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Taxes For Members

What are the Spanish tax rules on inheritance from abroad?

The Local Spain
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What are the Spanish tax rules on inheritance from abroad?
Spain's rules for an overseas inheritances are more complicated than for Spanish ones. Photo: Pavel Danilyuk/Pexels

Inheritance tax is a complex issue, particularly if you're a foreign resident in Spain and you're inheriting money or property from abroad. Here's what you need to know about it.

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If you’re a foreigner living in Spain, chances are that not all of your family will be living in the same country as you.

You’ll likely have parents, grandparents, aunts and uncles living back home or even in another country entirely.

If you’re a tax resident in Spain, meaning you live here for more than 183 days of the year, or the majority of your interests are in Spain (like your property and your immediate family), then you’ll have to adhere to the tax laws and regulations here.

Article 6 of the Inheritance and Donation Tax law states that taxpayers with habitual residence in Spain are subject to inheritance tax as a “personal obligation”, regardless of where the inherited assets or rights are located. 

This means that even if you receive your inheritance, which could be in the form of money or property, from abroad, you will be liable to pay tax on it here, simply because you live here.

It’s important to keep in mind, however, that the process of inheriting from abroad is much more complex than for national inheritance.

Each country has its own inheritance regulations, so you must be clear, not only the rules in Spain, but also the regulations of the country the deceased was resident.

READ ALSO: When should you turn down an inheritance in Spain?

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According to AGM Abogados law firm, Spain currently has international treaties on inheritance with three countries – these are France, Greece and Sweden. It’s worth keeping in mind that these treaties refer only to inheritance, not gifts.

For example, if you have a parent who lives in France and you inherit a property from them when they die, you will not have to pay Spanish inheritance tax on it, you will only pay this in France.

If your family member lives in another EU country, the regulations are also easier (with exception of those in Denmark and Ireland). In this case, the law will be governed by the European Regulation of International Successions.

According to this law, a person who resides abroad can choose the law that applies to them in their will, whether that is their country of origin or that of their habitual residence. This means, however, that your relative will have to have been prepared and have to have factored in the fact that you live in Spain in their will.

READ ALSO - Inheritance tax in Spain: Should you pass your property on to your children or sell it to them?

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In the event that there is no will or the person hasn't decided, the legislation of the country where the assets to be inherited are located, will apply.

If your family member doesn’t live in the EU or they live in Denmark or Ireland, most likely Private International Law will be followed, which determines which rules are applied to inheritance.

If Spanish law is applied, Article 23 of the Tax on Inheritance and Donations states that the taxpayer may deduct the amount paid in tax abroad.

This means the taxable base is determined by taking into account all the assets and rights inherited, subtracting any deductible charges and debts, as well as any tax paid in the country of the deceased.

The succession tax rates will differ depending on how much is inherited, but it is generally progressive ranging from 7.65 percent on the first €7,933 up to 34 percent on €797,555+, but several bonuses can be applied to these rates. 

It’s also worth keeping in mind that there are different inheritance tax rates and rules in each of the different regions in Spain, so what you pay will also depend on where you live in the country.

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The regions with the highest inheritance tax rates in 2024 are Asturias, Catalonia and Castilla-La Mancha, while they are more favourable in Valencia, Aragón, La Rioja, Balearic Islands, Madrid and Galicia. 

READ ALSO: Where are the best and worst places for inheritance tax in Spain?

Madrid for example offers a 99 percent reduction for all direct descendants and spouses, while other regions offer a lot less.

The amount you pay will also depend on your relationship with the deceased – for example, if you’re a child, a grandchild, a niece or nephew or sibling, different deductions and bonuses will apply.

Remember that if after you inherit, your assets outside of Spain come to more than €50,000, such as a property, you will have to complete form 720 in order in inform the Spanish tax authorities of your assets held abroad. 

As the laws surrounding inheritance are so complicated and can depend on so many different factors, the most important thing to do is to make sure you contact a lawyer specialising in these matters. 

They will be able to advise you on what exactly you'll be obliged to pay and if there is anything you can legally do in order to minimise payments. 

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