Inheritance Tax: IMPUESTO SOBRE SUCESIONES Y DONACIONES

INHERITANCE MATTERS AND DEATH DUTIES FOR BRITISH PASSPORT HOLDERS LEAVING PROPERTY IN SPANISH TERRITORY  

This is a complicated process and you may well decide to appoint a solictor rather than try and deal with the matter your self. The main difference between British and Spanish rules is that spain does not accept the concept of the “estate” of the deceased being taxed, in Spain the BENEFICIARIES of the deceased are individually taxed and importantly NONE OF THE DECEASED PROPERTY CAN BE DISPOSED OF UNTIL THE TAX IS PAID

DOCUMENTATION REQUIRED

  •  Get a Death certificate – legalized and translated officially with the Apostille from the UK Foreign Office in London if not issued in Spain.
  • Original and authenticated apostilled legalized copy of UK Probate certificate will be required. (from this point on A & LT stands for Apostilled and Legally translated and applies to ANY documentation which is not in the Spanish language The Apostille is obtained from the UK’s Foreign Office a Traductor Juridica can be found online or locally)
  • Get an authenticated copy of the Spanish Will or if only a UK will is available original and A & LT – If no will is available at all then a UK Probate letter of administration A & LT will be required
  •  Obtain confirmation of last will status and life insurance policy status in Spain from Madrid central registry via a Spanish Notary or apply yourself
  • Collate Assets in Spain documentation – originals of;
    • The Escritura (deeds to the property in Spain) plus current valuation
    • Proof of payment of IBI (rates) last receipt
    • Proof of payment of Non-Residents deemed income tax – last 4 years returns, modelo 210
    • Letter from the banking institution of all bank accounts in Spain stating the balance of the account(s) as at the point of demise.
    • Confirmation of any insurance policy paid out in Spain (including burial policies)
    • Original documentation of any vehicle or vessel registered in the Canary Islands in the name of the deceased plus official current valuation(s)
  • Collate information of Beneficiaries under the will
    • NIE certificate – Foreigners fiscal identity number (if they don’t have one it must be obtained before starting the process
    • Full names, Fiscal Addresses and copies of passports.
    • % split between beneficiaries
    • Statement of pre-existing wealth (in the Canary Islands) of each of the benficiaries

Pre-existing wealth Multiplier

Classes I and II Class III Class IV
Up to 402,678 n/a 1.5882 2.0000
402,678 -2,007,380 1.0500 1.6676 2.1000
2,007,380 – 4,020,770 1.1000 1.7471 2.2000
Over 4,020,770 1.2000 1.9059 2.4000

Define relationship status of beneficiaries
There are different categories of beneficiaries when calculating Inheritance Tax:

Relationship to deceased Reduction allowance in euros Non fiscally resident heirs
Children under 10 138,650.00
Children
15,956.87 plus 3,990.72 euros for every year under 21
up to a maximum of 47,858.59 euros
Children 10-14 92,150.00
Children 15-17 57,650.00
Children 18-20 40,400.00
Spouse 40,400.00 15,956.87
Children 21*+ and Adopted children 23,125.00 15,956.87
Rest of descendants/ascendants or adoptive parents 18,500.00 15,956.87
Group III Brothers, sisters, nephews, nieces, uncles,
aunts and in-laws
9,300.00 7,993.46
IV Anyone else. This includes unmarried partners
unless there is acceptable and substantial proof of a
long term cohabiting relationship.
0.00 0.00
  • Each beneficiary must swear a deed of acceptance of inheritance in front of a Spanish Notary OR obtain a Spanish Power of attorney or UK POA – A &LT to authourise another to do this on their behalf if not coming to Spain to sign the document themselves.
  • Submit an inventory of assets and inheritance tax returns for each beneficiary to the Spanish tax office in Madrid if the deceased was NON Fiscally Resident in Spain or to the Canarian Tax Office if they and the beneficiaries were/are Fiscally Resident here. You have to pay the inheritance tax within six months after the date of demise otherwise a surcharge will be imposed. All original documentation has to be enclosed.
Assets up to the value of: Tax rate applied: Cumulative tax
%
7,993.40 7.65 611.50
15,980.91 8.50 1,290.43
23,968.36 9.35 2,037.26
31,955.81 10.20 2,851.98
39,943.26 11.05 3,734.59
47,930.72 11.90 4,685.10
55,918.17 12.75 5,703.50
63,905.62 13.60 6,789.79
71,893.07 14.45 7,943.98
79,880.52 15.30 9,166.06
119,797.67 16.15 15,606.22
159,634.84 18.70 23,063.25
239,389.13 21.25 40,011.04
398,774.54 25.50 80,665.08
797,555.08 29.75 199,291.40
Excess 34.00
  •  Differences for the Canary Islands: Once the tax calculation is done there is the possibility of a large reduction being applied, depending on the FISCAL residency status of the deceased and the beneficiaries,.
    In 2008, the autonomous regional government of the Canary Islands granted Spanish fiscal residents a 99.9% reduction to the inheritance tax due on bequests to close relatives (parents, children, spouses and family partners). This was abolished in April 2012 as a result of the economic crisis but it was reintroduced in January 2016.
    Under the re-introduced scheme, the reduction is available for both fiscal residents and non fiscal residents on bequests and gifts of property or assets located in the Canary islands IF made to closest relatives, i.e. those in the first two groups, eg spouses & children as long as non-fiscally resident heirs reside in another EU country.
    The fact that applying the 99% reduction discount for non-fiscal-residents in Spain who ARE fiscally resident in the EU, is governed by EU non-discrimination regulations will mean that those who are fiscally resident in the UK are unlikely to benefit from this once the UK has left the EU, unless some subsequent agreement is negotiated. The problem is any new treaties are likely to be drawn up between the UK and Spain – and the 99% discount is within the remit of the Canarian Government, not the Spanish State, so it is possible that UK fiscal residents will end up paying the full amount, no longer being protected by the EU regulations.
  • Whatever the inheritance tax amounts to, once it has been paid and documents returned, you will be required to change over the deeds at Land registry – their charges are approximately the same as the Notary’s and beneficiaries are also be liable for plus valia tax on the increase in the value of the land since the time it was purchased by the deceased.
  • Bank accounts can now be transferred or closed
  • If any vehicles are involved the ownership details must be changed at Trafico in Santa Cruz
  • Utilities etc can be changed to the beneficiaries (new owners) of the property

This is a BASIC check list we would strongly advise that you get information on your specific circumstances