Divorce with assets abroad in Spain: what you need to know

More and more people divorcing in Spain have assets abroad: a bank account in another country, inherited property outside Spain, international investments or wealth accumulated after years of living in another country. When the relationship breaks down, the inevitable question is: what happens to all of that?

The answer is not always simple. In a divorce with assets abroad, the laws of several countries may come into play, and a poorly planned decision can have significant financial consequences. In this article, we explain what you need to know about jurisdiction, applicable law and the division of international assets in a divorce.

If you are looking for a general legal definition, you can consult our legal dictionary entry on international divorce. Here, we focus on the financial and property-related aspects when there are assets outside Spain.

 

 

Which court has jurisdiction over the divorce?

The first step in any international divorce is to determine before which court the claim should be filed. This matters because the court dealing with the divorce will not always be the court competent to resolve every issue relating to assets located in other countries.

In the European Union, jurisdiction in matrimonial matters is mainly determined by criteria such as the habitual residence of the spouses, their last common habitual residence or the residence of one of them in certain circumstances.

If the spouses do not live in the European Union, have different nationalities or the assets are located in third countries, determining jurisdiction may be more complex and requires a case-by-case analysis.

 

Which law governs the divorce and the division of assets?

The fact that the divorce is processed in Spain does not necessarily mean that Spanish law is the only law applicable. In the European Union, the Rome III Regulation allows spouses, in certain cases, to agree which law will apply to their divorce from a set of options linked to habitual residence, nationality or the court before which the proceedings are brought.

In addition, for the division of the matrimonial property regime —that is, to determine how the common assets are divided— the applicable law may be different from the law applicable to the divorce. Regulation (EU) 2016/1103 establishes specific criteria on jurisdiction, applicable law and recognition of decisions in matters of matrimonial property regimes where international elements are involved.

For this reason, in an international divorce with assets, it is not enough to know where the claim is filed: it is also necessary to analyse which law governs the divorce, which law governs the matrimonial property regime and what effects the decision will have in the countries where the assets are located.

 

Real estate abroad

Real estate has a special characteristic: it is usually closely linked to the law of the country where it is located. This means that, even if the divorce is processed in Spain and an agreement is reached on the division of assets, the requirements of the country where the foreign property is located may need to be met for that agreement to have effect over the asset.

In practice, this may involve:

• Registering the Spanish agreement or judgment in the land registry of the foreign country.
• Carrying out an additional procedure in that country to enforce or formalise the division.
• Working with a local lawyer in the country where the property is located.
• Reviewing the tax implications associated with the transfer or allocation of the asset.

 

 

Bank accounts abroad

Balances held in bank accounts abroad may form part of the marital estate if they were acquired during the marriage and are subject to the applicable matrimonial property regime, such as the community of property regime or an equivalent system.

To divide assets abroad during the divorce, it may be necessary to submit bank documentation in the Spanish proceedings and, in some cases, obtain cooperation or a decision in the country where the bank is located.

Concealing accounts or balances abroad during divorce proceedings may have civil, procedural and even tax consequences, especially if those assets should have been declared to the relevant tax authorities.

 

Investments and financial assets

Investment funds, pension plans, shares, company holdings or other financial assets located or registered abroad require an accurate valuation. Not all assets are divided in the same way, nor do they have the same tax treatment.

In these cases, it is advisable to review, among other matters:

• The formal ownership of the asset.
• The date of acquisition.
• The applicable matrimonial property regime.
• The updated valuation of the asset.
• Any legal or tax restrictions in the country where it is registered.

 

 

What if the other spouse hides assets abroad?

Concealment of assets is one of the most common problems in divorces with international elements. In these cases, it may be necessary to request banking information, provide documentary evidence, review tax returns or initiate asset investigation measures.

In Spain, Form 720 is an informative tax return relating to certain assets and rights located abroad. Although its purpose is tax-related, in some proceedings it may provide relevant information about declared foreign assets.

A lawyer specialising in International Family Law can advise you on what information may be obtained, how to request it and how to use it within the divorce proceedings.

 

Pension plans and foreign retirement rights

If one or both spouses have contributed to pension systems abroad, it may be complex to determine whether those rights form part of the marital estate, how they should be valued and whether they can be divided in the divorce.

Each country has its own system and its own rules on the divisibility of pension plans, retirement rights or employment benefits accumulated during the marriage. For this reason, in these cases it is often necessary to coordinate the Spanish legal analysis with local advice in the relevant country.

 

The importance of acting early

In divorces involving assets abroad, the timing of the decisions matters greatly. Waiting until the conflict escalates can reduce the available options and make it more difficult to locate, value or protect the assets.

The sooner the full financial and property situation is analysed and a strategy is defined, the stronger the position will be in the proceedings. This is especially important when there are properties, bank accounts, companies, investments or pension rights in several countries.

 

How Zabalgo Family Lawyers can help you

At Zabalgo Family Lawyers, we specialise in International Divorce in Spain and have been advising families with complex financial situations across several countries for more than 25 years. We analyse your case as a whole, coordinate with local lawyers when necessary and support you throughout the entire process.

Request a consultation with Zabalgo Family Lawyers

Paloma Zabalgo is a lawyer specialising in Family Law and President of the Family and Succession Law Section of the Madrid Bar Association.