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

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...

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.

24 Lawyers Offering Inheritance Services in Spain

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  • Peter Edwards, Palma de Mallorca
    Peter Edwards, Palma de Mallorca
    Jul 29, 2021

    Our advocate’s perfect bilingual status put us very much at ease in our negotiations with her and we were very happy at the outcome.


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