Residents and non-residents inheriting or donating property in Spain used to be treated differently when it came to tax. However, following pressure from the European Commission, a modified law was passed on 28th November 2014. This brought to an end the tax discrimination there had been against non-residents living in the European Union with property in Spain.
More good news was to follow. Inheritance and donation tax is governed by the regulations of each autonomous region such as Murcia, Valencia and Andalucia. Some of these regions have now increased the tax allowances that there are for those inheriting or receiving donated property.
The combination of these two developments mean that in numerous autonomous regions non-residents with property in Spain have a greatly reduced amount of inheritance or donation tax to pay. In some cases there is now nothing to pay at all. However, a tax declaration will still need to be presented.
Andalucia is a recent example of a region in which allowances in Inheritance tax have been significantly increased. From 1st January 2018 the tax threshold for close relatives with property in Andalucia has been raised to one million euros. Previously the ceiling after which you must pay inheritance tax was €250,000. In other words, if you are inheriting assets worth under €1,000,000 you will have no tax to pay at all.
The region of Murcia is another area where the tax between close relatives has almost been eliminated in 2018. There has been a reduction of 99% of the final tax quote to pay for both inheritance and donation tax. Both Murcia and Andalucia have followed the example that was already set by the Valencian Community.
Of course, each case is different and it is important to take individual advice. The inheritance and donation tax must be calculated in each case taking account of the region and relationships between the parties involved. However, generally speaking, the outlook is promising for those inheriting or receiving donations.
More Information from Ábaco Advisors
If you would like more information about inheritance or donation tax please contact our legal department. Send us an email to legaldpt@abacoadvisers.com, or use the form below. We will be happy to help you.
Ptt says:
Always interested in this. In the Canaries I have been used to reading Inheritence tax threshold is only 7500 euros and if you want to pass on to a brother they not only have to start paying from this low level but there is a double loading because it’s in the 3rd category for charging.. This discriminates against single people who are equally part of families. Unfortunately have not seen anything showing an improvement in this in the Canarian Autonomous region yet. As this seems so bad might I have not seen something new ?
Ábaco Advisers says:
Hi Ptt,
In the Canary Islands, Inheritance and Donation tax is ruled in the “Law Decree 1/2009, of 21st April, where the recast text of the current legal provisions issued by the Autonomous Community of the Canaries regarding taxes ceded is approved.”
In those cases where succession occurs between siblings in the said Community, the following tax allowances may apply:
Article 20 Allowance due to relationship
c) Group III, acquisitions by second and third degree colateral relatives and ascendants and descendants by affinity: 9,300 euros.
Article 20-ter Allowance due to age
1. Those people of seventy five years old or more inheriting shall have an allowance of 125,000 euros.
Article 22-ter Allowance due to acquisition of the deceased’s main residence
[…] a reduction of 99% of the value of the property may be applied to the taxable base, with a limit of 200,000 euros for the whole value of the property, which must be divided into the different taxpayers proportionally to their share.
The said reduction may be applied by the colateral relatives of the deceased being over seventy five years old who have lived together with the same at least the two years prior to the death.
Application of this allowance is conditioned by maintenance of the property in the patrimony of the inheritor within the five years following death, unless the inheritor happens to die within the said period of time.