Changes to legislation affecting inheritance and donation tax

Impuesto de sucesiones y donaciones

Inheritance Thursday, January 8, 2015
Spanish inheritance tax

Since the summer of 2014 there has been a lot of coverage in the media regarding the EU ruling affecting Spanish inheritance and donation tax. The existing tax law in Spain was considered to be discriminatory against non-residents. Therefore, the European court established that Spain had to modify its laws in order to coincide with European law.

Finally this change has taken place and the Spanish government has adapted its legislation.

A law was passed the 28th of November 2014 which will be applicable to all bereavements and donations which occur after January 1st 2015.

As a result all EU citizens with assets in Spain will be able to choose the application of the inheritance and donation tax law of the appropriate Spanish region (Comunidad Autónoma) :

  • If the deceased is an EU citizen with assets in Spain, the inheritors can choose the application of the law of the region (Comunidad Autónoma) where the assets are located.
  • If the deceased is resident in Spain, the inheritors can choose the application of the law of the region (Comunidad Autónoma) where the deceased was residing.
  • In the case of donation the beneficiaries can choose the application of the law of the region (Comunidad Autónoma) where the assets to be gifted are located.

In summary, in the case of inheritance and donation proceedings to be completed in Spain non-residents can benefit from all the tax reductions previously only awarded to residents, therefore eliminating any kind of discrimination. 

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