IN today’s article we are going to discuss double taxation on inheritance tax, giving you some basic legal advice.<\/p>\n\n\n\n
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Double taxation on inheritance tax is regulated in the Law on inheritance and gift tax (IHT), article 23 and in regulation, article 46.<\/p>\n\n\n\n
They basically say that:<\/p>\n\n\n\n
When a person is obliged to pay inheritance tax due to a personal obligation in Spain, the lower of the following amounts, may be deducted from the tax bill to be paid;<\/p>\n\n\n\n
1. The amount paid abroad, for inheritance tax (or similar). In relation to assets located outside Spain.<\/p>\n\n\n\n
2. Or, the result of applying to assets located abroad, the effective average rate.<\/em><\/p>\n\n\n\n <\/p>\n\n\n\n Only those who pay in Spain by a personal obligation, that is, the beneficiaries of an inheritance, who are tax residents in Spain.<\/p>\n\n\n\n This means therefore, they must pay tax in Spain in respect of the entire inheritance, even for the assets that are outside of Spain.<\/p>\n\n\n\n It must be remembered that nationality is irrelevant as for the purposes of inheritance and gift tax, only tax residence is relevant.<\/p>\n\n\n\n <\/p>\n\n\n\n A person, who is tax resident in Spain, inherits from her father, properties or assets in the United Kingdom and Ireland.<\/p>\n\n\n\n For properties and assets in the UK and Ireland, she paid the equivalent of inheritance tax in those countries.<\/p>\n\n\n\n But, being a tax resident in Spain, she must pay in Spain for the entire inheritance and therefore, also and again, for the assets located outside of Spain.<\/p>\n\n\n\n In this case, we would be facing a case of double taxation. That is, two amounts of inheritance tax would be paid in two different countries in respect of the same assets.<\/p>\n\n\n\n According to Spanish regulations, the amount to be paid in Spain for IHT may be reduced by what was paid abroad or the effective average rate.<\/p>\n\n\n\n <\/p>\n\n\n\n According to the aforementioned articles, the effective average rate is calculated by dividing the tax rate by the taxable base and multiplying the result by 100.<\/p>\n\n\n\n <\/p>\n\n\n\n If you are a tax resident in Spain and inherit assets outside of Spain, you must pay inheritance tax here for the entire estate.<\/p>\n\n\n\n But, according to the regulations on double taxation on inheritance tax, part or all of the amount paid could be deducted.<\/p>\n\n\n\n It is equally important to know that Spain has signed some double tax treaties with several countries in this matter.<\/p>\n\n\n\n <\/p>\n\n\n\n You can find out more about our services related to successions, wills, inheritances, etc.<\/a><\/p>\n\n\n\n <\/p>\n\n\n\n So, if you need expert advice, on these matters Contact us<\/a><\/u><\/strong><\/p>\n\n\n\n <\/p>\n\n\n\n You could also keep informed in our FACEBOOK.<\/a><\/p>\n\n\n\n <\/p>\n\n\n\nWho can deduct what was paid in another country?<\/u><\/strong><\/h2>\n\n\n\n
Example<\/u><\/strong><\/h2>\n\n\n\n
Calculation of the effective average rate<\/u><\/strong><\/h2>\n\n\n\n
Conclusion<\/u><\/strong><\/h2>\n\n\n\n