We want to highlight on this article, the confusing and sometimes incorrect information that the expatriates in Spain – and Spanish people with interests abroad – are receiving from some professionals regarding Inheritance Tax.
As we have mentioned on several occasions, the EU Regulation 650/2012 is already in force regarding inheritance.
It is advised by some legal agents, financial advisors, and tax specialists that because this regulation, in Article 22, allows national law to be chosen as the applicable law to the succession, it is advisable – if taxes payable on the country of the nationality of the testator (the person making the will) are more convenient – to choose their national tax law to pay less inheritance tax.
But this advice is wrong, because the European Regulation 650/2012 relates to the applicable law to the succession. For example, whether English law applied in principle it could be understood that there is freedom to testate, but under the Spanish law, there are certain limitations on this freedom, and therefore there are certain portions of the Estate that are normally reserved for descendants or spouse.
It is not true that you can choose to pay inheritance taxes in one country or another, or under the law of one country or another. This Regulation expressly excludes in fiscal or revenue and administrative public law matters, and each state in relation to the succession of assets in its country, will determine the calculation, payment of taxes, etc.
Furthermore, Article 1 of this Regulation says:
This Regulation shall apply to succession to the estates of deceased persons. It shall not apply to revenue, customs or administrative matters.
Therefore, it is incorrect that the Regulation 650/2012 allows people to choose between paying taxes under the law of the country or another, as the fiscal and tax succession matters are not within its scope.
Therefore, if you have property in Spain and you want to make proper succession tax planning, you should know that it is not true that you can choose what law you want to apply for the payment of inheritance tax, as the regulation does not affect inheritance taxation, which are governed by the laws of different states.
If you want to make a will, plan your inheritance tax, etc. properly,contact us and we will help.
The information provided in this article is not intended to be legal advice, but merely conveys general information related to legal issues.
Carlos Baos (Lawyer)
Spanish Law firm solicitor attorney barrister.
Alicante, Denia, Costa Blanca Marina Alta
White & Baos 2016 – All rights reserved