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Inheritance and Gift Tax in Spain

5th September 2021

Inheritance and Gift Tax in Spain

It is never pleasant when having to deal with death and tax; however it cannot be avoided and must be declared within a certain time period so it is fundamental both you and your heirs understand the implications.

Each Autonomous Community in Spain has its own rules, which comply with the State legislation but the tax allowances vary significantly between each region.

The Spanish Inheritance Tax is the same as Gift Tax, which means that the tax for someone who inherits or is gifted an asset in Spain will be the same.

TAX RESIDENTS IN SPAIN

If you are a tax resident in Spain, you will have a personal obligation to declare to the Spanish Tax Authorities any worldwide inheritance that you are a beneficiary of.  If there is a double taxation agreement between both countries, then you should be able to offset tax paid in the other country.

You have six months from the date of death to present the tax return but this can be extended for a further six months if needed.

The tax can be filed at your local Tax Office in the corresponding Autonomous Community.

NON RESIDENTS

As a non resident tax payer of Spain you have a real obligation to pay tax on those assets/rights located in Spain. 

The tax will have to be filed in Madrid.

The current Inheritance and Gift legislation does not allow non EU residents to apply the allowances of the corresponding autonomous community, however in 2018, the Supreme Court confirmed that both residents of the EU and the EEA, as well as in any other country other than Spain, have the same right as residents of Spain to apply the corresponding regional regulations regarding Inheritance and Gift Tax.

Although it has not yet materialized in a new legislative reform of this Law, in practice the National Tax Management Office considers correct the declarations submitted by non-EU residents who have applied the regulations of the autonomous community and they are even granting refunds for those non-EU citizens who had initially paid the tax under state regulations as opposed to their autonomous community.

WHAT IS THE TAX IN SPAIN?

It is important to note that there are no exemptions between spouses as there are in other countries.  In Spain, the National Government set the tax rates that fall within the following brackets:

Value of estate (euros)%
Up to 7,9937,65
7,993 – 31,9567,65 – 10,2
31,956 – 79,88110,2 – 15,3
79,881 – 239,38915,3 – 21,25
239,389 – 398,77825,5
398,778 – 797,55529,75
797,555 +34

The tax reliefs that can be applied to reduce your inheritance tax will depend on the relationship between the deceased and the heir, which fall in to the following groups:

  • Group I: children (natural and adopted) under 21 years get an allowance of up to €47,859.
  • Group II: children (natural and adopted) over the age of 21, grandchildren, spouses, and parents/grandparents (including adoptive) get an allowance of €15,957. Some regions may recognize unmarried partners registered under a pareja de hecho.
  • Group III: siblings, aunts, uncles, nieces, nephews, in-laws, and their ascendants/descendants get an allowance of €7,993.
  • Group IV: cousins, all other relatives, unmarried partners (unless the region allows it) and those who are unrelated get no allowance.
  • Those with disabilities receive an allowance of either €47,859 or €50,253, depending on the extent of the disability.

Some of the Autonomous Communities increase the tax allowance, such as Valencia, Andalucía, Cataluña, Canary Islands who provide significant reductions for spouses and children.


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Information by E.B.F Consulting S.L. E.B.F Consulting has been providing tax and accounting services to expatriates in Europe since 1999. Office is based in Lanzarote, Spain. Visit www.ebfconsulting.com for more details. Copyright© E.B.F Consulting 2021 All Rights Reserved.