If you have property in Spain you will be keen to ensure that your inheritors are not burdened with a large Spanish inheritance tax bill when you die. Leaving property in Spain brings different tax requirements to what you might be used to in your home country. It’s important that you know what these are and that your inheritors have the resources to deal with inheritance tax demands when the time comes.
Every case is different. For example, the relationship between the deceased and the inheritor can make a big difference to the amount to be paid. Other factors to take into consideration include your nationality, the region in which the property is located and your status as a resident or non-resident in EU countries.
Prior to 1st January 2015 there had been differences in Spanish inheritance tax law In relation to residents and non-residents of Spain. However, following pressure from the European Commission, the taxation of Spanish inheritance could no longer discriminate against non-residents in Spain.
As a result, non-residents in Spain who are residents of an EU country benefit from the same inheritance tax allowances/ reductions. Of course, this could change if you are a British national when Britain leaves the EU.
Rather than talking theoretically about percentages we have included below some actual examples of how much inheritors of property in Spain might have to pay in different circumstances.
Case study 1: Resident of an EU country leaving their 50% share to their spouse or children who are also EU resident
Mr. and Mrs. Svensson have been living in the Costa Blanca for ten years and have one child living in Stockholm, Sweden. They jointly own a two-bedroomed house on an urbanisation.The house is valued at 157,500€. They have not yet decided whether to name the surviving spouse or their child as a beneficiary in their wills. However, in both cases, the Spanish inheritance tax would be the same.
Inheritance tax calculation = €0
Case study 2: EU resident leaving property to non EU resident children
Mrs. O’Connor moved to the Costa del Sol after having lost her husband. She has two adult children who live with their families in Australia. Mrs. O'Connor lives in a small villa in an inland rural area that is valued at 128,000€. When Mrs. O’Connor dies she will leave her property to her two non EU resident children.
Inheritance tax calculation = €0 if they keep the property for a minimum of 10 years.
Inheritance tax calculation = €4944,23 for each child, if they sell before 10 years
Case study 3: Non EU resident leaving their 50% share to their spouse
Mr. and Mrs. van der Sommen bought a sea front apartment in Torrevieja. They both live in Canada and use the apartment for themselves and friends during holiday periods. The apartment is currently valued at €94,000 of which they own 50% each. They have two children who also live in Canada. When one of the couple dies they will leave their assets to their spouse. They are both non EU residents.
Inheritance tax calculation = €2,906.93 to be paid by the remaining spouse
These are three typical examples. However, if you have been left property in Spain and would like to know exactly what the inheritance implications are for you, we can help. Ábaco can provide a cost estimate of the Spanish inheritance process on the property you have inherited, including inheritance tax to pay.
Every case is different. Ábaco can provide you with the personalised information you need to help you make the right decision.