Who can inherit your assets?
"Inheritance" is governed by the National law of the deceased person (the signatory of the Will). For example, if you are British citizen, you are covered by British Law - which respects the right of a British citizen to leave his/her assets to anyone of his/her own choice without any imposed obligation or limitation. (This is completely different for a Spanish citizen who, under Spanish Law, is obliged to leave a minimum percentage of their assets to their descendants).
Inheritance Tax
In Spain, Inheritance Tax is called Impuesto de Sucesiones y Donaciones (ISD).
In our country there is a main law called Ley Estatal made by the Central Government and that applies in general to the whole country and establishes rates ranging from 7% to 34% of the inherited net values (result after application of corresponding personal allowances) and it is paid by each beneficiary of the Will in relation to the corresponding inherited portion. Since 2001 regional governments have the option of issuing new laws that establish certain benefits for their resident tax payers; some governments as Valencian one have published a Law where the allowances for resident citizens in that Comunidad are higher than the ones observed in Ley Estatal.
In case of a Non Resident deceased person the applicable law to that inheritance case would be always the Ley Estatal which states an allowance per close relative of 15.956,87 €, if it is a descendant under 21 the allowance will be higher.
In general terms, in the “ley estatal” and in the different laws issued by the various Comunidades Autónomas as well other relatives as brothers, uncles, aunts, cousins and nephews will apply lower reductions (exemptions). In general terms when the inheritor is a more distant relative or non-relative (including the non-married partner) there won’t apply any reduction (exemption).
When the Inheritance tax has to be calculated in relation to a deceased person that was residing in Spain, we would have to refer to the law that the corresponding “ Comunidad Autónoma” has issued for its tax payers. In order to be applied the law issued by a regional government (as for instance the Valencian Law) there is a requirement of the deceased being a resident over five years before the date of decease in that particular Comunidad Autónoma. Therefore in the case of a the person that being a resident is deceased but he/she wasn’t there five years counted from the day before decease, the Ley Estatal would apply unless they were residents before in Spain in another Comunidad in which case should be analysed if another regional law could be applied.
As an example the Law of Comunidad Valenciana establishes for the year 2007 a reduction of 40.000€ for close relatives (spouse/descendants/ascendants). In Comunidad Valenciana there has been a new benefit for heirs that are residing in the area as well called “bonificación en la cuota” and consists in taking of the 99% of the payable tax when not only the decease was residing in Comunidad Valenciana but the inheritors are close relatives (spouse/descendants/ascendants) and as well formal residents in the area of that Comunidad.
The Ley Estatal (applicable as minimum to respect for all regional laws)observes a specific reduction when a Spanish Resident is deceased leaving the house that constitutes the main domicile to his/her close relatives and they undertake not to sell for ten years; in those circumstances there is a specific reduction called “reducción por vivienda habitual” where a 95% of the property value could be taken off in the calculation of the net inherited value with a maximum of 122.606,47€.
Therefore to determine the applicable law to the case is the first step and then based on the particular circumstances of the case there could be nuances that would lead to the application or not of certain allowances or reductions.
Also, please be aware that, in addition to Inheritance Tax, there are other legal expenses that arise from the inheritance process, including Notary Fees, Land Registry Fees and Solicitors' Fees.
The benefits of having a Spanish Will
Any foreigner, Resident or Non-Resident, can make a Spanish Will leaving his Spanish property to anyone he chooses – as long as his own national law allows for free disposition of assets. Making a Spanish Will is very easy – and not only will you feel more secure but, also, the legal processes of inheritance will be faster, less expensive and less traumatic for your loved ones.
What happens if you have no Will at all
Your own National Law concerning assets abroad will be applied - and this may vary from country to country. Whatever your national law states, the process of finalising and releasing the estate will certainly be more complicated, protracted and expensive should you die intestate.
Additional documentation required to inherit assets
Making a Will is only the first step. In Spain, on the death of a spouse property ownership does not automatically pass to the surviving spouse just because the Will stipulates this. In addition to the Will, if two people own a property jointly and one of them dies, a process equivalent to a "Probate" still has to be followed to amend and update the ownership. A new Title Deed (Escritura de Adjudicación de Herencia) has to be drawn up and signed, with whoever has been appointed as inheritor/inheritrix of the deceased (either in the Spanish Will, if there is one, or the one brought from the home country, as relevant) named as the new owner of the assets left by the deceased. The inheritor/inheritrix will then pay the relevant Inheritance Taxes and the fee for the registration of the new ownership.
IMPORTANT ADVICE: Please be aware that all legal advice provided by Ábaco concerning Inheritance Tax issues refers exclusively to Spanish Law. We cannot provide advice on any legal or tax obligations arising in your home country as a result of Spanish inheritance issues. You should therefore check with your legal/tax advisors in your home country to ascertain if there will be any further Inheritance Tax liabilities for your inheritors after payment of the Spanish Inheritance Tax.
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