Succession, Heritage, Testament, and Inheritance and Succession Tax

Welcome to our Spanish Inheritance Tax, Testaments and Inheritance and Succession Law Section

You will find the necessary information about Spanish Inheritance Tax, the international heritage, and the legalization of an international will.

Our team of specialists has prepared a guide with the information you need to know how to make a will, what taxes do you have to pay in an inheritance? What a law regulates my inheritance, and many other issues.

When a person who owns assets in Spain, the latter’s possessions must pass on behalf of his or her heirs.

In this respect, there are various steps to follow:

FIRST. – Identification of the heir’s assets

It is very important to identify all the assets that were in the name of the deceased, such as bank accounts, real estate, life insurance, shares, cars, etc.

SECOND. – What law applies in the event of an inheritance?

The law of your country of origin. Spanish law recognizes that, in the case of an inheritance, the law to be applied is that of the country of origin of the deceased person who has died.

In this way, in theory, the position is relatively simple: the inheritance law of the United Kingdom, France, Belgium, etc., will apply even if a home or property is owned in Spain.

But: WHY IT IS IMPORTANT IDENTIFY WHAT LAW APPLY IN THE HERITAGE?.-

There are great differences between Spanish laws and those of other countries such as the United Kingdom, France, Belgium, etc., as regards inheritance.

The most important difference is that the Spaniards have the figure of the inevitable heirs (reservative heirs), which means that the testator cannot dispose of the inheritance at his free election, and under any circumstances, he must leave 66% of his inheritance for persons appointed as the Heirs Mandatory or resident heirs (mainly descendants and spouses). This is totally different from the inheritance law of other countries, which allow the free of assets, that is the total freedom to be able to transfer the total assets at will.

The problem arises when the requirements of the inheritance law of the country of nationality of the deceased say that for BUST GOODS, the law applies where the property is. In this way, if the immovable property is in Spain, then Spanish law should apply to settle who the heirs are. And, if Spain considers compulsory heirs (such as son and daughter) who have not had its rights considered in the Testaments, then they can claim its rights to be respected. Technically, he will return this to a country’s return to the law he is named “Referral”, “or Giramiento”.

And , it is very important because, if the nationality of the deceased wandered:

FRANCE: The law applicable to the succession to the property is the country where the deceased had his or her habitual residence at the time of his or her death. On the other hand, with regard to immovable property, the applicable law is the place where such property is located.

French law does not allow any exception to this law, so that you cannot choose the law applicable to the succession.

Thus, if the property is located in Spain, French law may determine that the law applicable to the succession is Spanish in order to determine which are the heirs of the property, and according to the Spanish rules of the compulsory heirs.

  BELGIQUEBELGIUM: The law applicable to the succession to the property is the country where the deceased had his or her habitual residence at the time of his or her death. On the other hand, with regard to immovable property, the applicable law is the place where such property is located.

Belgian legislation also makes it possible to choose the law applicable to succession. This choice is limited to the law of the State of nationality of the deceased person or the State where he or she had his or her habitual residence at the time of the election. However, such designation may not combine the deprivation of an heir presumptive with his right to self-determination under the applicable law in the absence of a choice.

Thus, if the property is located in Spain, Belgian law may determine that the law applicable to the succession is Spanish in order to determine which heirs of the property are, and according to the Spanish rules of the compulsory heirs.

  SUISSESWISS: One of the fundamental principles of Swiss private international law of succession is the principle of the unity of succession (art. 86 et seq. of the LDIP).

The law normally applicable to the entire succession is the law of the last habitual residence of the deceased (art. 90 LDIP). If foreign laws refer to Swiss law, the reference is therefore accepted. If foreign law does not deal with property left by a foreigner in Switzerland, Swiss law may apply.

However, many countries consider that only their legislation is applicable to the devolution of immovable property located on their national soil. Switzerland, for its part, does not claim exclusive jurisdiction, and accepts the application of such foreign law in the case of buildings situated abroad.

… So, will it be the laws of the nationality of the testator, or the Spanish law applied for succession? ::

 

A REGALE:

Spanish law helps to avoid any problems in the majority of cases by providing in Article 9 of the Spanish Civil Code that, when a foreign owner of property dies, having made a will in Spain or in his country of nationality, the disposition of any of the assets he possesses in Spain, not Spanish law, will be governed by his own national law. If its own law allows the free disposition of assets, it relieves it of the Spanish Inheritance Law [but not from the tax to the Spanish inheritance.

According to article 9, paragraph 8, of the Spanish Civil Code, successions are governed in Spain by the law of the nationality of cujus at the time of its death, regardless of the nature of the property and the country in which it is located.

However, the provisions made in a will and agreements in succession established in accordance with the national law of the testator or the owner at the time they were upheld, although the succession is governed by another law and the legal reserves conform, where appropriate, to the latter. The rights which, under the law, are granted to the surviving spouse are governed by the same law as that governing the effects of marriage, always subject to the legal reservations of the descendants.

