Other than in the Basque country and Navarra, inheritance tax is ceded from the State to each «Comunidad Autónoma», depending on the residence of the deceased. The scope of this cession only relates to the management, outcome, and possibility to modify certain aspects of the State rules such as reductions, rates, etc. It is usually used to establish some additional benefits, over and above those provided by State Law. However, the right to govern this tax and the main schedule of the regulation remain with the State and this regulation will be the one to be applied if the Comunidad Autónoma does not regulate any of the benefits allowed.

The situation of the “Territorios Forales” is completely different, as they have their own legal system, which means they have their own tax raising powers. The territorios forales, for tax purposes are not organised in the same way as other Comunidad Autónomas. In Navarra, the “Territorio Foral” is the Comunidad Autónoma de Navarra, but in the Basque Country there are as many rules as there are “Territorios Históricos” so Vizcaya, Alava y Guipúzcoa have their own inheritance tax regimes.

It is necessary therefore to know which is the competent authority and what are the rules to be applied.

The competent authority to charge inheritance tax will be the Diputación Foral ( Bizkaia, Alava, Guipuzkoa) of the last residence of the deceased wherever the residences of the beneficiaries are.

If the deceased was not resident in the Basque Country, the following will apply:

a)The Spanish state will be competent if the beneficiaries are residents in Spain

b)The corresponding Basque Country’s Diputación Foral will be competent:

.- If the beneficiary resides in the Basque Country.

.- If the beneficiary resides in a foreign country and the most valuable inherited assets are located in its territory

Spanish residents in a foreign country will retain all political rights of Vascos if their last residence in Spain was in the Basque Country if they apply for it, as long as they retain Spanish nationality.

The rules to be applied

From 30-12-2017 there is a very important change.

When the beneficiary is resident in a foreign country ( Obligación Real): the rules of the corresponding Diputación Foral will apply.

When the beneficiary is resident in Spain ( Obligación Personal) The corresponding Basque Country’s Diputación Foral will apply Spanish State rules when the deceased resided more days in Spain, in another place than in the Basque Country, in the previous five years, unless he or she kept the «condición política de Vasco» ( In Bizkaia it is necessary in this case-condición política de Vasco – that the death occured in Bizkaia).

So if this is the case, in the calculator you must choose State law instead of the corresponding Diputación Foral rule if the deceased passed away after 29th December 2017.

For those who passed away on 29th December 2017 or before, the rule was different, Basque Country Diputación Foral would apply their own rules if the habitual residence of the deceased was established five years previous to death. It is a slight but important change.

.- The corresponding Diputación Foral, will demand the inheritance tax if the deceased’s last habitual residence was in one of these territories. It is deemed that a person had his or her habitual residence in the Basque Country if he or she stayed in the territory more than 183 days during the previous year prior to the date of death, including temporary absence.

If the deceased had not completed the minimum residence the corresponding Diputación Foral will demand the tax if the place where the deceased had his or her main interest is within its territory and presuming that the majority of the income is generated within the territory. In last instance, when the last residence for income tax purposes was in one of these territories.

.-Also: If the deceased had his or her last habitual residence in a foreign country, the corresponding Diputación Foral will demand the inheritance tax if the tax payers have their habitual residence in that territory.

If the beneficiary (tax payer) has his or her residence in a foreign country, the competent inheritance tax law of Vizcaya, Alava or Guipuzcoa will be applied if all the assets are located in the corresponding territory.

In Bizkaia, there are four groups of beneficiaries, depending on the closeness of kinship.

The first group is for ascendants, descendants, spouse and unmarried partner, without any consideration to their age.

This group benefits from a reduction of the value to be taxed ( -400.000 €) and from the application of a fixed rate of 1.5%.

The second group is for brothers and sisters, and also benefits from a reduction to the amount to be taxed (- 40.000).

The third group is for uncles, aunts, nephews, nieces, ascendants and descendants-in-law, including stepchildren, ( -20.000 €) and with a progressive scale ranging from 5.7% up to 34.58%. The scale is already accounted for in the calculator, so you don’t need to do anything but enter the required data.

The fourth group is for cousins, in-laws (those other than ascendants and descendants) and those not related. There is another progressive scale for this group ranging from 7,6% up to 42,56%.

There is a reduction to the amount to be taxed for disabled people ( -100.000 €) and also a reduction in the life insurance premium, if any (from – 400.000 € in group I, to 50% of the amount of the life insurance with a limit of 200.000 € if the beneficiary is in group II to a reduction of 10% of the amount of the life insurance with a limit of 40.000 € in group IV).

The previous wealth of the beneficiary is not taken into account in Bizcaya.

In Guipuzcoa, there are similar groups to those above, called groups I, II , III with siblings and uncles, aunts, nephew, nieces, as well as ascendants, descendants, in-laws and stepchildren in the same group Ii, and all other kin and non-related beneficiaries in group III

There are ruled reductions on the total amount to be taxed depending on the closeness of the kinship, the disability or life insurance, and the diferent rates for each group. All of them are included in our calculator.

Reduction in life insurance is only for contracts that are at least two years old at the date of death.

Beneficiaries in group “I” ( ascendants, descendants, spouse or unmarried partner) are taxed at a fixed rate of 1.5%.

Beneficiaries in group I are rated under a progressive scale that ranges from 5,7% to 34,50%.

Beneficiaries in group II are rated under a different and progressive scale that ranges from 7,60% to 42,56%.

The same groups are used in the regulations of Alava, with reductions of the value to be taxed of up to 400.000 € for beneficiaries within group “0” (ascendants, descendants, spouse or unmarried partner) and up to – 38.156 € for group II.

Acquisition by members of group “0” are always taxed at a fixed rate of 1,5%

There is a different scale for disabled beneficiaries others than those in group 0, and also a scale for group I (ranging from 5.70 % up to 34,58 %, lowest and higest rate) and for those in group II (7,60% – 42,56%).

The relationship of an unmarried couple must comply with the Basque Country Law for unmarried couples.

In Alava there is no reduction for the acquisition of life insurance but the scale is applied separately to the life insurance amount, instead of to the sum of life insurance and acquired assets, so as it is a progressive scale, there is also a big benefit for life insurance beneficiaries.