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Why the group you are in determines your Spanish Inheritance tax liability

The death of a relative who owned assets in Spain forces people who often have no previous experience dealing with Spanish laws to try to comprehend the rules of inheritance  and indeed  inheritance tax in spain. Given that the rules are completely different from Anglo-Saxon jurisdictions it can be difficult to get an appreciation of how the rules will affect your particular situation.

One thing that is certain is that it will have an impact and needs to be dealt with quickly in order to avoid fines and interest.  The table below is a typical format that the Spanish government uses to show potential inheritance tax liability, and as can be seen, the concept of ‘Groups’ is used to determine available exemptions, and consequently, tax liability:

inheritance tax spain state deductions

The Groups referred to were defined as:

Group I – Children, including adopted children, under the age of 21

Group II – All other children, spouses and parents

Group III – close relatives such as brothers and sisters, grandparents, aunts and uncles

Group IV – more distant relatives

To give a better idea of how these rules work in practice, if we take the example of a  16 year old child who inherits from her parents, her situation falls into Group I and so she may claim an exemption of €15,956.87 + (€3,990.72 5) = €19,953.60 to give a total exemption of €35,910.47.

In addition to the above exemptions, should any beneficiary be disabled, further exemptions ranging between €47,858.59 and €150,253.03

If the deceased took out a life insurance policy in favour of a beneficiary there is an exemption up to the value of €9,159.49 where the beneficiary is a spouse, child or parent.

An exemption also exists for inheritance tax payable on the permanent or habitual residence. This exemption applies equally to spouses, children and parents of the deceased at a rate of 95% of the value of their inherited portion of the property up to a maximum value of €122,606.47 each. An important proviso exists in that the property may not be sold for a period of 10 years after the inheritance.

Other relatives further removed, may also benefit from this exemption but must have been living with the deceased in the property for a period of at least two years prior to the date of death.

The specific deductions available do not only depend on the Group that you are assigned to, but all on regional deductions, depending on your residency status in Spain.

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Inheritance

Available in the following locations: Alcoy, Alicante, Arrecife, Barcelona, Benidorm, Cadiz, Castellon, Córdoba, El Campello, Estepona, Fuengirola, Gandia, Girona, Granada, Jaen, L`Eliana, La Manga del Mar Menor, Las Palmas, Los Alcázares, Los Cristianos, Madrid, Maspalomas, Mazarron, Murcia, Nerja, Orihuela Costa, Oviedo, Palma de Mallorca, Puerto del Rosario, Puzol, Seville, Torrevieja, Valencia, Velez Malaga, Vera, Vigo.

* If your local town is not listed, a lawyer from our nearest office will be happy to assist you.

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1Who is this Service for?

For those who need to arrange for an estate abroad to be transferred to beneficiaries under a Will or via intestacy

2What does this service consist of?

  • Assistance obtaining a legalised copy of the death certificate.
  • Arrange a legal copy of any existing will.
  • Verification of the existence of any life insurance policies.
  • Power of Attorney to avoid excessive travel costs
  • Inheritance Acceptance Deed drawn-up with the public notary.
  • Payment of Inheritance Tax at the office.
  • New titles in the inherited assets are inscribed in the relevant registry
  • Simultaneous sale or disposal of assets if required (please request quotation).

 

Support services

3Free Support Services Included

When combined with the free and innovative Advocate Abroad support services you can be sure that you are obtaining completely transparent legal services from registered and regulated English-speaking lawyers abroad.These support services include:

  • Verification of the regulatory status of your professional.
  • Fees as recommended by the Local Professional Body
  • Fees specified in advance and legally guaranteed.
  • Service levels agreed in advance and guaranteed.
  • All professionals must hold professional indemnity insurance.
  • Professionals' proficiency in English monitored.
  • Continuous quality controls and reviews.

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