Inheritance Tax

Inheritance tax SpainThe Inheritance Tax is one of the most complex personal taxes you may find in Spain as there are 17 different laws to apply depending on the “Comunidad Autónoma” or “Region” where the deceased person has lived more time during the last 5 years.

Just to give you a short idea, it is possible to pass away in Murcia and pay Inheritance Tax according to the Regulation of Andalucía if the deceased lived there more than 2 years and 6 months in the last 5 years.

This only gives an idea of how complicated it could be to find out which regulation applies to the probate. After this first step, we have to find the allowances and discounts we could apply to the particular case as it is totally different from a Community to another and this is why we cannot generalise and every single case has to be studied considering its particularities and personal circumstances of all the inheritors.

Manuel Antonio Perez has designed ways of preparing the whole probate for all the inheritors if they live in Spain or outside, to make it as easy as possible for them as we understand the short period of time to do all the paperwork is better to use it to recover from the lost of the relative. With only 1 meeting, we would get all the information needed and complete the process within 2 months, including the change of ownership in the Land Registry and the payment of the taxes while inheritors would not have to do anything, as we are here to help you and your family.

For example, in the Valencian Community, there is a free allowance of 100,000€ per inheritor before any tax is due, 220,000€ if the inheritor has a disability certified between 33% and 66% and 340,000€ if the disability is higher than 66%. To get the value which is going to be taxable, we have to do a valuation of all the assets the inheritor is receiving worldwide, not only in Spain, if the Inheritor is a Fiscal Resident in Spain, or only the ones allocated in Spain if the inheritor is a Non Fiscal Resident. If we consider the case of a Fiscal Resident in our example, we can also reduce the value of the main home on a 95% (With a limited discount of 150,000€) but the inheritor has to assume the compromise of not selling the property within 5 years.

After those allowances and discounts, we can say that the remaining over the free allowance is the amount in which you are going to pay taxes. There is a scale with several bands where the higher is the amount, the higher is the tax rate. This scale is the same for all the communities and goes from 7.65% to 34%.

For a person resident in the Valencian Community who receives an inheritance from the husband or wife with the following assets in Joint names and values:

Asset Value Percentage of ownership Value inherited Discount applicable Reduced value
Main home Spain 300,000€ 50% 150,000€ 95% 7,500€
Second home 300,000€ 50% 150,000€ 150,000€
Bank Accounts Spain 50,000€ 50% 25,000€ 25,000€
Bank AccountsOutside Spain 50,000€ 50% 25,000€ 25,000€
350,000€ Total value taxable 207,500€

The total value which is going to be taxed is 107,500€ after including the free allowance of 100,000€ and, after applying the tax rates to 107,500€, we got the tax to pay as 13,626.61€ that can be reduced on a 75% and finally, the tax to pay would be 3,406.65€.

Please, keep in mind that all these reductions will apply only if the tax payer asks for it, as the tax office will not apply it voluntarily. This is why you have to choose a professional who knows what to do and not a general solicitor, lawyer or accountant unless is specialised on this matter.

Please, do contact us for further information or to request an estimation on the Inheritance Tax that you or your inheritors will have to pay in Spain and we will arrange a telephone call to discuss it or a meeting in our Main Office in Benijófar (Alicante), or other locations as Altea (Alicante), Mazarrón (Murcia) or Mojácar (Almería) or you can also leave a comment below.

Have a look to other posts for further information:

Consequences of a Bad Tax Advice

Overseas Asset Declaration

3 Comments

  1. Really appreciate you sharing this post.Thanks Again. Really Great.

    Reply
  2. Thanks for the article, is there any way I can receive an email whenever you publish a new update?

    Reply
    • Thanks for your comments John.

      If you provide us by email with your contact details, we will keep you informed about the last and more important news on tax and legal matters in Spain.

      Please, send it to info@tacs4expats.es or call into our office on Monday, between 9:30 and 16:30, speak to our Office Manager and leave your details with her so we could include you on our database.

      Reply

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