The reason why the Spanish authorities will apply the national law of the deceased is to respect the unit of assets or the unity of wealth. This concept confirms that always when there are assets that could be settled with different laws, to try to resolve them with the same criteria and with the same law. The application of this concept will cause attempts not to treat these elements of the deceased’s wealth in different ways.

In this way, a person from France, Belgium, or Switzerland, who owns property in Spain, but another property in his country, bank accounts in his country, pensions, actions, security, etc., he must be sure that the law for his inheritance will be governed by the law of his country, even for Spanish property.

 

This is the General rule, but, like all the General rules, there is a disqualification:

– What will be the case of foreign dwellers that they have sold all their assets and they moved to Spain, when the unique assets they have are the Spaniards?

– Or the case in which a foreign urban citizen has properties in Spain, but does he live permanently in another country like France, or Italy?

These are cases in which Spanish case law has applied the concept of “referral”. It means that Spanish law has been applied, by introducing Spanish limitations in Freedom the Testamentary Disposition, mainly “the Compulsory Heirs”.

Thus, what will be the law of application for inheritance in these cases, the Spaniard, the law of the foreign country…?

SOLUTION: THIS SYSTEM creates serious confusion and misunderstandings in the inheritance of European citizens, which is, now, SOLUTIONED, with Regulation (EC) No 6507/2012.

REGALLY CE 6507/2012: These conflicts and confusions are already resolved between European citizens of an approved law and despite the fact that some EC members have not signed, like the United Kingdom and Denmark, will be able to APPLICATION IN SPAIN.

[gdlr—————————————————————————————————————————————————————————————————————————–SOLUTION : CE SYSTÈME créé de gros confusions et malentendus dans l’héritage de citoyens européens, qui est, maintenant, SOLUTIONÉ, avec le Reglament CE 6507/2012!!–
[gdlr-ycon-notification of icon-icon-flag, type, type, column, 99d15th, colour, colour, , 000, 000, 000, REGALLY, CE 6507/2012: These conflicts and confusions are already resolved between European citizens of the law approved and despite the fact that some members of the EC have not signed, like the United Kingdom and Denmark, will be able to APPLICATION IN SPA.

This law, in simple words, gives 2 options:

Option 1: You choose the law. “Actively,” “No.”

The law that will govern the inheritance of a deceased person will be the law chosen by the testator. This means that you can choose the law that you want to settle your inheritance. The ideal way to do this is to expressly confirm on your will the law that wishes you to regulate your inheritance.

So, if you are French, British, German, Norwegian, etc., you can decide on your will or certification which is the law you want to be regulated after your death.

Option 2: The country of permanent residence: ‘active’ ‘no”

If you haven’t planned anything about your will in relation to the law that you wanted to regulate your inheritance, then this law will be the one in which you had resided for the last 5 years.

In cases where you lived in different places, and/or permanent residence is not clear, then the law will be the law of the country in which you had the strongest bond throughout your life.

 The law was approved in August 2012 and has been in force since 17 August 2015. Therefore, after that date, the inheritances where the deceased had made a will in Spain, or if the residence had been permanent, will be governed by this new law.

THIRD. “Did there be a will or not?” Executing an international heritage in Spain

The next step is whether or not a will has been drawn up, in order to be able to execute the inheritance in Spain. In fact, there may be two or more wills – each that can cover different jurisdictions. There may be a French or Belgian will, covering the assets at the bottom and in Spain.

(A) There is a will in Spain. – Then inheritance can be executed in a normal way according to Spanish laws of inheritance.

For the will to be valid in Spain, it must be signed before a Spanish notary and registered with the Spanish Register of Testaments (Central Register of Provisions).

B) There is a will in the country of origin of the deceased.-In this case, the will must be translated into Spanish, and after duly legalized (it must come with the Apostille of the Hague Convention

The legalization of a will must also be accompanied by the Death Act and sometimes a birth certificate and the family record.

You should know that inheritance taxes in Spain do not pay within 6 months of the date of death, if you pay these late taxes you will be subject to search sanctions ranging from an additional 5%, depending on the time of delay.

C) There are no wills in Spain or in the country of origin. – If a foreign owner in Spain dies without making a will (in Spain or his country of origin) residing or not residing, then there will be no dispute: his property will be arranged in accordance with Spanish inheritance laws.

In a few cases, the Spanish Notaries may request that the Legacy trial be completed in the country of origin or nationality (France, Belgium, etc.), and once it was carried out in Spain.

In other cases, if the Spanish Notary considers that it is not necessary to do the Legacy in the country of origin, then the inheritance will be executed and considered as a normal Spanish inheritance process.

In this way, making the inheritance in Spain or in the original country will depend in each specific case, depending on the interpretation that the Notary in charge of the Heritage Spain will like to make.

FOURTH. – SPAIN SUCCESSION TAX

In Spain, the inheritance tax is 7.65-34% of the tax base, and it is for the entire Spanish state. However, the tax base may be reduced with the following reductions:

– Descendants up to 21 years: From EUR 15.956.87 to EUR 47,858.59, depending on age.

