Spanish Inheritance Tax for Non Residents

In Spain, new laws have gone into effect since the European Court of Justice’s (ECJ) ruling on Inheritance tax in September 2014.  Whether you are drawing up a will or claiming an inheritance on a Spanish property, it’s important to know the following key information as a non resident of Spain.

Spanish Inheritance Tax

In Spanish, the Inheritance tax is known as ‘Impuesto de Sucesiones y Donaciones’ (ISD).  Anyone who inherits an asset in Spain is personally liable to pay for this tax.  The inheritance tax must be filed and paid within 6 months of the death of the individual. 

It is also important to note that legally, and at the time of death, all Spanish assets belonging to the deceased are legally frozen which means that the inheritors cannot access Spanish bank accounts or sell the property of the deceased without first filing and paying ISD.

What is the tax rate in Spain and how does it apply to non residents?

Depending on the value inherited, the rates range from 7.65% on the first €7,933, up to 34% on €797,555 and over (For a complete list click here).  

Non Resident EU or EEA members: As per the ECJ’s 2014 ruling, non resident beneficiaries who are part of the EU or EEA (European Economic Area) are qualified to receive the allowances afforded depending on the autonomous community where the property is located and the beneficiary’s relationship to the deceased.  The more remote the beneficiary’s relationship is to the deceased, the lower the tax allowance and the higher the tax rates.  For a list of beneficiary groups, click here.

Non resident, non EU or EEA members do not receive allowances.

Deadline to File ISD

The deadline to file and pay Spanish Inheritance Tax (ISD) is 6 months from the date of death of the individual.

Penalties for Late Payment

Not paying within 6 month deadline will incur fines and penalties which increase over time.

There are additional fines for under declaring or submitting inadequate amounts.

Extension to File ISD

You can request a 1 time extension within the first 5 months of the filing period.  This will afford a 6 month extension (total of 12 months from the time of death of the individual) to file and pay ISD.  

Requests to pay in installments can also be made.

Spanish Wills

Generally, it is highly advisable to draw up a Spanish will.  Remember, your inheritors only have a 6 month deadline to file and pay therefore you want to help them avoid as many delays as possible, and in Spain processes can often be prolonged. A Spanish will can help your inheritors:

• Avoids fines for late filing and payment
• Avoids delays
• Avoid extra legal procedures and legal fees
• Avoids expensive sworn translations.

Debts

When inheriting assets you may also acquire and become liable to all debts of the deceased. Your Spanish lawyer can ensure your liabilities do not outweigh the assets, in which case it is advisable to refuse the inheritance altogether.

Spanish Lawyers: Whether you are claiming an inheritance or drawing up a will, we always recommend employing a Spanish lawyer.

Sources: Information cited in this article has been researched on the page of specialist, Raymundo Larraín Nesbitt. For more details on Inheritance Taxes, please visit his page at: https://www.spanishpropertyinsight.com/2016/02/08/spanish-inheritance-tax/.

Posted on 27 January, 2016 by Pierre-Alban Waters in Costs, New? Start Here