Spanish Inheritance Tax for Non-Residents

Spanish inheritance tax for non-residents has been changed to be the same as for residents, and will now enjoy the same generous tax breaks.

Spanish inheritance tax for non residents

Discrimination According to the ECJ

Until the 31st of December 2014, Spanish inheritance tax for non-residents (ie European Union citizens not ordinarily resident in Spain)  was discriminatory as compared to European Union citizens who were resident in Spain, the former not being able to avail of extensive deductions and exemptions that substantially reduced the amount of tax payable in respect of inherited assets.

The cause of the discrimination was that when either the deceased or the beneficiary were not residents in Spain, they had to follow the tax rules laid down at the State level, which did not contain many of the substantial tax deductions available at the regional level.

However, on January 1st, 2015, Law 26/2014 entered into force and this modified the existing legislation, specifically Law 29/1987. The new legislation was drafted as a result of the decision of the European Court which decided that Spanish inheritance tax for non-residents infringed on the free movement of capital (Article 260 TFEU) as a result of the differences in the fiscal treatment of gifts and inheritances between residents and non-residents in Spain.



Special New Tax Regime for Non-residents

With the entering into force of the new legislation on January 1st, 2015, a new special tax regime has been introduced for non-resident EU citizens, that is to say, EU citizens not resident in Spain, but resident in the European Union, may apply the Spanish regional tax rules as have residents in Spain before the new law.

Inheritance law Spain law for non residents has thus been brought into line with the European law doctrine of equality for  all citizens of the European Union.

In relation to EU citizens the new legislation establishes that, if the deceased was not resident in Spain , heirs not resident in Spain can apply the rules of the Autonomous Community in which the majority value of their assets are located.

If the heirs are resident in Spain , the rules of the Autonomous Community where they reside shall apply. If the deceased had been resident in a region of Spain and the heirs are not resident in Spain , the non-resident heirs will pay their inheritance tax under the rules of the Autonomous Community where the deceased resided.

Following the above explanation it would appear to be the case that new problems may be posed in the future, such as on the death of a person resident outside the EU , whereby heirs that are EU citizens resident in Spain will continue liquidating their inheritance tax under the less generous state rules, and thus maintaining discriminatory treatment.

Neither does the legislative amendment make any ruling on its retroactive nature, so I understand that it is not possible to apply the new rules to taxable transactions incurred prior to January 1 , 2015.

In the author’s opinion the new rules could not be applied retroactively as if this was the intention of the legislators, it should have been expressly declared to be retroactive. In my opinion the new rules should have been given retroactive effect , since the judgment of the ECJ declares the supervening invalidity of the rule infringed , with effect from the time that the Court’s judgment was handed down.

This should envisage the unenforceability of the old tax discrimination to anyone affected.  Despite this, after telephone contact with the Non-Resident Tax Agency in Madrid , it seems that they are accepting the application of the new rules for accruals prior to January 1, 2015 , although this is something we must continue to monitor.



Interpretation at the Regional Level of Spain

It is worth remembering that inheritance and gift  tax collection in Spain is devolved to the Autonomous Communities, so these latter have been free to set their own rules.

The amount of inheritance tax payable by EU citizens resident in Spain varies considerably depending on whether the taxpayer is residing in one region or another.

In fact this has initiated a tax “war” between the Spanish Regions for the purposes of this tax , because there are people who have taken up residence in Autonomous Communities with more favorable treatment whereby beneficiaries pay less tax on inheritance and donations , especially those with highest valued estates.

So, we are now seeing this issue currently pending judicial interpretation and already there have been some judicial rulings relating to discrimination in Spanish territory between residents of different Autonomous Communities on the basis of having to pay more or less tax.

As an example, the most famous case lately in Andalucía has related to the death of the fabulously wealthy Duchess of Alba, because although she has always been linked sentimentally and emotionally to  Andalucía, apparently her “fiscal heart” belonged to Madrid, which according to some media sources, was extremely advantageous for her heirs, thereby saving more than 90 million euros in inheritance tax.

Since now inheritance law in Spain for non-residents is the same as for residents, they will enjoy the more generous inheritance tax deductions previously applied only to residents, and since the regulations of the Autonomous Community in which the majority value of the assets of the estate are located shall apply, the difference in tax rates and deductions etc by the the various Autonomous Communities may well become an important consideration for estate planning in the future.

