Spanish Inheritance Tax

 

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2015 The new rules for the Inheritance Tax in Spain
The new rules for the inheritance tax in Spain


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.


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
Spanish inheritance law in Andalucía Spanish inheritance law in Balearic Islands Spanish inheritance law in Canary Islands Spanish inheritance law in Murcia region Spanish inheritance law in Valencian communitySpanish inheritance law

Who is bound by the Spanish Inheritance Tax


  • Taxpayers who have their habitual residence in Spain, 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 by the way of inheritance.

  • Likewise will be obliged by the Spanish inheritance tax, 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.
Inheritance tax in Spain

The tax base of the Inheritance Tax in Spain


The tax base of the inheritance tax in Spain 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 State or Autonomous communities regulations.


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


In the calculation of the inheritance tax in Spain, 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 State regulations

Relationship groups

Reductions according to State rules

Group I: descendants and adopted under 21 years

Reduction € 15,956.87 + 3.990'72 € / year less than 21.

Límit: € 47,858.59

Group II: descendants and adopted 21 years and over. Ascendants. Spouses
Reduction € 15,956.87
Group III: Family collaterals 2nd and 3rd degree. Ascendants and descendants in law
Reductión € 7.993,46
Reduction for habitual residence
95% limit of € 122,606.47
Disabilities
  • Disability =/> 33% and less than 65% » € 47858.59
  • Disability =/> 65% » € 150,253.03
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
95%*
Reduction due to inheritance Farming business
from 50% up to 90%*

*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 State law. This regulation applies to the taxpayers who are not resident in Spain nor in a country pertaining to the EU or EEA. For the rest of the cases, the inheritance tax is ruled by the Autonomous community where the properties, representing the largest value of the estate, are located.

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
Spanish inheritance yax in Andalucía Spanish inheritance tax in Balearic Islands Spanish inheritance tax in Canary Islands Spanish inheritance tax in Murcia region Spanish inheritance tax in Valencian communitySpanish inheritance law

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


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

Tax rates according to State rules

Net tax base

Up to €

Gross Tax payable

Rest net tax base

Up to €

Applicable Rate

%

0,00

 

7.993,46

7,65

7.993,46

611,50

7.987,45

8,50

15.980,91

1.290,43

7.987,45

9,35

23.968,36

2.037,26

7.987,45

10,20

31.955,81

2.851,98

7.987,45

11,05

39.943,26

3.734,59

7.987,45

11,90

47.930,72

4.685,10

7.987,45

12,75

55.918,17

5.703,50

7.987,45

13,60

63.905,62

6.789,79

7.987,45

14,45

71.893,07

7.943,98

7.987,45

15,30

79.880,52

9.166,06

39.877,15

16,15

119.757,67

15.606,22

39.877,16

18,70

159.634,83

23.063,25

79.754,30

21,25

239.389,13

40.011,04

159.388,41

25,50

398.777,54

80.655,08

398.777,54

29,75

797.555,08

199.291,40

higher amounts

34,00


These Tax rates of the inheritance tax in Spain are according to State law. This regulation applies to the taxpayers who are not resident in Spain nor in a country pertaining to the EU or EEA. For the rest of the cases, As seen above, the Spanish inheritance tax is ruled by the Autonomous community where the properties, representing the largest value of the estate, are located.

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 Autonomous community where he resided.

See the Spanish inheritance Tax Rates in other Communities:

Andalucia Balearic Islans Canary Islands Murcia Valencian Community State Regulations
Spanish inheritance yax in Andalucía Spanish inheritance tax in Balearic Islands Spanish inheritance tax in Canary Islands Spanish inheritance tax in Murcia region Spanish inheritance tax in Valencian community


The tax liability


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

Multiplying Coefficients. State 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 State law. This regulation applies to the taxpayers who are not resident in Spain nor in a country pertaining to the EU or EEA. For the rest of the cases, the different regulations of the Autonomous communities determine the Spanish inheritance tax.

See the Spanish inheritance Tax Liability in other Communities:

Andalucia Balearic Islans Canary Islands Murcia Valencian Community State Regulations
Spanish inheritance yax in Andalucía Spanish inheritance tax in Balearic Islands Spanish inheritance tax in Canary Islands Spanish inheritance tax in Murcia region Spanish inheritance tax in Valencian community



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.


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