Spanish Inheritance Tax

VALENCIAN COMMUNITY

The inheritance tax in Spain

The Spanish inheritance tax is an imposition that is paid by the recipient of the inheritance in Spain. This tax is due in case the heir is resident in Spain or the asset being inherited is located in the Spanish territory.

Inheritance Tax in Spain for non residents

The Act 26/2014, of November 27 has changed the rules on inheritance and gift tax in Spain applicable to non-residents who are citizens of an European Union country (EU) or European Economic Area (EEA). From now on, the Europeans citizens non-residents in Spain will be taxed by the Autonomous community tax rate of the place where the higher value property inherited is located, and not by the Spanish state regulation of the Inheritance tax, as has occurred until 2015.

This change is due to the recent ruling of European Court of Justice (September, 3, 2014 in Case C-127-12) that considers illegal the discrimination between residents and non-residents on the application of the Spanish inheritance tax. While the residents were paying the inheritance tax according with the autonomous legislation (with possibility of better deductions and tax reductions), the non-residents were governed by the state standard of the Inheritance tax, extremely unfavorable.

The amendment in the Spanish inheritance tax is based on establishing a special regime for non-residents in Spain, who are citizens of a country of the EU or the EEA, consisting of equalize their treatment with residents in Spain,

The most significant changes in the Spanish inheritance tax for non residents are:

REAL LIABILITY

• When the deceased is non-resident in Spain, the heirs will be taxed by the inheritance rules of the Autonomous Community in which the properties representing the largest value of the estate are located.

PERSONAL LIABILITY

• If there were no property to inherit in Spain, will apply the rules of the Autonomous community in which each heir resides.
• When the testator is resident in Spain, must apply the rules of the Autonomous community where he was resident.

Regarding to the Spanish inheritance tax, is considered that a resident in Spain resides in certain Autonomous Community, when lives in its territory the greater number of days in the period of the immediately preceding five years to the tax accrual (decease date).

Spanish Inheritance Law

The Inheritance tax is regulated by Act 29/1987, which applies generally in Spain, but each region (Autonomous Community) has the power to establish reductions in the tax base, the tax rates and deductions applicable. As we have seen the law has been amended by the recent Act 26/2014, of November 27, giving to non residents in Spain the same benefits that the residents have in the Spanish inheritance tax. In the Valencian Community is regulated by the Valencian Community Act 13/1997.

Every Autonomous Community has its own regulations about the Spanish inheritance tax. See some examples:

Andalucia	Balearic Islans	Canary Islands	Murcia	Valencian Community	State Regulations

Who is bound by the Spanish Inheritance Tax (Valencian Community)

• Taxpayers who have their habitual residence in Spain (Valencian Community), regardless of where are located the properties or rights inherited.


• Are also required to pay the tax, the non-residents in Spain receiving property and / or rights located in Spain (Valencian Community) by the way of inheritance.


• Likewise will be obliged by the Spanish inheritance tax (Valencian Community), the reception of amounts resulting from life insurances when the contract was made with Spanish insurers or has been hired in Spain with foreign entities which operate in the Spanish territory.

The tax base of the Inheritance Tax in Spain (Valencian Community)

The tax base of the inheritance tax in Valencian Community is the net value of the individual acquisition of each heir, being understood as the real value of the property and rights reduced by any charges and debts that may be deductible in accordance with the Valencian Community regulation.

Can be deducted generally the amounts owed by the deceased as long as their existence is proved. Also will be deductible of the Inheritance tax the amounts owed by the deceased to any of the public administrations in Spain.

The tax benefits. Reductions on the base of the Inheritance tax (Valencian Community)

In the calculation of the inheritance tax in Spain (Valencian Community), to the net value (value of properties and rights minus debts) of the goods inherited, depending on the family relationship with the deceased and the type of property inherited, will apply reductions on the tax base. These are the reductions according to the Andualucia regulations

Relationship groups	Reductions according to Valencian Community rules*
Group I: descendants and adopted under 21 years	Reduction € 100,000 + 8,000 € / year less than 21. Límit: € 156,000
Group II: descendants and adopted 21 years and over. Ascendants. Spouses	Reduction € 100,000
Group III: Family collaterals 2nd and 3rd degree. Ascendants and descendants in law	Reductión € 7.993,46
Reduction for habitual residence	95% limit of € 150,000*
Disabilities	Disability =/> 33% and less than 65% » € 120,000 Disability =/> 65% » € 240,000
Life insurance spouse, ascendants and descendants	100% Limit € 9,195.49
Reduction due to inheritance Family business	95%*
Reduction due to inheritance of historical heritage	from 50% up to 95%*
Reduction due to inheritance Farming business	95%*

*There are more specific rules. Consult us to know the exact figures of your Spanish inheritance tax

These reductions of the Spanish inheritance tax are according to the Valencian Community. This regulation applies to the taxpayers who inherit properties, representing the largest value of the estate, located in Andalucia.

