Spanish Inheritance Tax Laws – a change

Inheritance laws throughout Spain until recently differed depending on whether the deceased was a resident or a non-resident and where they lived.

For example if the deceased was resident in Andalucia then each inheritor would enjoy tax relief on the first 175,000 Euros. If the deceased was not resident in Andalucia there was no tax relief and tax must be paid on the full amount of the inheritance. This was considered by many, especially those who had to pay the tax, not only discriminatory but against EU regulations.

On 03/09/2014 the EU agreed and instructed the Spanish government to revise their inheritance laws and put an end to discriminatory tax practices. A new law, 26/2014 dated 27 November, came into force on the first of January 2015 putting an end to the discrimination and allowing inheritors to claim back any discriminatory taxes paid in the previous four years.

According to where the deceased and the inheritors are resident, the new rules differ and in addition to state law there are 17 autonomous regions in Spain each with its own inheritance laws. Andalucia is one of them.
A) If the deceased was resident in Spain and the inheritor is resident in Spain: Then inheritors pay taxes on any worldwide property and assets they inherit, according to the regulations of the autonomous region where the deceased was resident.
B) If the deceased was resident in Spain and the inheritor is not resident in Spain but is resident in another EU country: Then inheritors pay taxes on any property and assets they inherit that the deceased held in Spain, according to the regulations of the autonomous region where the deceased was resident.
C) If the deceased was resident in Spain and the inheritor is not resident in Spain and is not resident in any other EU country: Then inheritors pay taxes on the property and assets they inherit that the deceased held only in Spain. According to the Spanish state inheritance regulations.
Or if the deceased was not resident in Spain
A) If the deceased was not resident in Spain but was resident in another EU country and the inheritor is resident in Spain: Then inheritors pay taxes on any worldwide property and assets they inherit, according to the rules of the autonomous region where the deceased held the majority of their assets. If there are none, then the rules of the autonomous region where the inheritor is resident, will apply.
B)  If the deceased was not resident in Spain but was resident in another EU country and the inheritor is not resident in Spain: Then inheritors pay taxes on any property and assets they inherit that the deceased held only in Spain, according to the rules of the autonomous region in which the deceased held the majority of their assets.

Finally, the deceased was not resident in Spain and not resident in another EU country.
A)  If the deceased was not resident in Spain or another EU country but the inheritor is resident in Spain: Then they pay taxes on all the worldwide property and assets they inherit, according to the Spanish state rules on inheritance.
B) If the deceased was not resident in Spain and not resident in another EU country and the inheritor is also not resident in Spain: Then they pay taxes  on property and assets they inherit that the deceased held only in Spain. According to the Spanish state rules on inheritance.

As usual, we advise our readers to take proper advice on all matters concerning the law.

joseluis@intercala.com
www.intercala.com