– Descendants, or adopted by persons over 21 years of age, surviving spouses and ascendants: EUR 15.986.87.

– Other family members: EUR 7.993.46

These reductions are the minimum that can be applied in a case of succession. But each region can improve and increase (not reduce) the general state’s reductions.

 

Settlement of the tax of Successions in Murcia, Andalusia and the Region of Valencia:

A) VALENCIA REGION

– REDUCTIONS ON THE BASE OF THE TAX

– Descendants, or adopted under 21 years of age: EUR 100,000 to EUR 156,000.

– Descendants, or adopted over 21 years of age, surviving spouses and ascendants: EUR 100 000 reduction of the tax base.

– PERMANENT RESIDENCE: 95% reduction in the value of residence.

In the event that the property to be inherited was the permanent residence of the deceased, there will be a reduction in the tax base of 95%, with a maximum of EUR 150,000, subject to the following conditions:

• The heirs must be the descendants, ascendants, or the surviving spouse, or correlative who have lived in the property.
• The property must be used as the permanent residence of the heirs for the last 5 years before the date of death.

– IMPOSITION TAX REDUCTION:

Once the tax base is calculated (taking into account any reductions obtained), then the resulting base will also be reduced, when the heirs are the descendants, ascendants, or the surviving spouse:

This reduction in the tax rate is 75% for descendants who are minors 21 years old, and 50% for descendants over 21 years of age and for the surviving spouse.

B) MURCIA REGION

There is no 99% reduction for permanent residence. So, in Murcia now, the reduction on the tax rate of 99% does not exist.

So this reduction that has been used for years in inheritance acquisitions for descendants, children 21 years of age or older, spouses and ancestors is now reversed. And only 99 percent remain for descendants under the age of 21.

Thus, if if you were a tax residence with a property in the region of Murcia, if you had the misfortune to suffer from the loss of a close relative (father, mother, spouse), and even if at that moment the last thing is thought is the inheritance tax you are paying, you must be aware of what you have only the right of the general discounts from Spain, which are:

– Descendants up to 21 years: From EUR 15.956.87 to EUR 47,858.59, depending on age.

– Descendants, or adopted by persons over 21 years of age, surviving spouses and ascendants: EUR 15.986.87.

– Other family members: EUR 7.993.46

C) Andalucha

REDUCTION ON THE TAX-BASED:

Main residence. Tax-based reduction of the value of permanent residence on the 99.99% basis.

For the surviving spouse, descendants, and ascendants, reduction of EUR 175 000 from the basis of the inheritance to be received by each of the heirs.

OTHER ISSUES TO BE TAKEN INTO CONSIDERATION IN THE HERITAGE PROCESS

The execution of a will in Spain

At present, in order to consider an acceptance of an inheritance valid in Spain, it must be completed before a notary. The beneficiaries (or its representatives through Procuration) would compare in the Notary, who would ask them to sign the acceptance by indicating and detailing the various amounts and concepts.

This document will contain the inventory of Spanish assets (properties, bank accounts, shares, cars, etc.), the heirs, the law to be applied, the persons with rights to the Spanish assets, and the percentage of those assets (or the individual assets that accrue to each heir).

As regards the properties, after the acceptance of the properties by each heir, the properties will be registered with the new owners in the property register and in the same way in the register of credits and mortgages if the property is the subject of a mortgage loan. In all cases, taxes derived from this inheritance will have to be paid.

Spanish inheritance tax should be followed by a specialist

The Spanish inheritance tax entered into force in 1988 and is part of the Law of the Tax on Successions and Donations. This law makes it very clear that non-residents who own property in Spain of any kind are automatically subject to Spanish inheritance tax. There are a few important exemptions that reduce taxes for smaller inheritances, and thus, multiplication coefficients increase for larger legacies. These exemptions also exist for inheritances received by non-parents or wealthy heirs. This is a very complex subject, since the tax depends not only on the value of the property, but on the wealth of the vessel.
Spanish inheritance tax for Spanish residents and non-residents:

In theory, the Spanish inheritance tax for non-residents follows the same rules with regard to residents: valuation of ownership, acceptance of fees or levies that may be deducted, acceptance of previously completed transfers of funds, and deductions from the tax base for acquisitions of heirs, and provisions for the authorities to verify the values and determine the right tax.

BEFORE OF 2015, non-residents had no Spanish inheritance tax benefits. And existing reductions were only applied to residents.

BUT, AFTER 2015, non-residents have the same benefits and reductions in inheritance tax in Spain.

VERY IMPORTANT RECOMMENDATION

• With inheritance tax objectives, property will be valued taking the highest of the amounts of the following cases: the market value, the cadastral value, or the value stipulated for the calculation of the wealth tax.
• The rules for calculating the amount to be paid on the Spanish inheritance tax are very complicated: they largely depend on the value of the property and a multiplication coefficient.
• Since these taxes can be changed without notice, it is important to have the opinion of a trader in all cases.