Definition of the usufruct in Spain.
The Spanish Civil Code defines the usufruct as the right to enjoy the goods of others with the obligation to keep its form and substance, unless the title of its constitution or the law authorise other way. (Article 467 CC).
In this situation although the owner of the property is the “bare owner”, however, is the usufructuary who has the right and duty to enjoy and preserve the property under the terms by which the right was established.
What to do when the Spanish usufruct is extinguished.
When the usufruct is extinguished (for any reason: death of the usufructuary, extinction of the cause or origin, expiration of term …), provided that it had access to the land registration, it will be necessary to proceed with the consolidation of the domain once the usufruct has been extinguished.
This consolidation of the domain has tax implications, so before the consolidation of the domain at the Land Registry is necessary to settle the corresponding taxes.
The consolidation of the domain is taxable following the same title or legal transaction whereby the dismemberment of property or right was produced.
Depending on whether the transaction was for valuable consideration –onerous title- ( purchase/sale) or not valuable consideration (donations or inheritance) so will be taxable the consolidation of the domain. It may find two different assumptions:
- It will be subject to Spanish Transfer Tax and Stamp duties (or VAT, if applicable) when the dismemberment between “bare ownership” and “usufruct” was produced for valuable consideration (purchase/sale).
- However, if the dismemberment was caused for not valuable consideration, (without non-profit, such as a donation or inheritance), the subsequent consolidation of the domain, will be subject to “Inheritance and Donation tax”.
Both taxes (ITP-AJD and ISD) are transferred to the autonomous communities and are these which have adapted the corresponding tax forms to its own normative.
The situation above described may be varied and complex, so it is advisable to consult professionals to resolve each particular case. Arcos & Lamers Asociados dispose of the best professionals that will be on your disposition to answer any query that you may have.
Additional Note: By Order HAP / 2488/2014, of December 29, is approved Tax Form number 655 (also Tax Forms 650 and 651) of self-settlement tax form for consolidation of the domain for extinction of usufruct. This Tax form is applicable for those taxpayers who must fulfil its obligations to the State Tax Administration, for adaptation to the regulations of the tax provisions in Judgment Court of Justice of the European Union and adaptation of the Spanish Inheritance and Donation Tax Law, for non-residents, dated 3rd September 2014, Case C-127/12 (please see our link )
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Felix Ruiz, lawyer in Spain.
- Lawyer in Spain, Lawyer Marbella, Lawyers in Marbella, Property Lawyer in Marbella, Spanish law firm,