Spanish inheritance tax for non-residents has been changed to be the same as for residents, and will now enjoy the same generous tax breaks.
With the entering into force of the new legislation on January 1st, 2015, a new special tax regime has been introduced for non-resident EU citizens, that is to say, EU citizens not resident in Spain, but resident in the European Union, may apply the Spanish regional tax rules as have residents in Spain before the new law.
Inheritance law Spain law for non residents has thus been brought into line with the European law doctrine of equality for all citizens of the European Union.
In relation to EU citizens the new legislation establishes that, if the deceased was not resident in Spain , heirs not resident in Spain can apply the rules of the Autonomous Community in which the majority value of their assets are located.
If the heirs are resident in Spain , the rules of the Autonomous Community where they reside shall apply. If the deceased had been resident in a region of Spain and the heirs are not resident in Spain , the non-resident heirs will pay their inheritance tax under the rules of the Autonomous Community where the deceased resided.
Following the above explanation it would appear to be the case that new problems may be posed in the future, such as on the death of a person resident outside the EU , whereby heirs that are EU citizens resident in Spain will continue liquidating their inheritance tax under the less generous state rules, and thus maintaining discriminatory treatment.
Neither does the legislative amendment make any ruling on its retroactive nature, so I understand that it is not possible to apply the new rules to taxable transactions incurred prior to January 1 , 2015.
In the author’s opinion the new rules could not be applied retroactively as if this was the intention of the legislators, it should have been expressly declared to be retroactive. In my opinion the new rules should have been given retroactive effect , since the judgment of the ECJ declares the supervening invalidity of the rule infringed , with effect from the time that the Court’s judgment was handed down.
This should envisage the unenforceability of the old tax discrimination to anyone affected. Despite this, after telephone contact with the Non-Resident Tax Agency in Madrid , it seems that they are accepting the application of the new rules for accruals prior to January 1, 2015 , although this is something we must continue to monitor.