Spain Told to End Foreigner Inheritance Tax

Spain_flagThe European Court of Justice struck a blow for foreign property owners in Spain this week, ruling that a higher inheritance tax on nonresidents is “discriminatory.”

The decision is the culmination of a long-running battle between Spain and the EU, which ordered Spain to change the practice of charging higher inheritance rates to nonresidents in 2010. But Spain refused to comply, and the case was referred to the courts.

In the wake of the ruling, Spain’s government is looking at how to bring legislation in line with the ruling, a source at the Treasury Ministry told Reuters.

This is a major issue for both foreigners and Spain’s economy. By some estimates, 14 per cent of Spain’s population is foreign nationals, one of the highest percentages in the EU.

The issue is complex. National legislation doesn’t make a distinction between residents and nonresidents, but the inheritance taxes are applied by regional governments. The tax policies vary between regions. But in the Balearic islands, for example, locals may pay about 1 per cent while foreigners might pay anywhere from 7 to 34 per cent, the Wall Street Journal reports, citing data from DMS Consulting.

The Journal also published one man’s experience with the tax, under the headline, “Inheriting Trouble: Spain’s Tax Almost Drove Me From the Country.”

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7 thoughts on “Spain Told to End Foreigner Inheritance Tax”

  1. Donna

    We urge anyone else who believes they have been affected by this tax discrimination to come forward. Taking quick action is important as the right to make a reclaim may expire due to legal time limits for making a tax reclaim in Spain.

    As claims can be filed only once, people affected need to look for experienced experts in EU international tax law.

      1. Sara

        So many people are losing out as they are not aware that they may be able to claim a refund if they have paid Spanish Inheritance Tax in the last 4 years. The longer people are unaware the more likely they will be outside of the 4 year time limit and reduce their chance of claiming.
        Anyone who has inherited assets in Spain who may be affected should seek advice as soon as possible to avoid missing the boat! https://youtu.be/lpJ7Yhn6EJQ

  2. John

    No it is time for other discriminating legislation that affect foreign nationals to be addressed. Such as rental income from property. Why can Spaniards offset expenses against their rental income whilst non-residents have to pay the tax on gross income?

  3. Profile photo of Graham PooleyGraham Pooley

    Funnily enough I was reading an article earlier today about this at http://worldwidelawyers.co.uk/2014/09/19/spanish-inheritance-tax-set-to-change/ and came here to find out more and I’m still a little confused. My wife and I now have some disposable income and have started looking at holiday property in or around Ibiza. We’d like to get things right from the start and make sure that the property can be left to our children with no issues. It seems a good idea to me on the surface to make the tax fair for all, but the more I read around the more it seems that people actually have a mixed opinion. Am I right to say this is NOT good for the Spanish economy? I’m afraid I do have a somewhat biased view given our circumstances but interested to get the whole picture. Many thanks.

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