Inheritance Tax for non-residents in Spain (Part 1)
In this post I will look at what may happen if you inherit money or property from a non-resident in Spain and especially if you can receive the tax benefits offered by the Law of Succession in Andalusia, which are more generous than central government taxation arrangements
CASE 1: WHEN THE DECEASED IS NON-RESIDENT IN SPAIN
In this case, several scenarios can be considered:
A. WHEN THE DECEASED IS NON-RESIDENT IN SPAIN AND THERE ARE GOODS IN SPAIN:
A.1. The deceased is not resident in Spain, but is resident in a country of the European Union (EU) or the European Economic Area (EEA):
The heirs, whether or not they are residents in Spain, can apply the inheritance law of Andalusia, as long as the most valuable assets of the deceased are located in Spain.
Let's look at several examples:
Example nº 1:
A citizen residing in Germany dies, and his heirs are residents of Austria. The estate is made up of the following assets: a house in Berlin valued at € 500,000, two properties in Marbella valued at € 700,000 and two houses in Madrid valued at € 200,000.
In this case the heirs must be taxed by the Inheritance Tax in Spain on all the assets in Spanish territory, which add up to a total of € 900,000 and in the same way they can benefit from the application of the inheritance law of Andalusia, because the properties with the greatest value are in Andalusia.
Example nº 2:
We have the same details as example 1, but in this case the heirs are resident in Murcia. Here the heirs can also benefit from the Andalusian inheritance law, but they must pay tax on all the assets of the hereditary wealth, that is, € 1,400,000, including the ones that are located outside of Spain in Berlin.
A.2. The deceased is not resident in Spain, and is not a resident of a country of the European Union or the EEA:
In this case the heirs can not benefit from the Andalusian inheritance law and must apply the central government law.
Example nº 3:
A citizen residing in Saudi Arabia dies, her heirs are residents in France, and the assets of the hereditary estate are: a house in Saudi Arabia valued at €2,000,000, another house in Marbella valued at €6,000,000 and business premises in Madrid valued at €3,000,000.
In this case, the heirs only have to pay tax in Spain for the goods located in the Spanish territory, which add up to € 9,000,000, not being able to benefit from the tax benefits offered by the Andalusian law and being obliged to apply the government law.
Example nº 4:
Let’s imagine that we are faced with the same circumstances as in example number 3, but that the heirs are residents of Malaga. Likewise, they cannot benefit from the Andalusian regulations, having to apply the government inheritance law. In this case they must pay tax on all the assets of the deceased a total of € 11,000,000, because the house in Saudi Arabia should be included.
B. WHEN THE DECEASED IS NON-RESIDENT IN SPAIN AND THERE ARE NO ASSETS IN SPAIN:
B.1. The circumstance may arise that the deceased is not resident in Spain, but is a resident of a country of the European Union or the EEA, and the heirs are residents of Andalusia:
In this case, the heirs may apply the Andalusian regulations and benefit from their tax arrangements.
Example nº 5:
A citizen residing in Germany dies, his three children reside in Estepona (Malaga) and his spouse in Germany. The hereditary estate is composed of a house in Germany valued at€ 1,000,000 and there is no property in Spain.
In this case the surviving spouse should not pay inheritance tax in Spain. However, their three children, who are residents of Estepona (Malaga) should pay inheritance tax on all the inherited assets and may apply the Andalusian law.
B.2. The deceased is a non-resident in Spain, and is a resident of a country that is NOT a member of the European Union or of the EEA:
In this case, even though the heirs are residents of Andalusia, they must apply the state regulation.
Example nº 6:
A citizen who at the time of his death is a resident of Russia, his spouse is resident in Switzerland, but his son is a resident of Fuengirola (Málaga). The hereditary estate is composed of a house in Switzerland valued at € 1,000,000
In the example, the surviving spouse should tax inheritance tax in Spain, but the son should tax inheritance tax for the goods he receives from the inheritance, and the central government law should be applied without being able to benefit from the Andalusian law.
Deceased: It is the person who has died.
Hereditary estate: The hereditary estate is the patrimonial set of the deceased, which will be subject to distribution among the heirs, and it consists of the asset (set of assets and rights) and liabilities (set of debts).
Heirs: a heir is the person who receives a property, money or rights and obligations of the deceased.
Do not hesitate to contact our law firm in Marbella if you have any questions regarding an inheritance of non-residents Andalusia or a legacy of non-residents in Spain. Our team of lawyers who are experts in inheritance from non-residents in Marbella will be pleased to advise you and carry out all the procedures relevant to the inheritance.
SOURCE: Agencia Tributaria de Andalucía