Testimonials for our Inheritance service
  • Peter Morgan
    Peter Morgan, Mallorca

    Following our father's death, my brother and I asked Rosa to act for us and guide us through the Spanish probate legal process. There were several obstacles and Rosa was always there for us, explaining what was required and liaising with professional bodies e.g. the notary, to ensure that everything was done in a timely manner.

    Rosa also helped us immeasurably when my father’s estate was sold. The pandemic meant that it was difficult for us to travel to complete the sale paperwork but to overcome this Rosa became our Power of Attorney and again liaised with professional bodies e.g. buyer’s solicitors, the notary. Her English is excellent and her patience is inexhaustible. Thank you Rosa.

    Dec 02, 2020
  • Gail Maher
    Gail Maher, Fuengirola

    Hi, I would like to thank Alvaro very much for all his expertise. We had a very long journey from dealing with the inheritance will for my mother's apartment in Torrenueva to dealing with sale of the apartment.

    He was brilliant in every aspect. Nothing too much trouble. Very professional and would definitely recommend him to anyone in the future.

    So a big thank you and wishing you to continue delivering an excellent service. Regards Gail Maher

    Oct 21, 2020
  • Johanna Count
    Johanna Count, Benidorm

    Consuelo explained and took care of everything. She is easy to get in touch with and a pleasure to deal with.

    Having to deal with Spanish probate laws and procedures was overwhelming but Consuelo made it so straight forward.

    Oct 07, 2020
  • Stephen McCool
    Stephen McCool, UK

    José was attentive and sympathetic throughout in his dealings with my brother (in Australia) and me (in the UK).

    Ours was a problematical case which involved José making contact with a Spanish notary and subsequently applying for NIEs for us and acting Power of Attorney. After this he was involved in protracted negotiations on our behalf with a particularly unhelpful Spanish bank in the matter of inheritance.

    He was a calming influence when needed and never less than professional. He kept us fully informed at all times.

    Jul 29, 2020
  • Michael Armstrong
    Michael Armstrong, La Manga del Mar Menor

    Consuelo has the highest praise and gratitude from this family by somehow reclaiming inheritance tax from Madrid. Previous solicitors left a mess,partial/incorrect and missing documents were received very late.

    Despite obstacles such as denial from tax office and virus Consuelo promptly, courteously and professionally simply got on with the job and succeeded against all odds. We cannot thank her enough!

    Jul 27, 2020
  • Yolande Van-de-l'Isle
    Yolande Van-de-l'Isle, London

    Jose understood my needs and was able to do all the things that I needed. He was extremely approachable and did everything necessary.

    I understood what he was doing and what was required of me to do. I was also very happy with the price paid.

    Jun 29, 2020
  • Abbie Orsini
    Abbie Orsini, England

    Rosa responded efficiently I was extremely happy and satisfied with this !

    She explained everything I needed to know and more to help me understand. At the beginning I found the process daunting Rosa took this feeling way and helped me feel at ease.

    Paying was straight forward and I was well informed with fees etc. Rosa took a very professional approach and I felt comfortable approaching her about any issues I had.

    She is a credit to advocate abroad !!!!! Thank you for your help !!!!!!!!!❤️

    Jun 18, 2020
  • Jonathan Mackay
    Jonathan Mackay, Jaca

    Francisco was extremely professional and answered our many questions promptly and clearly, both by phone and email. We feel very lucky to have had Francisco handle our Spanish Fiscal declaration.

    The service was perfect, and we are very happy with the whole process.

    Mar 12, 2020
  • Gail Maher
    Gail Maher, Torrenueva

    Alvaro is brilliant.

    He comes across very professional and friendly,nothing too much trouble.

    As I was unable to go to Spain initially all communication was via phone and was put at ease straight away as he understood exactly what was required to deal with my case, and all went exceptionally well. I was able to meet Alvaro in August to pass over documents required and made me very welcome.

    I have been so pleased with everything I have now engaged him on a further instruction on our property in Torrenueva..

