Inheritance Law and Inheritance Tax

Inheritance Law
Inheritance Law is governed by the law of the country of nationality of the deceased person, meaning that when a foreign property owner dies, having made a will either in Spain for his country of nationality, the disposal of his property will be governed by his own national laws, not Spanish law. However, the same law does not free the foreigner from Spanish Inheritance Taxes.

A Spanish will has to be registered at the Spanish Registrar of Wills to be made valid. If a foreign property owner of property in Spain dies without making a will, whether a resident or not, his property will be disposed off in accordance to Spanish inheritance rules.

It is advisable to make a will for your Spanish property here is Spain and a copy of this will, can be attached to your will made in your country of nationality.

Inheritance Tax
This is a very complicated tax and we recommend that you seek personal advice from your Solicitor as the laws in Spain can literally change over night and there is scope for planning tax to reduce your liabilities. What follows is a simple explanation.

Inheritance Tax not only depends on the value of the estate, but also on the wealth of the recipient. For non residents for tax purposes only property situated in Spain are classified as pre existing wealth. All non residents who own property or rights in Spain are automatically subject to inheritance tax.

In general, the taxation of inheritances for non residents follows the same rules as for residents, in the valuation of the property, the availability of allowances and charges or costs which may be deducted, the provisions for the authorities to check the values and determine the tax due.

In most cases, for inheritance purposes, property is valued at today’s market price. Where a property is jointly owned and one owner dies, it is only half the value which is included in the estate. The tax base is then further reduced by any debts owing by the deceased, mortgages, and the expenses of the last illness and the funeral costs.

The rules for calculating the amount of inheritance tax due are very complicated, and depend upon the value of the estate and a multiple coefficient.

Tax Allowances
Spouses, parents and grandparents and adoptive parents: € 15,956.87 as well as direct issue and legally adopted children who are 21 years of age or older, plus € 3,990.72 for each year by which the beneficiary is under 21, up to a maximum of € 47,858.59

Siblings, uncles and aunts, step-parents and step-children: 7,993.46 Euros

Calculation of Spanish Inheritance Tax
The following rates are based on the law in force in 1999 and are for illustration only and you must not depend on their accuracy. You must seek specialised legal advice to be informed correctly.

The rates work on a sliding scale ranging from 7.65% to 34%. The tax due on inheritance is calculated after all exemptions and deductions as follows:

On €30,050 – tax 9.5%
On €60,101 – tax 10%
On €120,202 – tax 12.5%
On €150,253 – tax 14%
On €204,404 – tax 16.25%
On €601,012 – tax 25%

When the property is left to distant relatives or non relatives, the tax is a flat rate of 18%. Where a single person dies childless and the estate is left to a non relative there is a flat rate of 22.95%. However these rates can be increased by a series of multiple coefficients to allow for the closeness of the inheritor’s relationship to the deceased, and the inheritor’s existing wealth in Spain.