Inheritance tax ranks among one of the world’s most complex taxes, particularly when the estate owns assets in more than one country.
When it comes to Spain inheritance tax, where and how much the heir pays depends ultimately on the residency status of both the deceased and beneficiaries.
This article outlines the rules for international and Spain inheritance tax payable on assets owned by a resident or non-resident deceased and inherited by a resident or non-resident heirs.
For more comprehensive information on inheritance tax in Spain, tailored to your specific situation, please get in touch with us. CTA contact
Spain inheritance tax
Spain levies inheritance tax (IHT) on assets located in the country and possibly overseas, depending on the residency status of both the deceased and heirs. IHT is applied on a sliding scale that takes into account both the value of said assets and the relationship of the heir with the deceased. The closer the blood tie, the less IHT to pay and in some autonomous regions, IHT has been abolished completely for first-degree relatives. Note that in Spain, the heir is liable for IHT, not the estate as is the case in the UK, for example.
Need to make a will in Spain? One way to alleviate the burden of IHT on your heirs is to leave a will stating the beneficiaries of your assets in Spain. At Costaluz Lawyers, we are experts in helping foreigners draw up the will that best protects the interests of their heirs and estate. Get in touch for a free consultation. CTA contact
IHT when the deceased was resident in Spain
In this instance, the amount of IHT levied and payable in Spain also depends on the residency status on the heir(s).
Heir is resident in Spain
When both the deceased and heir had/have Spanish residency, IHT is levied on the deceased’s assets both in Spain and abroad. The tax payment in Spain is calculated according to the IHT regulations in the region where the deceased lived. The heir is also liable for IHT on any assets owned by the deceased outside Spain but note that any inheritance tax paid abroad is deductible in Spain.
Heir is not resident in Spain
In the case of an inheritance by a non-Spanish resident of assets owned by a Spanish resident, the heir is liable for payment of IHT in Spain on all assets located in Spain. If the heir is resident in the EEA, regional reductions for IHT can be applied. If the heir is resident outside the EEA, he is not eligible for any regional reductions. No IHT is liable in Spain for assets owned by deceased outside Spain.
IHT when the deceased was non-resident in Spain but an EEA citizen
Again, the amount of IHT payable and to which country depends on where the heir is resident.
Heir is resident in Spain
The heir is liable for IHT in Spain on the deceased’s worldwide assets. Reductions in the region where most assets are located can be applied and if the deceased owned no assets in Spain, reductions in the region where the heir lives may be applied. Any IHT paid on assets abroad may also be deducted.
Heir is not resident in Spain
The heir must pay IHT to the Spanish authorities for the deceased’s assets located in Spain. Reductions are applicable according to the regional regulations in the area where most of the inherited estate is located. No IHT is payable in Spain on assets located outside the country.
Read our guide to inheritance tax in Spain
IHT when the deceased was non-resident in Spain and also non-EEA
When the deceased lived outside Spain and the EEA, IHT rules depend once again on the residency status of the heir as follows:
Heir is resident in Spain
The heir is liable to pay IHT in Spain on the deceased’s assets worldwide and no regional reductions may be applied. IHT paid in other countries may be deductible in Spain.
Heir is not resident in Spain
The heir must pay Spanish IHT on assets located in Spain only. No regional reductions are allowed.
Get professional advice
As previously mentioned, this guide gives you an idea of the liability of IHT for heirs, based on where they are resident and where the deceased lived. However, it is no substitute for professional legal advice to ensure your IHT liability is no larger than it should be.
The Costaluz Lawyers team of legal experts have years of experience helping foreigners with inheritance matters in Spain.
If you wish to facilitate matters for the heirs to your Spanish assets and/or get help with managing assets in Spain you have inherited, get in touch now. We will be only too pleased to assist you.
Maria Luisa Castro
