Spain is rightfully among the top tourist destinations in the world. The country has such a diverse offering of enticing characteristics that almost anyone who visits it will discover something to fall in love with. After all, Spain can attract people with all kinds of different interests – from outdoors lovers who will enjoy the nature and beaches of the country to those who live for the party and will appreciate Spain’s fantastic nightlife.
Then, there are the timeless art and architectural masterpieces, the friendly and relaxed atmosphere, excellent Mediterranean cuisine, and the lower cost of living. It is no wonder that many become so enamored with the country that they decide to make it their permanent residence.
As a natural conclusion stemming from this fact, there is an increasing percentage of people around the world who are starting to inherit properties in Spain from their family members or loved ones. This is especially relevant for British citizens as the country is home to one of the biggest British ex-pat communities.
Unfortunately, the laws and regulations governing the inheritance tax in Spain could seem like an impenetrable wall. Especially, when the inheritors are also dealing with the unfortunate circumstances surrounding the passing of a family member.
To navigate the process and ease the pressure on themselves, the recipients of the inheritance should consult an expert well-versed in both Spanish as well as International and British law. Ensuring that all requirements are met within the allotted time frames could save you a lot of potential troubles in the future.
What Documents Should You Prepare?
Multiple documents will need to be presented to the Spanish authorities in order to complete the inheritance process successfully. First, a valid death certificate must be obtained. If the testator has passed away outside of Spain, the document will need to be translated and validated with the Hague Apostille.
Next, the heirs must apply for and acquire a valid Spanish NIE number and have legalized copies of their passports. The NIE (Número de Identificación de Extranjero) number is an identifier assigned to foreigners for tax purposes. An NIE number is required for all transactions involving the Spanish Tax Office and Public Registries.
The will and testament of the deceased is also of extreme importance. If it is written in English or is prepared outside of Spain, the document will need to be translated, verified by a Notary Public, and marked with Hague Apostille. The will can also determine which laws of succession will be applied to the inheritance. If no such will exists, then the person is classified as having died intestate. In such cases, the laws of succession of the domicile of the deceased are typically applied. In addition, the lack of a will necessitates that the heirs acquire and present a Probate.
Spanish Property Inheritance Tax
All heirs or beneficiaries in Spain are liable for inheritance tax. The allocated tax must be paid within six months from the date of death. An additional, one-time extension of another six months is available, but it must be applied for no longer than five months after the date of death. If the due inheritance tax is paid after that period, it will most likely incur additional surcharges and penalties applied by the Spanish tax authorities.
In this case, inheritors could be liable to pay a 5% levy every three months after the deadline, up to a maximum of 20%. Once the tax has been settled, the ownership of the testator’s property or other assets will be transferred to the heirs. The tax raters under Spanish law depend on the value of the inheritance and start from 7.65% on the first 7,993.46 euros going up to 34% on the 795,555 euros and above.
Applicable Inheritance Tax Allowances
The sum of the inheritance tax is also subjected to regional differences as each Autonomous Community in Spain is allowed to enact its own local laws. For example, in the Andalusia region, a reduction of 1,000,000 euros is applied to the tax base. As for sums above that threshold, there is a reduction of 99%. Other regions with a 99% share bonus include Madrid, Extremadura, and Murcia.
The exact kinship and relationship can also influence the inheritance tax. Children (both natural and adopted) under 21 can receive a tax reduction ranging from 15,956.87 euros to 47,858.59 euros. Children above 21, grandparents, grandchildren, parents, spouses or registered domestic partners are eligible for a tax reduction of 15,956.87 euros. The third group includes siblings, uncles, aunts, nephews, and in-laws, and they can receive a reduction of 7,993.46 euros. All other relatives or partners are not eligible for a tax reduction under the Spanish Inheritance and Donations Tax.
