Spanish Inheritance Tax requires specialist legal advice for your own situation. Because the estate will not be released by the Spanish authorities until the Spanish Inheritance Tax has been paid, our simple advice is to make sure that you have enough life cover to cover not only the mortgage, but also the estimated Spanish inheritance tax bill.
Whatever provision you make in your Will, Spanish Inheritance Tax is due on any property situated in Spain, whether the owners are resident or not, and there are no exceptions to this (unless the property is owned by a company).
The Spanish inheritance tax is charged on the recipient, not on the estate. Non-residents must prove their world-wide wealth to the Spanish tax authorities, and pay the appropriate rate of tax.
Spanish Inheritance Tax is governed by the 1988 Ley del Impuesto sobre Sucesiones y Donaciones (Inheritance Tax Law). This provides that non-residents who own property or rights in Spain, of whatever nature, are automatically subject to Spanish inheritance tax. It also creates some important exemptions which reduce the tax for smaller inheritances, and “multiplication coefficients” which increase it for larger inheritances, and for inheritances received by non-relatives or wealthy inheritors. This makes it a very complex subject, as the tax not only depends on the value of the estate, but on the wealth of the recipient.
Spanish inheritance tax for Spanish residents and for non-residents:
A new law entered in force at the end of 2014, which changes drastically the Inheritance Tax in Spain.
During years, EU Non Residents in Spain were not treated in the same way as Spanish Residents for Inheritance Tax. This treatment has now considered as discrimation from the European High Courts, and, consequently, forced to Spain to change Inheritance Tax normative, in order to allow EU Non Residents to get the same benifts and reducton in taxes as Spanish Residents.
In September 2014, European High Courts decision confirmed discriminatory treatment to Non Spanish Residents made by Tax Laws from Spanish regional governments. Before this decision, Spanish residents may have access to determinate benefits and tax reductions in inheritance, offered by the different regions in Spain. Non residents were not considered as beneficiaries of these reductions, so, consequently, paying more taxes than Spanish residents.
Just AFTER 2015, a new regulation of the Spanish government entered in force.
Main consequences are:
EU citizens non residents in Spain will be treated as “residents” as per inheritance tax reductions. So, non residents have the same rights as residents for reductions and taxes.
There is a process to claim back the over-taxed payments from all those payers who were taxed with the previous system.
Click here to know more about how to claim back tax payments from Inheritance Tax.
HOW CALCULATE SPANISH INHERITANCE TAX
In Spain, inheritance tax is a rate from 7.65 to 34% from the tax base, and this is executable in all the Spanish territory. However, the tax base of the tax can be reduced with the following reductions:
– Descendants up to 21 years: From € 15,956.87 to 47,858,59 euros, depending on age.
– Descendants or adoptees over the age of 21 years, surviving spouses and ascendants: € 15,986.87.
– Other family members: € 7,993.46
These reductions are the minimum reductions that can be applied in a case of inheritance. But each region can improve and increase (not reduce) the reductions set by the overall way.
So, let us list a few of the tax reductions from various regions:
A) VALENCIA REGION
REDUCTION ON THE TAX BASE and TAX RATE for ASCENDANTS, DESCENDANTS and SURVIVING SPOUSE
– Descendants, or adopted younger than 21 years old: 100.000 – 156.000 EUR, and then, reduction of the 75 % on the Tax Rate
– Descendants, or adopted older than 21 years old, surviving spouses, and ascendants: 100.000 EUR, and then, reduction of the 50 % on the Tax Rate.
– IN CASE OF PERMANENT RESIDENCE: REDUCTION 95 %
In case that the property inherited was the permanent residence of deceased, there will be a reduction on the tax base of the 95 %, with a máximum of 150.000 EUR, subjected to the following conditions:
Only when inheritors are descendants, ascendants, surviving spouse, or correlatives older than 65 years old (living with the family at least 2 years before the decease).
The property must be used as the permanent residence of the inheritors DURING, AT LEAST, 5 YEARS.
B) MURCIA REGION
There are some reductions of the base of the tax when the inheritors are receiving the permanent residence.
And there is a reduction in the tax rate of 99 % in case of descendants under 21 years old, and 60 % on descendants over 21 years old and surviving spouses.
So, for Murcia Region, once that you are older than 21 years, owning a property in Murcia, and being resident in Spain, you will pay the same as per non residents!.
C) ANDALUCIA REGION
REDUCTION ON THE TAX BASE:
- Permanent residence. Reduction on the Taxable Base for the 99,99 % on the permanent residence value.
- For surviving spouse, descendants, and ascendants, reduction of 175.000 EUR from the inheritance base to be received by each one of the inheritors.