Inheritance tax is due on the acquisition of inherited or bequeathed assets resulting from death as well as money paid out by life insurance policies.

.-It is very important to know the obligation to pay inheritance tax falls on the individual beneficiary, rather than on the estate.

Each beneficiary must complete the inheritance tax forms and pay tax on the value of their individual acquisition (either for single assets or for a share in the estate)

.-If you are resident in Spain, either a Spanish national or an expat, you must pay inheritance tax on all inherited acquisitions, regardless of whether the deceased was resident in Spain or not, and regardless of whether the assets are located in Spain or not.
You can deduct from the Spanish inheritance tax duties the lower amount of these two:

a) The amount paid in a foreign country for inheritance tax for the same acquisition that is taxed in Spain.

b) The amount that results from the application of the rate of Spanish inheritance tax to the value of the acquired assets located in a foreign country, which have been taxed under the inheritance tax rules of a foreign country.

.-If you are a non-resident you will only pay for the acquisition of the assets that are located in Spain, regardless of whether the deceased was a resident there or not. You won´t be able to deduct taxes paid in a foreign country to reduce your Spanish inheritance tax obligation in this case.

Value of the individual acquisition plus proceeds from any insurance policy both together are called «Base Imponible» to which is applied the rate “Tipo” which then gives an amount to be paid «Cuota».

The rate is not a fixed figure but the result of applying a progressive scale of rates related to stages of the «Base Imponible» so for higher acquisitions the amount to be paid will not be proportional to lower acquisitions but progressively higher by applying successively higher rates

Inheritance tax is calculated for each beneficiary taking into account the personal circumstances of the taxpayer by a reduction of the » Base Imponible» and by multiplying the amount to be paid » Cuota» by a coefficient or factor that is determined depending on kinship, age and existing wealth of the beneficiary…. For that reason, the same succession with several beneficiaries with equal shares can result in different amounts of tax to be paid by each beneficiary.

The main personal circumstances of the beneficiary that are taken into account are:Age, Kinship, Disability, and the existing wealth of the beneficiary

Age, kinship and disability, ordinarily reduce the amount of individual acquisition before the rate is applied. Moreover, these circumstances are used to correct the result of applying the rate, so the total tax debt is going to be this outcome multiplied by a coefficient which is fixed depending on the age of beneficiary and kinship to the deceased related with the existing wealth of the beneficiary.
The more distant the relationship to the deceased and the greater the existing wealth of the beneficiary the more tax will be owed.

.-AGE:
Age is an important factor to take into account for descendants of the deceased mainly if they are under 21 with significant reductions that can be huge in some Comunidades Autónomas resulting that no tax debt will arise however much the acquisition is. ( Asturias for example)
In the Canary Islands there are reductions for beneficiaries of 75 and above.

.-KINSHIP

The family relationship between the deceased and the beneficiary is the main circumstance ( aside from the acquired amount) to be considered when calculating inheritance tax.

In Spain to determine the closeness of family relationship the concepts of grade and line are fundamental.

For inheritance tax purposes there is another concept: The group

– A non-married partner is classified as a non-related beneficiary, as are the children of the non-married partner.
There are a lot of rules specific to each Comunidad Autonoma related to this issue. These are mainly in order to assimilate married and non-married couples, and depend on whether the union in question was constituted according to the rules of that Comunidad Autónoma and whether it was included in its register of non married couples.

– A link by adoption is considered to be equal to that of a link by blood.

.-EXISTING WEALTH: The existing wealth of the beneficiary is going to be used, combined with the closeness of kinship, to determine the final amount to be paid ( Cuota líquida).
That is done by multiplying the coefficients that appear in the window below to the outcome of applying the rate to the amount of acquisition ( Cuota)

Just as the kinship is distributed in four bands or groups, the existing wealth of the beneficiary is distributed in three, that vary slightly between Comunidades Autónomas’ regulations. The first stage is commonly up to about 402.678,11 €.
This is also important as some of the reductions that are based on age, disability and kinship are limited to those beneficiaries whose existing wealth is within this first stage.

.-DISABILITY: The disability of an individual tax payer, physical or psychiatric, reduces his or her tax obligation depending on the level of the disability, which is measured in grades. The common stages to be taken into account are from 33% to less than 65% and from 65% onwards.
Some Comunidades Autónomas take into account other stages or different measures on mental health disability and physical disability. They are in the calculator

The disability must have been officially recognised by the competent public authority, before the death of the deceased. If this is not a Spanish authority, it must be considered on a case by case basis.

 If the deceased was a resident in Spain, the inheritance tax law of the Comunidad Autónoma where the deceased lived for most of the five years immediately prior to death, will be applied.

If the deceased had lived longer in another Comunidad Autónoma than that in which they had their last residence,  within this last five year period, that Comunidad Autónoma’s rule will be applied. 

If the deceased was a non-resident in Spain, BUT the beneficiary is, the tax payer can choose to apply the rule of the Comunidad Autónoma where the most valuable assets are located, and if there are no assets in Spain, the Law of the Comunidad Autónoma where they live. In cases where both the beneficiary and the deceased were non-residents, the tax payer can choose the law of the Comunidad Autónoma where the most valuable assets are located.

  Ask us if you have any questions related to any of these issues

And lastly, some curious things:

.-It will be presumed that the assets are still in the estate of the deceased if they were their property in the year before his or her death and are now becoming the property of an heir legatee, relative up to grade three, the spouse of any one of these of the deceased. This presumption will not hold if it can be proved that the assets were effectively sold and that the money is in the estate.

.-A taxable gift ( usually more expensive than inheritance tax) will be presumed to exist if there is a reduction in the assets of a person, simultaneously or within the period during which Tax administration can claim tax, and an equivalent increase in the wealth of a partner, descendants, heirs or legatees.

.- IT IS MANDATORY FOR TAX ISSUES FOR NON RESIDENTS IN A NON EU COUNTRY TO NAME A REPRESENTATIVE.