4 things you probably did not know about inheritance tax in Spain... but should!

What to know about inheritance tax and law in Spain before you make a will or accept someone’s inheritance

1. Non-residents can get inheritance tax discounts in Spain.
   Until quite recently, Spanish law and many online tax declaration forms only allowed residents in Spain – whether Spanish citizens or expats – to benefit from inheritance tax deductions. However, this has since been found to contravene the principle of free movement of capital within the EU under EU law and is discriminatory against non-Spanish residents. Now, non-residents and those from non-EU countries can claim tax deductions either based on the deceased’s habitual address in Spain or where they have most of their assets.
2. You have to pay Spanish inheritance tax as soon as the person dies.
   While it’s possible that the estate assets you inherit may take a while to be distributed, you still have to pay tax on it immediately.
3. There are two different tax rules in Spain: one for the whole country and another one for each region.
   The amount of inheritance tax payable can vary a lot based on the different deductions and benefits available, but also in which region of Spain the assets pertain to. Because inheritance tax has to be declared in your Spanish self-assessment tax returns and these can be tricky to navigate at both a national and regional level, it is a good idea to get a professional tax expert to help you file them so you don’t pay too much – or too little – tax.
4. There is no double taxation treaty between Spain and the UK for inheritance tax.
   While legally there is no double taxation treaty between Spain and the UK regarding inheritance tax, there are disparities between tax law in the two countries. In the UK, it is the estate that pays inheritance tax but in Spain it is the person who receives the inheritance. To avoid any complications about who pays the inheritance tax and to avoid paying twice, it’s best to consult a tax expert in Spain.