Spanish Inheritance Tax
Spanish inheritance tax applies to residents and non-residents and must be paid by each beneficiary before they can inherit anything. The time frame for this to be completed is 6 months from the date of death and, in the cases of married couples, there is tax to be paid on first and second death, there is no spousal exemption such as exists in the UK.
Inheritance tax in Spain is based upon the region where the deceased had their assets.
If you do not have a Spanish notarised Will in place with an EU succession clause 650/2012 declaring that the law of your home nation should apply to the succession of your estate, you will fall under forced Spanish Heirship rules – read more here: https://thywill.es/intestacy-in-spain
Many estates end up going to the Spanish government because either:
Noone claims the estate;
There are no traceable heirs;
Beneficiaries reject their inheritance because they do not have the funds to pay the upfront inheritance tax.
Spanish inheritance tax rates
Inheritance up to €7,993: 7.65%
€7,993–€31,956: 7.65 to 10.2%
€31,956–€79,881: 10.2 to 15.3%
€79,881–€239,389: 15.3 to 21.25%
€239,389–€398,778: 25.5%
€398,778–€797,555: 29.75%
€797,555+: 34%
Inheritors in Group 1 and 2 are able to claim a 95% tax allowance against the property value up to €122,000 per inheritor.
Any relative 65 or older who had been living in the property for 2 years or more is also eligible to claim this allowance.
If beneficiaries do not sell the property for a minimum of 5 years, then there are further tax reliefs available.
Group I: children (natural and adopted) under 21 years get an allowance of €47,859.
Group II: children (natural and adopted) over the age of 21, grandchildren, spouses, and parents/grandparents (including adopted) get an allowance of €15,957.
Group III: siblings, aunts, uncles, nieces, nephews, in-laws, and their ascendants/descendants get an allowance of €7,993.
Group IV: cousins, all other relatives, unmarried partners (unless the region allows it) and those who are unrelated get no allowance.
Those with disabilities receive an allowance of either €47,859 or €50,253, depending on the extent of their disability.
An extension of a further 6 months can be applied for to pay inheritance tax if required and instalment options can sometimes also be available.
Unpaid inheritance tax will increase by 5% every 3 months up to a maximum of 20%
If the fine remails unpaid the state will intervene and sell the asset.
It should be noted that there is no tax treaty for inheritance tax between the UK and Spain, but both countries do provide tax relief to prevent double taxation. It is essential that a professional should be consulted to ensure the maximum allowances are claimed and UK beneficiaries are not overwhelmed with complex forms to complete.
We can help with advice and planning in advance and conduct probate after death expediently and professionally.
Just give us a call on 865 756 058 Monday – Friday 9-4 (except red days) and a free consultation will be arranged with our specialist advisor accordingly.