Non-resident Inheritance Tax in Spain

Non-resident Inheritance Tax in Spain

The Inheritance Tax will be determined according to the residence of the interested parties or the situation of the assets to be inherited.

Consequently, the tax rules of one or another autonomous community (if heirs are resident in Spain) or general tax rule of the Spanish State (for non – resident heirs in Spain) will apply, so the inheritance tax payable can ultimately vary greatly depending on the place of residence of the heirs, since the autonomous rules usually provide for tax breaks and reductions, not included in the state norm of application to non-residents.

However, the situation is much more favourable to the resident heir in an EU country, for the judgment of the Court of Justice of the European Union of 3 September 2014 has determined that Spain has breached Community law by allowing established differences in the tax treatment of successions between heirs resident and non-resident in Spain.

In order to comply with this Judgment and eliminate the alleged discrimination described above, Law 26/2014 of November 27, which adapts the Spanish Inheritance Tax legislation to the provisions of the Judgment of the Court of Justice of the European Union of September 3, 2014 (Case C-127/12), applies the norms of the autonomous community where the principal goods are or the deceased resides:

A) In the case of inheritance of real estate property, if the deceased had been resident in a Member State of the European Union, other than Spain, the heirs shall be entitled to the application of the regulations of the Autonomous Community where the said goods are located.If there is no property located in Spain, the rules of the Autonomous Community in which he/she resides will apply to each heir.

B) In the case of inheritance, if the taxpayer has been resident in an Autonomous Community, taxpayers who are resident in a Member State of the European Union shall be entitled to the application of the own regulations approved by said Autonomous Community.

Thus, for goods situated in Barcelona or Catalonia, reductions and bonuses would be applied for spouses and children not provided for in the state regulations.

Persons resident in Spanish territory shall be considered to be in the territory of an autonomous community when they remain in the territory of the latter a greater number of days of the period of the five years immediately preceding the date of accrual of the tax.

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