Spanish Inheritance Tax: 8 Steps To Save Money

 

If you are reading this then you have probably received an inheritance in Spain.

Or possibly you own assets in Spain and are concerned about how much of your estate will be gobbled-up in taxes, charges and legal costs.

The first piece of advice is: Don’t Panic!

Many scare stories are written about Spanish inheritance tax which are either untrue or simply don’t apply to most of us.

 

Inheritance

Nevertheless, there are ways that you can reduce the costs associated with claiming an inheritance in Spain. Below you will discover 8 tips that will go a long way to ensuring you pay as little as possible.

Please note that you can arrange a full inheritance management service via our network of independent lawyers in Spain.

We also provide a very convenient and cost effective method of incorporating the following tax-saving ideas by providing a will-making service that allows you to maximise savings to potential  inheritance tax liability.

 

1. Do I need to be in Spain to handle an inheritance?

No. One possible way to reduce expense is to manage the inheritance remotely. By signing a power of attorney you can have your solicitor manage the documentation in Spain and facilitate transfer of the assets to the beneficiaries.

The power is created in both English and Spanish and needs to be legalised in the country where you are located before it can be used in Spain.

 

2. Are there any simple ways to reduce the tax?

If there is a mortgage on any inherited property this can be deducted from it’s total value before reaching the taxable value. Any other quantifiable legal debt likewise may be deducted from the value of the estate.

While not appropriate for everyone, in general, bequeathing the estate to as many beneficiaries as possible is sensible as each one has an exemption (Approx. €15,000) that can be used to reduce the taxable value.

Leaving a life interest instead of the full interest in the estate can reduce tax substantially also.

 

3. Is it possible to claim back inheritance?

Currently actions are being filed for the return of taxes against Hacienda and the Spanish government on behalf of those non-residents in Spain who have paid inheritance taxes on the basis of discriminatory treatment.

To be added to the list is free on a no-win-no-fee basis. Please contact us for more information on how to join the list.

 

4. Are there fines or surcharges for late payment?

Spanish law stipulates that any taxes due on an inheritance must be paid within six months of the date registered on the death certificate. If this is not complied with then penalties are charged and interest begins to accrue. The surcharges applied are as follows:

  • 3 months after the deadline: 5% surcharge
  • 6 months after the deadline: 10% surcharge
  • 12 months after the deadline: 15% surcharge
  • Over 12 months since the deadline: 20% surcharge.

In the first three scenarios, the surcharge is a percentage of the amount payable alone. In the last scenario where 12 months have elapsed since the deadline, interest also becomes payable, currently at a rate of 4.75%.

You would obviously be well advised to act quickly enough to avoid the surcharges and fines becoming payable.

 

5. What if I am unable to pay the tax?

If you are unable to pay the tax initially then one option to avoid surcharges would be to defer the payment. The rules may be summarised as follows:

  • You may opt to delay payment of the tax or to pay in instalments if a request has been submitted within the correct time-frame (six months from date on death certificate)
  • In general, approval of a request to delay or pay the tax in instalments will incur a levy for legal interest
  • The deadline for making an application to delay or pay in instalments is six months from the date of death of the testator.
  • For requests of a delay of a year or less in payment of the tax it is required that the request has been made within the allowed time period and that there are not sufficient liquid assets  to pay the tax
  • For requests to pay instalments over five years in addition to the rules regarding requests for a delay of one year, it is additionally required that a guarantee that covers 125% of the amount of the tax and interest payable.

 

6. Will I lose an inherited property if I cannot pay inheritance taxes due?

A major fear that beneficiaries can have is that, should they be unable to pay the tax on the inheritance of a property in Spain, that they may lose the property. This is not the case though complications can arise.

For example, it is certainly not possible to sell a property until any inheritance taxes that are due have been paid.

Often the solution here can be to arrange for the lawyer to prepare the inheritance tax papers and wait until a suitable buyer appears. In such cases, the taxes and legal costs can often be dealt with by using the deposit transferred to purchase the property.

 

7. Do I still pay taxes if I inherit the family home?

If the property was the habitual home of the deceased then a special tax exemption exists for close family members. The exemption is currently worth approximately  €122,000 or up to 95% of the value of the property.

There are strict rules governing what constitutes ‘habitual’ residence and the property may not then be re-sold for a period of 10 years.