    Dec 11, 2019
  • Andrew Hales
    Andrew Hales, Fuengirola

    We dealt with Angela, and had a superb service - she was efficient, clear, timely and exceptionally helpful. We would recommend this respectable Solicitor who has excellent English.

    Trustworthiness is so important, and step by step help was very much appreciated. Thank you Angela of myAdvocate Fuengirola.

    Oct 23, 2019
  • Mr Swildens
    Mr Swildens, Alicante and Belgium

    I'm very happy with the services received: I started with José in Alicante on various subjects whom than handed me over to Miguel for another case because he said Miguel was much more experienced in the field I needed assistance, I can appreciate professionals knowing their business.

    In the beginning when I started emailing with your good selves I experienced difficulties receiving mails from advocate abroad, it was a server issue from advocate abroad, I repeatedly asked Miguel and José about it but they could not find anything wrong. At this moment I no longer experience these problems.

    Sep 20, 2019
  • Isabel Albert
    Isabel Albert, Valencia

    Inmaculada has always responded to all my queries and explained and provided excellent solutions. She is very approachable, diligent and professional.

    Sep 17, 2019
  • Irene Hyde Christie
    Irene Hyde Christie, Coin

    I am very pleased with the service provided by Francisco. He has been most helpful and responded very quickly to all my emails.

    Jul 26, 2019
  • Franco Trio
    Franco Trio, United Kingdom

    Rosa always responded promptly to any email I sent.

    She kept me informed and provided alternatives and 3rd party services (translation).

    Thank you Rosa for your assistance, perseverance and honesty in helping my mum and I. We will definitely recommend you.

    Apr 10, 2019
  • Marcus Bond
    Marcus Bond, Fuengirola

    Proactive, great communication, thoroughly recommend.

    Feb 14, 2019
  • Michael Bates
    Michael Bates, UK

    Francisco was very easy to deal with. Very professional. Would not hesitate to recommend him to friends.

    Jul 27, 2018
  • Sarah Finnagan
    Sarah Finnagan, England

    Francisco was fantastic and helped me through every single step and helping understanding everything.

    Price was very reasonable i have no complaints at all.

    Very easy to get hold of and very quick at responding would definitely go back to him - thankyou so much Francisco for everything.

    Sep 21, 2017
  • Michael Tenerife
    Michael Tenerife, UK

    Rosa excelled in all of the criteria listed for evaluation.

    Extremely responsive, understanding, professional, and offered great value for money. Rosa explained the situation clearly and provided the clearest solution every time.

    I just can't imagine how Rosa could have done more. Truly excellent service.

    Aug 07, 2017
  • Richard Anthony Poole
    Richard Anthony Poole, Johannesburg, South Africa

    Very responsive, very understanding, value for money, has a great ability to explain and provide the appropriate legal solutions, very approachable and very professional in dealing me.

    May 03, 2017
  • LM
    LM, Ibiza

    Cristina was amazing and very helpful and i would highly recommend her services again.

    I am very satisfied and I definitely would use the same lawyer again in the future.

    Mar 10, 2017
  • AS
    AS, Denmark

    Jose was very helpful, always happy to assist.

    I am very satisfied the service provided by my lawyer.

    Dec 08, 2016
  • Diana Rawstron
    Diana Rawstron, London

    Domingo provided an excellent service on this matter and I was very pleased that I had found him through your website.

    I definitely use the same lawyer again in the future.

    Nov 03, 2016
  • Mrs. Irene C Price
    Mrs. Irene C Price, Acton Trussell

    It was a pleasure to deal with Francisco. He spoke excellent English. He was professional and courteous at all times, and responded to any queries I had by return, taking time to explain complicated legal procedure in a manner I could understand.

    For the work Francisco did, his charges were good value for money. I would recommend his services without hesitation.

    Oct 12, 2016
  • John Fitzpatrick
    John Fitzpatrick, UK

    Outstanding advice and service Jose was polite courteous and responsive and very sensitive in dealing with my fathers complex bereavement case.

    Jun 29, 2015
  • AS
    AS, Brussels

    My lawyer spoke English more or less fluently and was very helpful.

    He responded quickly to my request, understood the issues concerned and provided understandable and useful advice. A clearer pricing structure would have been helpful.

    However, I was satisfied with the service and would definitely use this lawyer again.

    Oct 23, 2014