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Spanish inheritance tax

The Inheritance and Donations Tax “is assigned by the State to the autonomous communities” that decide what the amount to pay will be (payable base) calculating the rate that will be applied, which is unpopular and frequently considered as excessive by taxpayers.

The difference in the amount to be paid between taxes began with “the competition between the Basque Country and Navarre:” The crisis in the budgets of the different regions caused the increase in the variations to be paid.

It is important to mention that some regions offer significant bonuses for the most direct heirs (example, 99% in Madrid).

In general, the payment is calculated from 7% to 34% with an exempt minimum amount that varies according to the region.

Inheritance tax in Spain

The inheritance tax in Spain is complicated to evade and what is frequently happening nowadays is that taxpayers are renouncing to the inheritance, especially if it involves housing or assets that are difficult to sell, which in addition, represents a burden in terms of maintenance charges and taxes in certain regions.

Among the inheritance tax norms stands out the responsibility of the heirs, who must pay taxes in the autonomous community in which “the deceased had lived, most of the time, during the five years prior to the death.”

This norm aims to prevent a person (whether elderly or very sick) from changing their residence to relieve the burden (taxes) on their heirs.

Some Autonomous Communities require you to pay the corresponding amount through the submission of a self-assessment form, whose official models required (650 and 660) can be found on the page of the Tax Agency (Agencia Tributaria).

Regarding inheritances, the deadlines for the presentation and verification of these payment forms must be considered as well.

In case of death, there is a period of six months from the death of the person (or as of the date of the death certificate) to present the corresponding requirements “in the liquidation office of the Autonomous Community where the main residence of the deceased is located.” Complying with the timeframes is of the utmost importance since “in some Autonomous Communities you can lose tax benefits if you do not pay within the term” indicated.

Another municipal tax that must be paid is the capital gains tax that is paid “in the city hall where the property left in inheritance is located.” The payment is made only if the value of the property increases.

Donations are also considered among the ways to leave assets as an inheritance, in this case respecting the will expressed in life by the person leaving the inheritance, who should be aware of the fact that once the donation becomes effective, the assets in question no longer belong to him/her “so, the beneficiary can allocate them as he/she pleases without the consent of the owner.”

Regarding inheritances, experts in the matter emphasize that the payment of taxes when leaving an inheritance is smaller than in the case of donations in life so, that option is valuable when it comes to evaluating the two alternatives.