Tax residents. Obligation to pay inheritance tax in Spain for assets inherited abroad, outside Spain.

Question:

I am a resident of Spain and have received an inheritance from my parents in the United Kingdom. Do I have to pay taxes in Spain and if so what taxes and where should I pay?

This is an enquiry that we receive on a fairly regular basis and in today’s article, we want to give basic information to people who, being tax residents in Spain, are beneficiaries of an inheritance consisting of assets located abroad (i.e. outside of Spain).

In Spain the Inheritance and Gift Tax (ISD or IHT) is paid by each of the beneficiaries: heirs, beneficiaries of a legacy and if he or she is a tax resident in Spain (their nationality is irrelevant) according to article 6 of the IHT law, they will have  a personal obligation to pay taxes in Spain in respect of the inherited assets, regardless of where they are located even if the assets are located abroad.

Where to pay.

Even if you are a resident, if the deceased was not a tax resident in Spain, you must present details of your inheritance and pay tax to the delegation of the Tax Agency in Madrid.

But it is very important to know that, if you are a resident of Spain, you can benefit from the tax credits of the autonomous community where you reside, even if the deceased person was a resident of a third party country, which is not part of the European Union.

As mentioned in previous articles there is a prohibition on discrimination in the payment of Inheritance Tax to residents in third party countries outside the EU and the decisions of the Spanish Supreme Court in this regard are important.

How to do it.

Even if the assets are abroad, the tax declaration must be submitted accompanied by the documentation proving the succession, assets and value.

The declaration should include;

The Death certificate, if applicable, translated and apostilled (if not a Spanish certificate).

Proof of inheritance of title by copy of the Will and confirmation that it is the last valid testament.

Documents proving the assets involved are part of the inheritance and their value.

Thus, if you are a tax resident in Spain, regardless of your nationality, you must submit and pay the Inheritance Tax if you inherit any asset or right, even if it is abroad, as indicated, but in most cases this is not very expensive, and will allow you to transfer the funds of the inheritance, or of the sale in the case of the real estate inherited to Spain without problems,

Our office can help you not only understand the regulations concerning the inheritance of assets in Spain, but also to settle the inheritance tax declaration of assets abroad, if you are a tax resident, so if you require legal advice, contact us.

The information provided in this article is not intended to be legal advice, it merely conveys information related to legal issues.

Carlos Baos

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

White & Baos 2020 – All Rights Reserved.

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