Spanish Inheritance Tax - introduction

Spanish inheritance tax ("Impuesto sobre successiones") is levied on the beneficiary´s acquisition and not the undivided estate (like English inheritance tax (IHT).

 

Tax Liability in Spain

Unlimited inheritance tax liability results from the fact that the beneficiariy is a resident taxpayer upon his death. A resident taxpayer is any individual living more than 183 days / year in Spain. In any other case only assets situated in Spain are taxable ("situs"), e.g. bank accounts, real estate, business assets, shares in a corpo­ration if the company has its seat or place of principal management in Spain.

 

Please note: nationality is not relevant.

 

Evaluation of the taxable estate

Property is generally assessed at market value. This also includes the assessment of real estate.  However, as the market value of real property is in most cases uncertain the tax authorities generally accept lower value stated in the tax declaration. 

 

Tax free allowances

Allowances depend on the degree of relationship of the beneficiary and the deceased. 

 

tax class I

tax class II

tax class III

tax class IV

  • Issue of the deceased (child or child of the child) under 21
  • Adopted children under 21
  • Issue over 21
  • The spouse
  • Parents
  • Adopted parents
  • Grand parents
  • broth­ers and sisters

  • First degree descendants of brothers and sisters (nieces and nephews)
  • sons-in-law and daughters-in-law, parents-in-law
  • All other beneficiaries.

 Personal allowance

 Personal alowance

Personal allowance

Personal allowance

 15.956,87 EURO

 15.956,87 EURO

 7.993,43 EURO

0,00 EURO

 

 

 

 

 

 

 

 

 

 

 

 

 

Please note:

  • Spouses are not exempt from Spanish Inheritance Tax.
  • Spanish inheritance tax law does not recognise the concept of partners or common law spouse.
  • Further special allowances (e.g. for self used real estate) may apply

 

Calculation of the raw tax figure

After deducing the allowance from the net value of the aquisition the "raw" tax figure must be calculated according to the following table:

 

 Taxable Aquisition in EUR up to...

Tax levied on this aquisition in EUR

Further aquisition in EUR

tax rate in %

0

0

7.993,46

7,65

7.993,46

611,50

7.987,45

8,50

15.980,91

1.290,43

7.987,45

9,35

23.968,36

2.037,26

7.987,45

10,20

31.955,81

2.851,98

7.987,45

11,05

39.943,26

3.734,59

7.987,46

11,90

47.930,72

4.685,10

7.987,45

12,75

55.918,17

5.703,50

7.987,45

13,60

63.905,62

6.789,79

7.987,45

14,45

71.893,07

7.943,98

7.987,45

15,30

79.880,52

9.166,06

39.877,15

16,15

119.757,67

15.606,22

39.877,16

18,70

159.634,83

23.063,25

79.754,30

21,25

239.389,13

40.011,04

159.388,41

25,50

398.777,54

80.655,08

398.767,54

29,75

797.555,08

199.291,40

u.s.w.

34,00

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

 

Calculation of the tax due

Finally the relevant co-efficient must  be applied. This is derived from the table below which takes into account the tax class and the taxpayer's pre-existing net wealth: 

taxpayer's pre-existing net wealth:

Class I and II

tax class III

tax class IV

Up to 402.678,11

1,0000

1,5882

2,0000

Up to 2.007.380,43

1,0500

1,6676

2,1000

Up to  4.020.770,98

1,100

1,7471

2,200

Over 4.020.770,98

1,200

1,9059

2,4000

 

 

 

 

 

 

 

Example:

Mr Brown, resident in London, is the owner of a finca in Palma de Mallorca (Spain), where he spends his holidays (20 days) every year. In his last will and testament he appoints his common law wife, Ms. Honeywell, as his sole heir. The finca is valued EUR 850.000,00. Ms. Honeywell has no property in Spain. As a common law marriage is not acknowled by the Spanish tax authorities, tax class IV applies. Ms. Honeywell`s allowance is therefore "0". The "raw tax figure is therefore according to the table 217.122,67 Euro. A co-efficient of 2.1000 applies as Ms Honeywell is taxable in tax class IV. The tax due on her inheritance is therefore 4.55.957,60.

 

 

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2009 © Jan-Hendrik Frank (Rechtsanwalt und Fachanwalt für Erbrecht)