 

8. My partner and I are not married. Can we benefit from inheritance tax exemptions?

This problem can be avoided in a number of regions by registering as a ‘pareja de hecho’ (common law couple) in the relevant local registry and which henceforth permits the partner to benefit from typical spousal tax advantages.

 

Need Advice on A Spanish Inheritance?

Our lawyers are located throughout Spain and are able to provide assistance from simple legal advice through to a complete inheritance service including payment of inheritance taxes and vesting of asset titles in new owners.

You can find more information on the individual law firms by going to our: lawyer locator section.

 

Client Testimonials

Client reviews of our legal services, as uploaded by clients directly to the Wufoo survey platform:

  • Default Avatar75
    Jason Yorke, United Kingdom
    Thursday, July 19, 2018
    Beatriz was really helpful and always kept me informed at all stages. She is very professional and a pleasure to deal with.
  • Default Avatar75
    Mr David P Robson, Valancia
    Thursday, July 12, 2018
    My lawyer Francisca offered value for money and was very helpful. Will use her again.
  • Default Avatar75
    Richard Day, London and Barcelona
    Thursday, July 05, 2018
    My initial call to your service desk was responded to by Oscar very quickly.

    I appreciated his time as I outlined my issue, a problem with the building community and administrators. At the end of ...the call he provided clear guidance on next steps.

    Furthermore he quickly turned around the issue with an excellent drafted response for which I could not of hoped to be better worded. It was comprehensive and aligned perfectly with what I felt was needed.

    Excellent value for money and most definitely I would highly recommend Oscar.
  • Default Avatar75
    Søren Aabel Hammer, Malaga
    Thursday, July 05, 2018
    Beatriz was professional and quick to respond. Would definitely recommend to friends.
  • Default Avatar75
    Patrick Crean, Almerimar
    Thursday, July 05, 2018
    Juan was fantastic. Very easy to understand and very pleasant. I would definitely use his service again.
  • Default Avatar75
    Damien Stephan, Benidorm
    Thursday, July 05, 2018
    The whole process from start to finish was straightforward and well explained. I honestly cannot recommend them enough!

    They really went out of their way to be helpful and kept me up to date at ev...ery opportunity. Excellent value for money from some really nice and genuine people. True professionals.

    Wouldn’t hesitate to use again in the future.
  • Default Avatar75
    Claire, Fuengirola
    Wednesday, July 04, 2018
    Alvaro assisted me during my experience at advocate abroad, and he was so kind. He answered any questions I had, and made me feel completely at ease.

    I knew I was in the hands of a professional. H...e could not have done more to help me.
  • Default Avatar75
    Paul and Joyce Rose, Mijas, Malaga
    Wednesday, July 04, 2018
    Extremely helpful and very professional. Will definitely use Alvaro next time we require legal advice.
  • Default Avatar75
    Nigel Whinnett, Esher, UK
    Wednesday, July 04, 2018
    Professional, friendly, efficient service, good value, a pleasure to use the services of the lawyer and his team. In depth knowledge of the relevant laws, taxes etc.

    Would highly recommend and use ...again.
  • Default Avatar75
    Claire O'Gara, Fuengirola
    Wednesday, June 27, 2018
    I liked Alvaroós enthusiasm, and the great level of customer service. He always answered my questions thoroughly.
  • Default Avatar75
    Mrs Susan Vickery, Silves, Portugal
    Tuesday, June 26, 2018
    Good advice, very helpful and fast. Would definitely recommend Luis to friends.
  • Default Avatar75
    Niall Purdie, Barcelona
    Monday, June 25, 2018
    Anna helped me purchasing my house, she was knowledgeable and professional throughout. I would recommend using her legal services.
  • Default Avatar75
    Kartik, Paris
    Friday, June 22, 2018
    Very satisfied with the service provided by Marianne. She speaks English fluently and she was very quick, comprehensive and clear in answering all the questions.
  • Default Avatar75
    David Stack, Lliria, Spain
    Thursday, June 21, 2018
    Francisca was extremely helpful. She made the whole process easy to understand. I would definitely recommend her service to friends.
  • Default Avatar75
    Susanna Buckley, United Kingdom
    Wednesday, June 20, 2018
    Lidia is very approachable and friendly and I never felt that anything was a problem.

