Brief Guide
for Expats

.- The requirements to record inherited assets in the Land Registry and other public registries are those stated by Spanish law and, unless there is only one beneficiary, it will need a public deed made before a notary either by the contador partidor ( executor), if one has been appointed in the will, or by all interested parties.

.- The legal entity of a Trust does not exist in Spain, so if a trust includes assets located in Spain, there is no way to deal with it, nor is there any possibility of recording the ownership of the assets in the public registries.

As the inheritor is liable for the debts, if a mortgaged asset is bequeathed to a legatee, the responsibility for the payment of the mortgage will fall on the inheritor, and if it is not paid, the legatee (and of course the creditor) can claim for it.

.-The surviving spouse or partner will not acquire the deceased’s share in any jointly owned assets, unless it is expressly stated in the will and, even in such cases, only if there is no harm to the reserved share of the inheritors (descendants and, if there are none, then ascendants in most places in Spain).

.-The testator does not have complete freedom to dispose of his or her assets after death, but with some regional differences, the testator must keep a reserved share for some very close relatives (descendants and, if there are none, then ascendants).

.- In any inheritance, with or without a last will, the widow or widower will have the right to enjoy for their lifetime (usufructo) a share of the estate (one third if there are descendants, half of the estate if there are ascendants and two thirds if there are not any ascendants or descendants).

.-The last will, to be valid, must comply with the reserved share system so if the testator unintentionally fails to mention any forced heir (descendants, and if not, ascendants) the naming of the rest of the inheritors will be null and void and if all of them are not mentioned, the complete testament, not only the naming of the heirs, will be null and void.

If any forced heir is not mentioned intentionally, the omitted inheritor keeps his right to claim, from the others, the ownership of sufficient assets to pay for his reserved share.

The reserved share of the descendants is 2/3 of the estate including the value of assets gifted during the life of the deceased and that must be accounted for in the clawback. If there is more than one descendant, one of the two thirds can be distributed freely amongst the descendants. The other third must be distributed equally amongst the first grade inheritors (children).

The reserved share of the ascendants is half of the estate, unless they concur with the widow or widower. In such a case the reserved share will be of a third of the inheritance.

.-An unmarried partner is not going to be considered a widow or widower, and the step-children of the unmarried partner are not going to be considered the same as stepchildren from a marriage, so the testator must consider them as strangers at the time of distributing the assets.

Special rules on the reserved share are applicable to foreigners that have the habitual residence in each Comunidad Autónoma of Galicia, the Basque Country, Aragón, Navarra, Cataluña y Baleares

If there is no widow or widower, the ascendants will inherit and if there is no ascendant, the closest relatives as in the State Law will inherit. Lastly, the Comunidad Autónoma de Cataluña will inherit.

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)

.-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.

.-If you are resident in Spain, 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.

.- Regarding Inheritance tax there is a regulation in the Spanish State Law and different regulations in each Comunidad Autónoma which usually recognise huge benefits for close relatives of the deceased.

Formerly Spanish Law established that all cases involving non residents would be ruled by Spanish State law, therefore denying non residents the option of taking advantage of any of those benefits ruled by the Comunidades Autónomas.

The European Court of Justice stated the Spanish system for inheritance tax was contrary to the principles of the EU of freedom of movement and freedom of establishment as it allowed different treatment of tax payers depending on where they, or the deceased, had their last residence, or where the assets were located.

So now the most important factor is to know which is going to be the applicable law for each individual succession. This will also determine a possible tax refund for inheritance tax already paid

.- It is mandatory for tax issues for non residents to name a representative