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INHERITANCE AND DONATIONS
Change of Spanish Tax Law for Non-Residents
A judgment of the Court of Justice of the European Union states that the different tax treatment of donations and inheritance between inheritors and donee residents and non-residents in Spain, between grantor residents and non-residents in Spain, and between donations and similar provisions of estate situated in Spain and outside is contrary to the principle of free movement of capital.
The judgment (dated 3 September 2014 – Case C-127/12) does not refer to powers attributed to the autonomous communities (generally with a more favourable fiscal impact for the taxpayer) but rather to national legislation that was applicable to non-residents in this matter.
By Spanish Law 26/2014 of 27 November (published in the Official Gazette of 28 November 2014), legislation of Inheritance and Donations (Law 29/1989) is adjusted to the premises stated in the Court of Justice of the European Union.
Focusing on inheritance assumptions, which are those most frequently resolved by Arcos and Lamers Asociados, the adaptation of national law to European judgment will mean the following:
• In the event of acquisition of goods and rights by inheritance, legacy or any other title of succession, if the deceased had been resident in a member state of the European Union or European Economic Area other than Spain, the taxpayer is entitled to the application of regulations approved by the autonomous community which has the highest value of assets and rights of the estate located in Spain. If there were no goods or rights located in Spain, the rules of the autonomous community in which the taxpayer resides will apply.
• In the event of acquisition of goods and rights by inheritance, legacy or any other title of succession, if the deceased had been resident in one autonomous community, non-resident taxpayers who are resident in a member state of the European Union or the European Economic Area will be entitled to the application of regulations approved by that autonomous community.
In this respect, it is understood that residents of Spain are resident in the autonomous community where they have remained a greater number of days during the five previous years, counted from date to date and finishing the day before the taxable date.
This adaptation of the Law of Inheritance and Donations to the judgment of the European Court is important, as Spanish tax authorities should update the appropriate tax forms as of 1 January 2015 due to the fact that autonomous bonuses are not included in the current tax forms.
Our Spanish law firm in Marbella has a team of experts available to advise you on the process of inheritance matters and settlement of the corresponding Spanish inheritance taxes. Ensure your peace of mind!