Spanish Inheritance Tax
Below you will find answers to many common questions about Inheritance Law in Spain. Probably the first question everyone has is, ‘Where do I even start to deal with an inheritance’?
Well, essentially inheritance is a process in which you are seeking to transfer the title to the assets of a deceased person to their named or legally assigned beneficiaries.
This will require you to show proof of the death of the deceased, the identity of the beneficiaries, the existence of a will – if any, and the existence and value of assets. Finally you will need to show evidence of payment of any taxes before having legal title in assets transferred to their new owners.
How can I find out if a will exists?
The existence of a will in Spain can be confirmed by requesting the ‘Certificado de Registro General de Actos de Última Voluntad’ (RGAUV). The RGAUV certificate is issued by the central office for wills and testaments in Madrid and verifies the existence – or not – of a Spanish will.
Will I be contacted about an inheritance?
No. A notary, the official that typically registers a will created in Spain, will never contact prospective beneficiaries. It is in fact a responsibility of the beneficiaries themselves to contact the notary where the will was drawn-up to view the contents.
Must I travel to Spain to finalise the inheritance?
In most circumstances all of the procedures required to process an inheritance can be carried out at distance. Please contact us for more information.
Who qualifies for regional inheritance tax exemptions in Spain?
By Article 7 of the relevant Spanish statute (Ley de Impuestos sobre Sucesiones y Donaciones 1987) where the heir or beneficiary of assets located on Spanish territory is ordinarily resident outside Spain, then they are subject to the inheritance tax rules of the Spanish State rather than the regional rules.*
* Please note that following a judgment by the European Court, the Spanish government has passed into law Ley 26/2014, which came into force on January 1st, 2015. The new legislation provides that European Union citizens, ordinarily resident in another European country, may apply any deductions available to residents of the region in Spain in which their assets are located. Please view the regional tax deductions.
For non-EU citizens, the national level tax exemptions below apply.
I have been living in Spain for several years. The law of which state applies to how my assets are distributed?
While the subject of some confusion due to slightly conflicting court decisions in the UK and Spain it appears to be now settled that where anyone is domiciled in another country then the laws of that country shall apply (in the absence of an international treaty with Spain on the matter).
Accordingly, in this case, for those domiciled in the UK the succession laws of England & Wales, Scotland or Northern Ireland shall apply depending on where domiciled.
Most people who have only a holiday home in Spain or have spent a relatively brief period of their lives in Spain will not be domiciled there. Under the succession laws of the UK a person may dispose of their assets freely without restriction (unlike Spain).
However, this does not mean that assets such as property, vehicles, cash etc are not subject to Spanish Inheritance Tax.
What can I do if no will has been made?
Please see the article posted in the Articles & Guides section about claiming an inheritance in Spain where there is no valid will
What should I do if the will is not Spanish?
Please see the article posted in the Articles & Guides section about claiming an inheritance with a non -Spanish will
Can an outstanding mortgage be deducted from the inheritance?
Yes. Any publicly executed debt such as a mortgage may be deducted as may the final health costs and funeral expenses up to prescribed limits.
How much time is given to pay any inheritance tax that is due?
A time-limit of six months is applied such that failure to pay any due taxes within six months from the date of death of the testator will result in fines being applied.
There is a statute of limitations such that if you wait for 4.5 years (the initial six month period plus four years), the liability for inheritance tax passes and good title can then be passed.
However, it should be understood that at any point during that time, should the authorities become aware that the owner has passed away, they can present a bill with the fines and penalties referred to above.
Of course, given the financial crisis that Spain is enduring there is considerably more pressure on regional governments to ensure that all taxes are collected.
What are the rates of inheritance tax in Spain?
See the article: Inheritance tax rates for a straightforward guide with examples.
How much could I be fined for late payment?
According to Article 27.2 of the ‘Ley General Tributaria’ the charges for late payment of Inheritance Tax are as follows:
- within 3 months of the deadline – 5% surcharge;
- within 6 months of the deadline – 10% surcharge
- within 12 months of the deadline – 15% surcharge
In the first three scenarios, the surcharge is a percentage of the amount payable alone. In the last scenario where 12 months have elapsed since the deadline, interest also becomes payable, currently at a rate of 4.75%.
Can inheritance tax be delayed or paid in instalments?
The regulations provide for postponement of the payment as well as payment in instalments to make payment of the tax somewhat easier. The rules are:
- Payment may be deferred for up to one year where there are insufficient liquid funds that can be converted to use for payment. This must be requested before the expiry of the six-month time-limit that runs from the date of death of the deceased ;
- The inheritance tax due to be paid may be split into instalments over a period of up to five years where this is also requested in advance of the expiry of the original six month period and the debt requires a guarantee that the tax will be paid off. Interest is payable
- Where the beneficiaries of an estate are unknown, payment may be delayed for a period of one year and paid in instalments over a five year period. A guarantee is required