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The Inheritance Tax is a levy that applies to the transfer of assets and rights following a person`s death in Spain. It affects heirs, life insurance beneficiaries, and recipients of lifetime donations. This tax is delegated to autonomous communities, direct, personal, subjective, and progressive, meaning the tax burden depends on the value of the inheritance and the degree of kinship with the deceased.
This tax must be paid within six months from the date of death, although an additional six-month extension can be requested, provided it is applied for within the first five months.
When a person dies, their heirs must decide whether to accept or renounce the inheritance. It is crucial to analyze the deceased`s financial situation, as the inheritance may also include debts. There are three legal options:
Once the inheritance is accepted, a detailed inventory of assets and debts must be prepared, including real estate, bank accounts, vehicles, and outstanding loans, to determine the total value and proceed with the tax process.
The Inheritance Tax is regulated by Law 29/1987, of December 18, and Royal Decree 1629/1991, of November 8. Its application varies depending on the autonomous community, significantly affecting the payable amount.
The amount to be paid is determined based on:
Reductions lower the taxable base before calculating the tax, whereas allowances are applied to the final tax liability.
To comply with tax obligations, the following documents must be submitted to the Tax Agency:
Some regions allow payment in installments or deferrals, especially when real estate is inherited without immediate liquidity. However, such deferrals may require guarantees and additional interest.
Failure to submit the tax within the deadline may result in surcharges and penalties, ranging from 5% to 20% of the due amount.
The Inheritance Tax in Spain is managed by each autonomous community, leading to substantial differences in tax burdens. For example:
If the deceased resided in Spain for the last five years, the applicable regulations will be those of their autonomous community of residence. If the deceased was not a resident in Spain but the heir is, the heir’s community regulations apply. If the deceased owned assets in Spain without being a resident, they will be subject to taxation due to real obligation.
To minimize the tax burden and avoid legal complications, it is advisable to plan the inheritance in advance. Effective strategies include:
At Gentile Law, we offer specialized legal advice to facilitate all procedures and optimize the tax burden. If you have questions about Inheritance Tax or need help managing an inheritance, contact us, and we will guide you through every step of the process.
Lucía Goy Mastromiechele
luciagoy@gentile.law
+34 626 118 451