Not existing property to inherit in Spain, will apply the rules of the Autonomous community in which each heir resides. And, being the deceased resident in Spain, by the rules of the community where he resided.

See the Spanish inheritance tax Reductions in other Communities:

Andalucia	Balearic Islans	Canary Islands	Murcia	Valencian Community	State Regulations

Once already it's been implemented the appropriate reductions to the tax base of the inheritance tax, we have the net tax base, on which the tax rate will apply.

Spanish Inheritance Tax Rates (Andalucia)

To the reduced net value is applied the following tax rates:

Tax rates according to Andalucia rules
Net tax base Up to €	Gross Tax payable €	Rest net tax base Up to €	Applicable Rate %
0	0	1.330.000	7,65
1.330.000	101.745	1.276.000	8,50
2.606.000	210.205	1.303.000	9,35
3.909.000	332.036	1.303.000	10,20
5.212.000	464.942	1.303.000	11,05
6.515.000	608.923	1.303.000	11,90
7.818.000	763.980	1.303.000	12,75
9.121.000	930.113	1.303.000	13,60
10.424.000	1.107.321	1.303.000	14,45
11.727.000	1.295.604	1.303.000	15,30
13.030.000	1.494.963	6.505.000	16,15
19.535.000	2.545.521	6.505.000	18,70
26.040.000	3.761.956	13.010.000	21,25
39.050.000	6.526.581	26.000.000	25,50
65.050.000	13.156.581	65.050.000	29,75
130.100.000	32.508.956	En adelante	34,00

These Rates of the Spanish inheritance tax are according to the Valencian Community. This regulation applies to the taxpayers who inherit properties, representing the largest value of the estate, located in Valencian Community.

Not existing property to inherit in Spain, will apply the rules of the Autonomous community in which each heir resides. And, being the deceased resident in Spain, by the rules of the community where he resided.

See the Spanish inheritance Tax Rates in other Communities:

Andalucia	Balearic Islans	Canary Islands	Murcia	Valencian Community	State Regulations

The tax liability

The tax payable inheriting in Spain (Valencian Community) is obtained by applying to the Gross payable tax, the multiplying coefficient depending on the pre-existing assets of the heir.

Multiplying Coefficients Valencian Community rules
Pre-existings assets €	Relationship Groups
	I y II	III	Rest
From 0 up to 402.678,11	1,0000	1,5882	2,0000
Over 402.678,11 up to 2.007.380,43	1,0500	1,6676	2,1000
Over 2.007.380,43 up to 4.020.770,98	1,1000	1,7471	2,2000
Over de 4.020.770,98	1,2000	1,9059	2,4000

These multiplying coefficients used to calculate the Spanish inheritance tax are according to Valencian Community rules.

To the amounts obtained due to the application of these coefficients will be applied the Reduction of the 75% as a Tax bonus to the heirs included on the following groups:

Relationship groups	Tax bonus 75% according to Valencian Community rules*
Group I	Tax bonus 75%
Group II	Tax bonus 75%
Disabilities	Physical =/> 65% » Tax bonus 75%  Mental  =/> 33% » Tax bonus 75%

*There are more specific rules. Consult us to know the exact figures of your Spanish inheritance tax

See the Spanish inheritance Tax Liability in other Communities:

Andalucia	Balearic Islans	Canary Islands	Murcia	Valencian Community	State Regulations

Deduction in case of international double taxation by Inheritance tax

When the taxation is due to PERSONAL LIABILITY, the taxpayer is entitled to deduct the lower of the following two amounts:

• The actual amount of the paid abroad in respect of similar tax that affects the current capital gains subject to tax in Spain by the Inheritance tax.
• The result of applying the effective average rate of the Spanish inheritance tax to the capital gains coming from goods or rights located abroad, on which is been already applied a similar tax by a foreign country.