving immovable assets in Spain.

If a Trust is already involved in an opened succession with immovable assets located in Spain a solution must be found that respects the intentions of the Trust and had similar effects, as the art.31 of EU Regulation 650/2012 states.

Within Spanish Law, the «sustitución fideicomidaria» may be used (ie. inscription in the name of the Trustee and the transfer of property at a certain time or upon death to the beneficiaries or any other solution that may fit the rules in the constitution of the trust or the ends to which the trust is intended

For Inheritance Tax purposes, the assets received by the beneficiaries by way of Trust, will be deemed as received directly from the deceased, and on the date of the deceased’s death, as if the Trust had not been constituted at all. That is important for two reasons:

.-Being received directly from the deceased the rules that benefit kinship would be applied.

.-As received upon the date of death, the Inheritance Tax has to be declared and paid within six months from the date of death, not when the assets are received by the beneficiaries.

.-And related with the above, as the estate may not be liquidated within that six month, the amount paid based on the value of the assets at that time, may be different from the proceeds actually obtained at the time of liquidation, and no way of claiming back any possible excess as the tax is calculated on the maximum amount of either the declared value or the real value.

The above appears in «Consultas» de la Dirección General de Tributos and in some court resolutions.

Sentencia Audiencia nacional 13-3-2017

Consulta Vinculante DGT V718/19, 29-3-2019