Spanish inheritance tax is a tax on the transfer of assets and rights after the death of a person. This tax applies to both residents and non-residents who inherit property located in Spanish territory or rights that can be exercised in Spain.
It is payable by the heirs or beneficiaries designated in the will of the deceased. In the case of non-residents, they are also liable to tax if they receive assets or rights located in Spain, regardless of their nationality or place of habitual residence.
Key Rules for non-residents and expats
Inheritance tax in Spain is levied on the acquisition of assets and rights by inheritance, legacy or any other inheritance title. For non-residents, the tax is levied on assets and rights located in Spanish territory. Since 2015, European legislation has allowed non-residents to enjoy the same regional reductions as residents in certain circumstances.
Regional variations in inheritance tax
Each autonomous community has the power to establish its own regulations, which generates significant differences in the applicable tax rates and allowances. For example, regions such as Madrid and Andalusia offer very favourable exemptions or reductions, while other regions have higher rates.
Calculating inheritance tax in Spain
The calculation of inheritance tax is based on the net value of the inherited assets. First, the gross value of the assets is determined and debts and justified expenses are deducted. Then, multiplier coefficients are applied according to the degree of kinship and the pre-existing wealth of the heir.
Taxable assets for non-residents
Assets subject to tax for non-residents include:
– Real estate properties in Spain.
– Financial assets managed in Spanish institutions.
– Vehicles registered in Spain.
Tax rates and allowances
Tax rates vary from 7.65% to 34%, depending on the net value of the inherited assets. The autonomous communities offer tax relief that can significantly reduce the tax burden, especially for spouses, descendants and direct ascendants.
Exemptions and deductions available
The main exemptions include:
- Main residence: up to 95% of its value under certain conditions.
- Family businesses: reductions of up to 100% if the legal requirements are met.
- Specific reductions for the disabled.
How to pay Spanish inheritance tax as a non-resident
Payment of the tax must be made to the tax office of the autonomous community where the assets are located. To do so, it is necessary to obtain a Foreigner’s Identification Number (NIE) and a tax representative in Spain.
Timeframe and deadlines for payment
The tax must be paid within six months after the death. It is possible to request an extension of a further six months, but this carries interest for late payment.
Required documentation
Documents required include:
– Death certificate.
– Will or declaration of heirs.
– Deeds of inherited property.
– Declaration of assets and rights.
Strategies to minimize inheritance tax in Spain
Estate planning tips for expats
- Distribute the estate: Planning the distribution of assets during life can reduce the tax burden.
- Create legal structures: The use of partnerships or trusts can be beneficial, depending on the applicable law.
- Taking advantage of regional reductions: Choosing a favourable tax residence in Spain
Importance of professional advice
Having a lawyer in Spain is key to ensuring compliance and optimising your tax burden. They can also help you identify customised strategies and manage the paperwork efficiently.
