SPANISH INHERITANCE TAX. NATIONAL OR REGIONAL LAW.
The collection of the Spanish Inheritance tax and the right to produce additional legislation to the National Inheritance law in Spain have been transferred to the different Regional Inland Revenue’s as per law 21/2001 of 27th December. As per this law, each individual regional Inland Revenue could establish:
2)Increase or decrease the corresponding Inheritance Tax Scale in Spain.
3)Increase or decrease the coefficients applicable to the pre-existing wealth of the heir.
4)Deductions or benefits to the Inheritance tax quota.
5)Management and collection of the Inheritance tax in Spain.
As a conclusion, the multi-lingual registered lawyers, accountants and tax advisers of Arcos & Lamers Asociados, experts on Inheritance procedures in Spain and Spanish Inheritance tax, can state that being the heir non fiscal resident in Spain, the Spanish Inheritance tax law applicable would be the Spanish national law. For heir/s Tax resident in Spain, both national and regional Inheritance Tax law would be applicable.
PERSONAL OBLIGATION VERSUS ASSET OBLIGATION.
An Inheritance in Spain would be considered as a personal obligation or liability for those Spanish Inheritance tax payers who are considered fiscal resident in Spain. The assets obligation liability would be applicable for only those considered as resident.
The above means, in principle, that the non resident in Spain would settle their inheritance tax calculated on properties and assets located in Spain only while the Tax residents in Spain would need, in principle, to declare at their Spanish Inheritance tax declaration all assets world wide inherited or otherwise stated in the corresponding bilateral agreement between the countries.
Nevertheless, the tax payer would be entitled to the “deduction to avoid double international taxation” (deducción para evitar la doble imposición internacional) in the event of having to declare the Inheritance Tax in Spain by means of a personal obligation (as a fiscal resident in Spain) having already paid the corresponding inheritance tax on assets located out of Spain. In this case the tax payer would be entitled to deduct the smallest from the following amounts:
A) The Inheritance tax paid out of Spain on properties and assets located abroad.
B) The average Inheritance tax rate applicable on properties and assets abroad as if they would be taxed in Spain.
Clarification on the above, the tax payer would be entitled to deduct only the corresponding hypothetic Spanish amount due although the Inheritance Tax paid out of Spain is higher. So the deduction to avoid double international taxation is partially applicable in some cases.
Do not hesitate to contact Arcos & Lamers Asociados, your leading Spanish law firm experts on Inheritance tax in Spain.