Couples who split up can often find themselves at a complete loss in more than one way; they must try to rebuild their lives on an emotional level, while having to make some exceptionally important decisions regarding their children, their financial status and their assets.
To avoid surprises relating to how the dissolution of a married couple’s estate is taxed, it is essential to seek advice about fiscal implications both at the time the divorce is finalised and in the future.
Unless otherwise stipulated in a pre-nuptial agreement, couples who marry in the Balearic Islands are subject to a separated asset regime, whereby each partner retains individual ownership of any assets in their possession prior to, as well as of those acquired during the marriage. Article 1,438 of our Civil Code establishes that housework counts as a contribution to a family’s economy and will be duly compensated when the assets are divided; similarly, article 4 of Balearic Civil Law states that “working for the family is considered a contribution and gives the right to claim a compensation …. when the separation regime is dissolved”.
The question which arises is: which fiscal implications are associated with this kind of compensation? Article 33.3.dLIRPF states that it will not be considered that the value of a family’s assets has fluctuated when this kind of matrimonial regime (separated assets) is dissolved, in the event of compensation, monetary or otherwise – other than alimony – being awarded. The compensation must be legally authorised, if not the assets will be considered to have changed in value.
This precept therefore generates an exemption from paying capital gains tax, as the asset has been awarded as compensation. However, the last paragraph of the article states the following: “The instance referred to under paragraph d) will not reflect fluctuations in value of the adjudicated rights or assets”. In other words: the acquisition value of the adjudicated asset will not be the same as that at the time the regime is dissolved, but its original value. This means that if the party who is awarded the asset were to sell or donate it, the acquisition price would be its original one, not the one given when the regime was dissolved, and this will have fiscal implications.
At Agote Diez Abogados we recommend you seek advice regarding the fiscal implications of your marital regime, if you are in the process of obtaining a divorce, or those relating to the taxation of assets awarded as a result of the dissolution of a marital regime.