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 firstname.lastname@example.org, or use the form below. We will be happy to help you.