In Spain, the amount of Spanish inheritance tax to pay is determined by three things:
- the relationship of the inheritor to the deceased
- whether the deceased and inheritor(s) are resident or non-resident
- the autonomous community in which the property is located
Depending on these factors, the amount of Spanish inheritance tax to pay can vary substantially.
The relationship between the inheritor and the deceased makes a significant difference to the amount of Spanish inheritance tax that needs to be paid. There are four groups of inheritors:
- Children and grandchildren under the age of 21
- Children and grandchildren over the age of 21, parents and grandparents and spouse
- Brothers, sisters, uncles, aunts, cousins, parents-in-law, daughter/ son-in-law
- Anyone else, including non-married partners
Depending on the relationship, there are different allowances which mean that inheritance tax in Spain doesn’t have to be paid until a threshold is reached. Close relatives of the deceased benefit from additional allowances. For example, spouses, children and parents benefit from a Spanish inheritance tax allowance of 15,956.87€ according to national law. This is sometimes increased with an additional allowance depending upon which region you live in. In Valencia, for example, this allowance is increased to 40,000€.
It can also vary according to the age of the children. In Valencia residents are entitled to an increase in allowance of 8,000€ for every year that an inheritor is under the age of 21. For non-residents in Valencia it is approximately 4,000€. The allowance is incremental up to a maximum of 96,000€ instead of up to 48,000€ under national law.
Resident or non-resident
There is a reduction in the amount of Spanish inheritance tax to be paid when the deceased is a resident and the property involved is the family home. The reduction ranges from 95% to 99% of the value of the property and represents a significant difference to the amount of inheritance tax payable in Spain.
As a result there are stringent checks made on residency. The exact details vary but usually involve a requirement to prove residency using Town Hall certification, utility bills and tax declarations. The deceased must also have been resident for a specified period of time, generally for at least three to five years.
In some cases the deceased might have been a resident but the inheritors might not. When the inheritors are close relatives such as children then 95% of the estate value, up to a maximum of 122,606.47€, can be exempt from inheritance tax. However, the inheritor has to make a commitment not to sell the inherited Spanish property for at least 10 years. If they do sell within that time they must pay the non-resident fee plus interest.
Not all autonomous regions do implement their right to place an additional Spanish inheritance tax. So, the procedures and taxes vary according to the region in which property is located as well as the residency of the testator and heir.
For example, in the regions of Valencia or Andalusia residency rules only apply when residency can be proved for the greater part of a five year period.
In order to make an accurate assessment of how much inheritance tax might be, these three factors must be considered by our expert inheritance team.