Spanish inheritance law is different from other European nations, so it’s important you understand the nuances when putting your affairs in order.
It might not be the most cheerful subject, but it is important that you make sure that you understand Spanish law when you’re writing your will. Taking action now can ensure that your wishes are fulfilled and your assets are protected for your nearest and dearest. In this guide to Spanish inheritance law, we provide you with some general advice. In this overview we outline some of the most important facts surrounding:
- Spanish succession laws
- Making a will in Spain
- Inheritance tax
- Donating property
That said, every case is unique and you should consult an expert about your specific circumstances. Therefore, reading this guide will help you familiarise yourself with Spanish law and help you prepare some questions for your solicitor.
Spanish succession laws
In the UK and Ireland, the succession law allows you to leave your estate to whoever you wish. However, in some countries, there are limitations. For example, Spanish succession law is different. In Spain, children and spouses are the ‘legal beneficiaries’. As a result, you’ll only have one-third of your property left to bequeath as you like.
From the 17th August 2015, Spanish residents who are nationals of another European country must state clearly on their will if they wish their own country’s inheritance laws to apply. If you have no will at all, then Spanish law automatically applies. Therefore, it is very important to make sure your affairs are in order if you’re retiring in Spain.
Making a will in Spain
There are many benefits to writing a Spanish will. First and foremost, it simplifies the inheritance process for your beneficiaries. As the documentation is already assembled, the procedure will be less complex and therefore, much faster. Preparing your will also gives you the opportunity to discuss the issue with an expert. They’ll be able to fully explain the implications of Spanish inheritance law. For instance, there are ways you can adjust your will to ensure that inheritance tax is kept to a minimum; one is to share your property out between several people. This can mean that there is less inheritance tax due as they will each have their own threshold, rather than just one.
Furthermore, a married couple must each make separate wills. Each will is prepared as a bilingual document, with one text in Spanish and the other in the writer’s chosen language. This document is then taken to the notary’s office where it is signed and certified. The notary keeps the original and forwards you a copy for your records. Next, the notary will record the papers with the Registro Central de Ultimas Voluntades in Madrid. This central registration means that your latest will is easily located. However, it does mean that if you do wish to change your wishes, you have to complete the process again.
Before you can register your property in your inheritor’s name, an inheritance tax declaration has to be made. Subsequently, the corresponding taxes must be paid. Spanish law allows six months for inheritance tax declarations. After this time, an additional 5% levy is applied every three months, up to a maximum of 20%. This is a very good reason to make sure that you are as prepared as possible.
Until recently, there have been differences in Spanish inheritance law in relation to residents and non-residents. However, following pressure from the European Commission, the Spanish government passed a new law on the 28th November 2014. This meant that for all bereavements and donations after January 1st 2015, the taxation of Spanish inheritance must not discriminate against non-residents and therefore benefit from the same tax reduction as residents.
What governs Spanish inheritance law
In Spain there are two laws that govern inheritance tax:
- national law, or ley estatal
- local law governed by the autonomous regions of Spain
The amount of inheritance tax you’ll have to pay varies according to where the property is located. For instance, there can be differences in the inheritance tax threshold. Furthermore, your relationship to the deceased can make a substantial difference to inheritance tax. According to Spanish inheritance law, there are four groups of inheritors:
- Children and grandchildren under the age of 21.
- Children and grandchildren over the age of 21, parents, grandparents and spouse.
- Brothers, sisters, uncles, aunts, cousins, parents-in-law, daughter/son-in-law.
- Anyone else.
Your beneficiaries have to voluntarily declare the value of their inheritance. It is wise to take advice on this, as an extra tax will be charged if the authorities dispute the declared value.
It’s important to be aware that there is no automatic transfer, even if it is a spouse who’s died. In every case, the formal procedure has to be followed. Moreover, you should be aware that failing to inform the authorities of the death of a co-owner of a property means that when the property is passed on, a retrospective transfer will need to be made.
Some people prefer to donate their property rather than bequeath it when they die. If you do decide to do this you still need to sign a new title deed. This process is called the donación de bienes and is considered a gift from the donor to the recipient. You will still have to make a donation tax declaration but, as is the case with inheritance tax, the levy is less when you are a close relative, such as a parent or a child. However, allowances vary from community to community.
Spanish inheritance law: Our recommendations
Making a will in Spain that clearly outlines your wishes and whether you want the succession law of Spain or your home country to apply will substantially help your beneficiaries. To make sure you and your beneficiaries are protected, it’s essential to seek expert advice. With the proper advice, you can carefully consider the tax implications for your inheritors. Therefore, you should seek a reputable solicitor who can communicate with you in your own language. Managing your inheritance may not be the most pleasant task, but it will make all the difference to those closest to you.