Inheritance Tax

Spanish Inheritance Tax may be payable when a person inherits property, money or other assets connected with Spain.

The amount payable cannot be determined solely by looking at the total value of the estate. It depends on several factors, including:

• The value and type of assets inherited.
• The share received by each beneficiary.
• The relationship between the deceased and the beneficiary.
• The beneficiary’s existing wealth and personal circumstances.
• The place of residence of the deceased.
• The place of residence of the beneficiary.
• The location of the inherited assets.
• The regional tax rules and allowances that apply.

Spain’s Autonomous Communities can apply different reductions, allowances and rebates. As a result, the tax payable may vary considerably depending on which regional rules apply to the inheritance.

This is why each beneficiary’s tax position must be calculated individually.

The tax calculation may include assets such as:

• Property in Spain.
• Money held in Spanish bank accounts.
• Investments and financial assets.
• Vehicles.
• Business interests.
• Other property or rights owned by the deceased.

The value used for tax purposes may not always be the same as the original purchase price or the amount the beneficiaries expect to receive if an asset is later sold.

For Spanish property, it is important to establish the appropriate tax value before the inheritance deed is prepared.

Spanish inheritance tax is generally subject to a time limit calculated from the date of death.

It is therefore important to begin the process promptly, even where the beneficiaries are still waiting for documents from another country.

Delaying the process may result in:

• Late-payment interest.
• Surcharges.
• Penalties.
• Problems registering inherited property.
• Delays accessing bank accounts or disposing of the assets.

In appropriate circumstances, it may be possible to apply for an extension within the legally established period. Whether an extension is advisable will depend on the circumstances of the estate.

Where urban property is inherited, a separate local tax known as Plusvalía may also need to be considered.

This is a municipal tax connected with the change in ownership of the land on which the property is situated. It is separate from Spanish Inheritance Tax and is administered by the relevant Town Hall.

The amount depends on factors such as the cadastral land value and the period during which the deceased owned the property.

The inheritance tax position should ideally be reviewed before the inheritance deed is signed.

• This allows the beneficiaries to understand:
• The likely taxes payable.
• The value to be attributed to each asset.
• Whether any regional allowances or reductions may apply.
• Whether funds will be available to pay the taxes.
• The potential tax consequences of retaining or later selling inherited property.
• Whether the proposed distribution between several beneficiaries is appropriate.

Our team can calculate the applicable taxes, prepare the required declarations and coordinate payment and submission within the relevant deadlines.