    She was also very sympathetic to my situation (my mother had passed away) and supportive. As soon as she was c...ontracted, she acted quickly to sort things out so that I could return home to the UK as soon as possible.

    She always tried her best to answer any questions very quickly and promptly and matters proceeded without too much worry on my part.
  • Default Avatar75
    Wendy Dickson, Marbella
    Tuesday, June 19, 2018
    It was all done very quick. Very good value for money. How easy it all was to communicate via email.
  • Default Avatar75
    Peter & Anita Bradshaw, Leeds, England
    Monday, June 18, 2018
    We could not be more happy with the service we received from Jaime.

    He responded immediately to our enquiry and it was clear from the outset that he fully understood our position. It was vital tha...t Jaime acted quickly in this matter and he did so in a highly professional and competent manner, providing us with clear and concise updates throughout.

    We found Jaime to be very polite and approachable and we believe his fees to be very reasonable. We would genuinely not hesitate to recommend his services.

    Before contacting Jaime, our previous experiences of Spanish Lawyers had been appalling - in fact we needed Jaime's help to resolve issues which previous Lawyers had created. Our only regret is not finding Jaime sooner!

    Thanks so much for all your help Jaime.
  • Default Avatar75
    Dion Nash, Algarve
    Tuesday, June 05, 2018
    Our lawyer Luis is bilingual, and was extremely helpful. We received very good service - Luis did everything needed to help me with my case. I would definitely recommend him to friends.
  • Default Avatar75
    Jan Neate, Nerja
    Wednesday, May 30, 2018
    Very satisfied with the service provided by Beatriz. She extremely helpful and spoke more or less fluent English. We would definitely recommend her to friends.
  • Default Avatar75
    Serena Bhatia, London
    Wednesday, May 30, 2018
    Anna has been nothing but helpful in providing information, sound advice and genuine care, My fiancé and I adore her! She is timely, professional and extremely knowledgeable about world wide law.
  • Default Avatar75
    Ronald Peter Downs, Spain
    Tuesday, May 29, 2018
    A lady staff member took us under her wing and managed to sort out my residency. Overall no complaints.
  • Default Avatar75
    Tracey and Mike Iliffe Bradley, Colchester, United Kingdom
    Tuesday, May 29, 2018
    From our very first contact through to the end of our purchase, Rosa surpassed all expectations.

    She was helpful, efficient, always quick to return our communications and a pleasure to deal with. ...We have already recommended her services to a friend.
  • Default Avatar75
    Cheryl, Seville
    Monday, May 28, 2018
    Miguel was helpful and kind. We will use his service in the future.
  • Default Avatar75
    Ken & Margaret, Torrevieja
    Thursday, May 24, 2018
    Pedro was extremely helpful, he couldn't have done more. We would definitely recommend his services to friends.
  • Default Avatar75
    Rl, Alicante
    Thursday, May 24, 2018
    Felt very comfortable at all times. Nothing was too much. Understood everything mentioned in our meeting. Very reasonable rate, money wise.
  • Default Avatar75
    KL, Valencia, Spain
    Wednesday, May 23, 2018
    Inma is easy to talk to, is prompt in replying to emails, is helpful and above all achieved the solution I wanted.
  • Default Avatar75
    MF, Lanzarote
    Monday, May 21, 2018
    My lawyer Cristina was extremely understanding , friendly and reassuring. With Cristina on my side, it gave me confidence to continue.
  • Default Avatar75
    RA, Paris
    Friday, May 18, 2018
    The service I needed wasn't complex, just verification of documents, but the service was rapid, friendly and exactly what I needed.My lawyer Julia was bilingual.
  • Default Avatar75
    Sham Naib, Callao Salvaje, Tenerife
    Friday, May 18, 2018
    My lawyer Oliver was very helpful, always happy to assist. He professionally checked the law before dispensing advice.
  • Default Avatar75
    Smith, France
    Friday, May 18, 2018
    Caroline is bilingual and was very helpful throughout. There is nothing I would suggest to improve. I was very happy with the service and would definitely recommend to friends.
Send Us Your Enquiry

Select Office

Select Office

Select Office

Select Office

Select Office

Select Office

Select Office

Select Office

Select Office

Choose Files