Understanding Inheritance Laws in Spain
Managing an inheritance in Spain can be particularly complex for non-residents. Spanish law requires that heirs formally accept an inheritance before assets can be transferred. This process involves legal and tax considerations that should be well understood to prevent complications and optimize taxation. In this guide, we outline the essential aspects of inheritance for non-residents, providing practical insights and key recommendations.
Legal Framework for Inheritance in Spain
Spanish inheritance law is governed by the Civil Code and European Regulation No. 650/2012, which establishes that the applicable law is generally that of the deceased’s habitual residence unless they have specified a different jurisdiction in their will.
Example:
A Canadian national residing in Spain passes away, leaving assets in the country. If they did not specify otherwise in their will, the Spanish legal framework will apply to their inheritance.
Selecting the Applicable Law in a Will
It is advisable for non-residents to explicitly state in their will which country’s law should govern their inheritance. This can prevent legal conflicts and ensure a smooth succession process.
Case Study:
A Swiss citizen who owns property in Spain chooses Swiss law in their will. This decision can allow for a different asset distribution than the default Spanish regulations, benefiting specific heirs.
Taxation for Non-Resident Heirs
Inheritance and Gift Tax (ISD) in Spain varies depending on the autonomous community where the assets are located. Non-residents are subject to taxation under regional regulations applicable to the location of the inherited assets.
Example:
An heir inheriting assets in Andalusia may benefit from substantial tax reductions, whereas in the Basque Country, tax rates may be considerably different.
International Tax Considerations
Non-residents are only taxed on assets located within Spain. If a double taxation treaty exists between Spain and the heir’s country of residence, it may help reduce or eliminate double taxation on the inherited assets.
Case Study:
An heir residing in Australia inherits assets in Spain. Thanks to a tax agreement between the two countries, they may be eligible for deductions that prevent dual taxation.
Required Documentation
To initiate the inheritance process, the following documents are required:
- Death certificate
- Certificate of last wills
- Documentation on life insurance policies (if applicable)
- Bank certificates indicating account balances at the time of death
- Will (if available)
- European Certificate of Succession (for heirs residing in different EU countries)
- Documentation of assets and properties
- Foreigner Identification Number (NIE) for heirs
Step-by-Step Inheritance Procedure for Non-Residents
- Verification of the Will:
- The Certificate of Last Wills must be obtained to verify if a will exists and where it was registered.
- A certificate regarding life insurance policies should also be requested.
- Notarial Formalities:
- A notary will draft the official deed of inheritance acceptance and asset distribution.
- Inheritance Tax Payment:
- The ISD tax return must be filed with the tax authority of the corresponding autonomous community.
- Property Registration:
- Real estate assets must be recorded in the heirs’ names at the Land Registry.
- Bank Procedures:
- To access the deceased’s bank accounts, heirs must provide the bank with a copy of the inheritance acceptance deed and proof of tax payment.
Key Recommendations for a Smooth Process
- Draft a will that clearly specifies the applicable law.
- Seek advice from an international inheritance lawyer to avoid legal and tax complications.
- Plan the inheritance process in advance to minimize tax burdens.
Regional Differences in Spain
Each autonomous community in Spain has its own tax regulations, significantly impacting the ISD tax.
Comparative Overview:
- Madrid: 99% reduction for direct heirs.
- Andalusia: Major tax reductions, with exemptions up to €1,000,000 per heir in some cases.
- Valencia: Higher tax rates with fewer reductions than other regions.
Conclusion
The inheritance process for non-residents in Spain is influenced by multiple legal and tax factors. Seeking professional legal assistance ensures a streamlined process and helps avoid unnecessary delays or tax burdens. Planning ahead and understanding the specific regulations applicable to each case are crucial steps toward an efficient inheritance procedure.
ATLANDIX GROUP
Lorena López – Solicitor
Tel. +34 644 402 567 – info@atlandixgroup.com
