1. All you need to know about property assets when divorcing in Spain
Following on from the extensive overview of divorce in Spain, we focus here on one of the most contentious issues when a marriage breaks-up: how are matrimonial assets distributed following the end of the marriage?
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2. The Application of Spanish Law
Typically, Spanish law is applied where a foreign national is resident in Spain and married to a Spanish national. Also, a married couple who are foreign nationals and who are habitually resident in Spain, may also request that a Spanish court applies Spanish law to their divorce application. If the divorce is a mutually-agreed 'fast-track' divorce then Spanish law, by definition, applies.
Property assets divorce Spain: the rules relating to the distribution of marital assets govern what will happen to the shared matrimonial home, how any shared assets will be split etc.
So, here we shall look at how Spanish courts assess the legal issue of division of matrimonial assets. Specifically, we will consider the following matters:
- The different 'types' of marriage in Spain
- Division of Assets in 'Separación de Bienes' type arrangement
- Division of Assets in 'Sociedad de gananciales' type arrangement
- What are private assets?
- The matrimonial home
- Division of Assets Process in a Contentious Divorce
3. Different Economic Relationships in Spain
The first step is to determine under which system of economic relations the marriage has existed.
In Spain, there are two standard economic types or systems of marriage: 'separación de bienes' and 'sociedad de gananciales'.
Unless specifically chosen by way of public document signed in front of a notary, the type of marriage is determined by default and usually depends upon which autonomous community or region the couple are resident once married.
4. Division of Assets Under Separación de Bienes
This, or a variation of it, is the default choice in Catalonia, Aragón, Navarra, Balearic Islands and Basque Country.
Where a couple are married under 'separación de bienes' then each spouse is considered to own that which they brought into the marriage i.e. owned before they were married as well as that which they have acquired during the marriage either by purchase, inheritance or gift.
They may dispose freely of such goods and assets as they wish.
So, where the couple purchases an asset, say a car, and one pays 75% of the cost while the other spouse pays the remaining 25% then upon divorce they would be entitled to a percentage of the value of the car based upon the percentage that they contributed to the purchase price.
If it is not possible to determine which of the spouses is the owner of a particular asset then it is split 50-50.
In terms of contributions made towards the cost of assets, recent court rulings suggest that the spouse who stays at home to look after domestic chores, raising children etc, may have a financial value attributed to that work.
5. Division of Assets Under Sociedad de Gananciales
This is the default position in the remaining Spanish regions and has the effect that all goods and assets acquired during the course of the marriage and which are not considered to be 'private' goods, are to be considered as belonging to both spouses equally.
Examples of goods and assets to be included in the matrimonial 'pot' would be:
- Goods obtained by the work or industry of either spouse.
- The benefits, income or rents obtained from other goods owned by either spouse even if considered to be 'private' goods.
- Goods obtained by using common funds, whether for the use of one or other of the spouses.
- Businesses and companies founded during the course of the marriage where common funds are used. If both private and common funds are used then the ownership is split in the ratio in which they were bought.
- Goods purchased initially with common funds that require instalments to be paid later such as hire-purchase will be shared even if the instalments are paid by one of the spouses.
So the income and pension of either spouse may be considered to belong to the matrimonial 'pot' and would be potentially divisible between both spouses upon dissolution of the marriage.
However, while all the previously-mentioned assets are shared equally, those assets considered to be 'private' are not and may not be divided between both spouses upon a termination of the marriage.
Take a look at this Wikipedia article (ES) if you want to learn more about Bienes Gananciales.
6. Property assets divorce in Spain - Private Assets
Those assets which may not form part of a matrimonial 'pot' are known as 'private'. These would include the following goods:
- Those rights and assets possessed before the marriage (even where funds considered 'common' to both spouses are used to pay later instalments - except for the matrimonial home, fixtures and fittings),
- Those rights and assets obtained during the marriage without payment, e.g. inheritances or gifts received by a particular spouse
- Those rights and assets obtained in exchange for a private asset belonging to one of the spouses
- Rights that may only be transmitted via inheritance
- An award for personal damages or damages to private assets
- Clothes and personal belongings not of 'extraordinary' value
- Equipment necessary for the carrying-out of a trade or profession, unless these are an integral part of a common enterprise
- Assets acquired with an initial payment by one of the spouses, even though later instalments are paid using common funds
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7. The Matrimonial Home
The matrimonial home is a special type of asset and is dealt with separately here: The Marital Home After Divorce.
8. Process of Division of Assets in Contentious Divorces
The manner in which marital assets are to be divided may be contained in the 'Convenio' agreement where such agreement exists, or decided judicially in the case of a contentious divorce where no agreement has been reached between the spouses.
Where there is no agreement, the judge directs the spouses to meet on a specified date to draw-up an inventory of the matrimonial assets.
Failure to appear at this meeting will be taken to mean agreement with the inventory proposed by the other spouse.
Where there is disagreement whether an asset should be included in the inventory of matrimonial assets or as to its value, then this is set-aside to be resolved by the judge.
Once the inventory is agreed or decided upon by the judge and the declaration ending the marriage is made, then either of the spouses may request division of those assets which appear on the inventory.
This request should be accompanied by a proposal as to how the assets should be divided – taking into account the norms established by civil law in this regard.
Having received the request to divide-up the assets, both parties will receive an invitation to meet with a court official within 10 days to reach an agreement as to the distribution of the assets.
As before, failure to attend will be deemed acceptance of the other spouse's proposal. A failure to agree will necessitate a ruling that an expert arbitrator be appointed to decide on the matter.
We propose reading our divorce in Spain opening article, which draws a bigger picture and sheds light on more specific matters within the topic.
9. Enforcing Foreign Divorce Property Awards in Spain
When a couple from another EU country with property interests in Spain get divorced in their country of origin, the question arises as to how to register the property in Spain on behalf of the spouse who has been awarded the property. Additionally, there are important tax implications that need to be considered.
The best practice in order to avoid extra costs of divorce and property settlements is to include reference to any property belonging to the couple in Spain in the foreign divorce proceedings taking place in their country of origin. In this case, the divorce decree, duly legalised and translated, should be taken to the relevant notary in Spain to sign a deed of ‘end of joint-ownership’ to which the divorce decree should be attached.
It is important that there is equality between the spouses, that is, that each of them is awarded assets of the same value in the divorce settlement or, if one spouse is awarded property of greater value than the other, there should be financial compensation. This equality of distribution is important because in this case no taxes are levied.
However, if one of the spouses happens to be awarded assets of a greater value, they are liable to pay taxes on the excess allocation compared to the other spouse. Finally, once the above procedures have taken place, the new property deed is deposited with the Land Registry to register the property in the name of whichever spouse has been awarded the property.
Should the divorce proceedings in the country of origin not refer to the Spanish properties, it becomes necessary to draft a deed of ‘dissolution of the joint-ownership’.
However, the fiscal advantages available when the joint-ownership had ended, do not apply to the dissolution of a joint-ownership. Accordingly, it becomes necessary to pay the Spanish property tax (typically levied at between 8% - 12% of the value of the property transmitted).
One half of the tax is then payable by the spouse who is taking ownership of the property. A price should be stated in the property deed, and it is this figure upon which the tax payable is calculated. If a price is not stated, then it would be considered to be a gift/donation, for which an even higher amount of tax would be levied.
In conclusion, it is vitally important that any Spanish assets owned by a married couple are included in the divorce proceedings that take place in the couple’s country of origin, in order to avoid high costs and taxes that would otherwise be levied.
