Inheritance is a way of acquiring property, a means of obtaining wealth that can be taxed, that is to say, of constituting the chargeable event of a tax. The Spanish tax system includes a figure whose purpose is to tax the acquisition of wealth free of charge and, therefore, includes as a fundamental taxable event inheritance. This figure is the Inheritance and Donation Tax (ISD), “Impuesto sobre Sucesiones y Donaciones” in Spanish.
Inheritance Tax can be taxed on the basis of personal obligation or real obligation:
- Personal obligation: If you have your habitual residence in Spain, you are taxed on your personal liability, and on all the assets and rights you acquire, regardless of where they are located, without prejudice to the deduction for international double taxation that may be applicable.
- Real obligation: If you have your tax residence abroad you can be subject to the tax by real obligation and will be taxed in the following cases:
The acquisition of assets and rights, whatever their nature, which are situated, may be exercised or are to be exercised in Spanish territory.
The following are considered to be located in Spanish territory:
- Immovable property situated in Spanish territory.
- Movable property permanently assigned to dwellings, farms or industrial holdings or establishments located in Spanish territory.
The perception of quantities coming from life insurance contracts when the contract has been taken out with Spanish insurance companies or has been concluded in Spain with foreign companies.
So as a summary, a non resident in Spain only will be liable to pay inheritance tax if he is heir to an inheritance that includes some property situated in Spain or recieves quantities from a life insurance contract made by a Spanish company or concluded in Spain with foreign companies.
For example if a person dies in Spain but his beneficiaries are residents in UK and all of the assets from the inheritance are in UK or other countries they wouldn´t have to pay Inheritance Tax in Spain. With a brief outline we will explain all the possible scenarios.
Inheritance Tax Scheme
A) Deceased Resident or Non-Resident in Spain
1) With properties in Spain:
- Heir not resident in Spain; Pays in Spain, for the value of the assets located in Spain
- Heir resident in Spain: Pays in Spain, for the value of assets located all over the world
2) Without properties in Spain:
- Heir not resident in Spain; Doesn´t pay in Spain
- Heir resident in Spain: Pays in Spain, for the value of assets located all over the world. Being able to deduct amount paid in another country.
Please note that this information is for general use only. For accurate advice and guidance, we highly recommend you book an appointment with an independent lawyer. Additionally, please see the following link: Taxes in Spain.
For more information or assistance, do not hesitate to contact Pellicer & Heredia on + 34 965 480 737 or email us at firstname.lastname@example.org.