When a close relative passes-away it is unfortunately not just a time to grieve, but also a time of bureaucracy. Dealing with the estate of a deceased loved one is not something that most of us are prepared for, and so it is all the more difficult to have to manage.
Whether or not a person was resident in Spain, there will still be Spanish bureaucracy to deal with when there were assets in Spain. This can be reduced substantially where a Spanish Will was drafted by the deceased.
In any case, a number of questions will typically arise in these situations: Is there a Spanish last Will & Testament or one signed in another country? Which inheritance law applies: Spanish or the law of the deceased’s country of origin? And, will the heirs need to pay any inheritance tax or not?
Spanish Inheritance Law for Non-Residents – Which inheritance law applies?
If you are not resident in Spain, then Spanish law should not apply to your inheritance. Where you have been resident can sometimes be a tricky question, though for questions of taxation, this typically involves spending more than 183 days a year, it can also relate to where your primary source of income is located.
Even if you are resident in Spain, as long as you create a valid last Will & Testament that specifies your desire for the law of your country of origin to apply, then Spanish law will not apply.
That said, many married couples that are resident in Spain are not aware that in their future inheritance, Spanish law will be applied due to the fact that they are technically resident in Spain. This means that if one of them passes away, under Spanish law their legal assets will not automatically be inherited by the surviving spouse.
Therefore, if you don´t want your belongings to go to your direct family and don´t have a Last Will yet, it is vital that you sign this important legal document before a Spanish notary.
In this Last Will & Testament the first thing you would do is to declare that the inheritance law to be applied is that of your own country – which is usually much more flexible – rather than Spanish probate law.
Secondly, you can determine your exact wishes for the transfer of your assets following the regulations of your national law. You can also choose if you want your Spanish Last Will & Testament to only apply to your Spanish assets or to your assets in all countries.
Signing of the inheritance deeds at the notary
To be able to inscribe the deceased’s assets – such as a property, bank account or car- into the name of the legal beneficiaries, it is always necessary to sign the Inheritance Deeds at the Spanish notary.
Mostly this is done by a lawyer that represents the beneficiaries with an official Power of Attorney. The lawyer will provide the notary both with the Death Certificate as well as a certificate from the central registry stating whether or not there was a Spanish Last Will and, if yes, where it was signed. In this case the notary of course also needs to receive a certified copy of this Last Will.
Inscribing properties in name of the legal heir(s)
When the Notarised and Officially stamped copies of the inheritance deeds are returned, the lawyer can then proceed with the correct inscription of the estate’s assets into the name of the new owner at the appropriate Registry. The whole process from the signing of the deeds at the notary until the end of the process, is around 3 months.
In which case do I pay inheritance or gift tax?
Spanish Inheritance Law for Non-Residents affects equally any resident, this is to say, inheritance or gift tax is the same for Spanish, European residents or non-European residents in Spain, but the percentage varies per region. In the Canary Islands heirs that are close family members like spouses, children, grandchildren or parents usually don´t pay inheritance or gift tax, but the tax return still needs to be carried-out.
Therefore, once the inheritance deeds are signed, the lawyer will fill out the obligatory forms on your behalf and pay any taxes due from such beneficiaries that do not benefit from tax exemption.
Depending on the country/region of residence of the deceased, the lawyer will send the documentation to either the Regional or National Tax Office. Finally, the lawyer will make sure that the local plusvalia tax is paid, where applicable.