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 |
|
|
|
|
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.