As specialists in inheritance in Spain there are very few scenarios that we have not come across in relation to Spanish estates and inheriting assets in Spain. After over 16 years of working in the field we have become very familiar with the concerns of those who are inheriting assets in Spain and so we thought it would be helpful to put together a rundown of our most frequently asked questions when it comes to inheriting in Spain and the answers to those pressing questions.
How much inheritance tax will I pay when inheriting in Spain?
Myths abound about inheritance tax in Spain. Many believe that Spanish inheritance taxes are so high as to leave one financially destitute and that it is better simply not to inherit in Spain. In part this belief has come about because of the previous behaviour of the Spanish Tax Agency towards non Spaniards, but there is a lot of misconception of a system that, while it is different to that of the UK, has its own logic.
Broadly speaking, the amount of inheritance tax you can expect to pay in relation to an inheritance in Spain depends upon three factors:
The location of the estate in Spain.
The value of the estate in Spain.
The relationship between the beneficiary and the person who has passed away.
Inheritance tax in Spain is a matter that is devolved to the autonomous communities, hence the amount of inheritance tax you can expect to pay in Spain depends upon the location of the Spanish assets.
When calculating the amount of inheritance tax payable on an estate in Spain, the rate of taxation applied depends upon the overall value of the estate. The maximum rate of taxation, applied to the highest value Spanish estate, is approximately 36.5%, but Spanish inheritance tax is applied on a sliding scale so that part of the estate will be taxed at a lower rate. This does mean that the total amount of tax will amount to more than 36.5% of the whole estate but bear in mind that this applies only to estates with a value of over €722,555.08 and only to estates located in Murcia. In the vast majority of estates the Spanish inheritance tax is much more reasonable.
The big difference between Spanish inheritance tax and inheritance tax in the UK is that in Spain each beneficiary is taxed individually and has his or her own nil rate band, rather than a nil rate band applying to the whole estate and the estate being liable to tax, as in the UK. The amount of the nil rate band depends upon the proximity of the familial relationship between the deceased and the beneficiary. A child or parent of the deceased, for example, has a higher nil rate band than a cousin. Also, further reductions often apply to a spouse or a child.
So, the answer to the question “how much inheritance tax will I pay when inheriting in Spain?” depends upon a number of factors, but you can be sure that in all cases the amount that you stand to inherit will exceed the amount of inheritance tax that you will pay in Spain.
How long will inheriting in Spain take?
The length of time it takes to administer an estate in Spain really depends upon the specific circumstances of the estate. As we set out here, there is a fair amount of documentation that needs to be in place to sign an acceptance of inheritance in Spain, and much depends upon how long it takes to collate that documentation. In addition if there is a property to be sold you may find the biggest delay comes from waiting for an acceptable offer.
If there is an urgent need to accept an inheritance in Spain quickly and all of the documentation is in place, it is a process that can be dealt with relatively speedily. In general, though, the process of inheriting in Spain takes a number of weeks.
How does inheriting in Spain work if there is no Will?
Again, this is another situation where much depends upon the specific circumstances, but we set out the general process here.
Inheriting in Spain where there is no Will involves considering sometimes complex legal issues and can become an extremely complicated and lengthy process if you do not seek good quality, independent legal advice at an early stage.
That said, it is always possible to receive your inheritance even if there is no Will in Spain or in the UK, provided that you have a right to inherit according to the rules of intestacy that apply to the estate.
Next steps if you are the beneficiary or Executor of an estate in Spain
If you know you stand to receive an inheritance in Spain, or think you may be entitled to receive an inheritance in Spain, the key to receiving your inheritance in a timely and cost effective manner is to seek legal advice from an independent specialist Spanish lawyer at an early stage.
As specialists in inheriting assets in Spain E&G Solicitors in Spain is extremely well placed to assist you.