Inheritance Tax
This tax is payable on inheritance of property by spouses, children or any other party who receives part of the deceased’s Spanish estate.
Spanish law provides that property registered in joint names is deemed to be held on a 50-50 basis and therefore on the death of one partner the surviving spouse inherits the deceased spouse’s 50% share. At this point inheritance tax becomes a pressing issue as the tax must be paid within 6 months from the time of death.

Inheritance is taxed on a sliding scale which starts at 7.67% rising to 34%. However, if you are a member of a particular class of beneficiary, a distant relative for instance, or you are already wealthy you could find that this rate is in excess of 80%. When assessing the beneficiary’s pre-existing wealth, the Inland Revenue will only take Spanish assets into account for non-residents.

The amount of tax a beneficiary is liable for depends on the net value of his share in the estate. This net value is calculated by establishing the current market value of the property and then deducting any charges, debts (a mortgage for example) or expenses that may be applicable. 3% is usually added to this figure to cover contents and personal effects. It is important to note that in Spain, unlike other countries, tax is only raised on the beneficiary’s share of this net value, not on the total value of the estate that has been transferred.

There are some tax allowances for certain classes of beneficiary.

Group 1:Spouses, parents, adoptive parents and grandparents as well as both children and adopted children over 21 have a tax allowance of €15,956.87. Children under 21 receive the same allowance, but a further allowance of €3,990.72 is added for each year the beneficiary is under 21. This allowance has a ceiling on it and the maximum that may be claimed is €47,858.59.

Group 2:Siblings, uncles and aunts, step-parents and step-children have a tax allowance of €7,993.46.

Group 3:Cousins, distant relatives and people with no family connection receive no allowances at all.

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