For those of you who do not know, form 650 is the tax return used to self-assess Inheritance and Gift Tax for non-residents in Spain. This tax applies to the acquisition of assets or rights located in the country, and must be filed annually by all non-residents in Spain. It is known as form 650 for non-residents.
JDV Asesores for Expats y Self-employed helps our clients who are not resident in Spain to understand whether or not they have to file this declaration, what deadlines are set by the Administration and, if so, we take care of the whole procedure. In this way, our clients will never face tax problems in the future arising from their asset declarations.
We explain in more detail the ins and outs of the non-resident 650 model.
Understanding the non-resident Form 650
Form 650 is a fundamental document for non-residents facing inheritance and gift taxation in Spain.It is one of the first pieces of information they try to collect when they know they have inheritance matters related to them in our country.
As we have said, the non-resident form 650 refers to the Inheritance and Gift Tax payable by those who do not reside in Spain but who acquire assets or rights located in Spanish territory. The national legal framework we have established defines the conditions under which the tax must be filed and self-assessed, so that the Spanish tax authorities can manage this tax obligation without hindrance.
Taxpayers and their obligations
Non-resident taxpayers are those persons who, on inheriting or receiving assets in the form of a donation, are obliged to pay the corresponding tax, regardless of their habitual residence.Taxpayers are considered to be heirs, legatees or donees who obtain assets located in Spain.
The obligations of taxable persons include:
- File form 650 within the established deadlines.
- Pay the tax corresponding to the inheritance or donation.
- Keep the documentation accrediting the transfer of the assets received.
Taxable events and succession titles
The taxable events subject to the non-resident Form 650 are acquisitions of goods and rights free of charge, which mainly include two situations: Inheritances (mortis causa) and donations (inter vivos).
Inheritances are situations in which a person dies and assets are passed on to his or her heirs, while donations are transfers of assets made during life between persons, without direct consideration.
Inheritance deeds can vary and range from wills to declarations of heirs. In each case, documentation supporting the nature of the inherited or donated assets, as well as their valuation, will be required.
Tax rules and regulation
Inheritance and Gift Tax is mainly regulated by Law 29/1987 of 18 December 1987, which establishes the basis of the tax at national level.
In Spain, the management and collection of Inheritance and Gift Tax is the responsibility of the Autonomous Communities, which results in variability in its application. State legislation provides a general framework, while the communities are responsible for adapting the tax to their territory. In other words, they can establish allowances or reductions that may affect the tax base.
The applicable rules include both the basic legislation mentioned above, as well as orders, decrees and resolutions issued by the tax authorities of each autonomous region. This has led to the development of different practices, so it is essential to be aware of the regulations in force in each particular case.
Legislative changes and updates
The inheritance and gift tax regime has undergone several modifications over the years. These reforms have been implemented to improve the fairness of the tax system, to adapt to social and economic changes, and to optimise tax collection.
Legislative updates may include changes in tax rates, the inclusion of new allowances or the revision of self-assessment procedures. For this reason, it is important to be well informed about any changes that may affect the tax liability related to the non-resident 650 model, as the legislation is subject to periodic revisions and adaptations that may have an impact on the tax burden of non-residents.
Procedure for filing form 650
We would say that almost the most important thing about filing form 650 for non-residents is to know the deadlines and the ways to do it. More than anything else, to avoid penalties and surcharges if you file it late and incorrectly.
Deadlines and ways of filing
The deadline for filing form 650 is 6 months from the date of the death of the deceased or from when there is firm proof of the death of the deceased. It should be noted that this period can be extended for another equal period, provided that the application is made within the first 5 months of the death.
As we have already mentioned, it is necessary to comply with the established deadlines, if not, it is very possible that interest for late payment will be generated and we will receive a possible sanction. JDV Expatax recommends to keep a record of the relevant dates in order to facilitate compliance with this tax obligation.
Online and in-person filing
The majority of users and their legal representatives choose to file form 650 non-residents online through the Tax Agency’s electronic office. To do this, we already know that it is necessary to have a digital certificate or the cl@ve system. In this way, and from an objective point of view, the procedure is managed more quickly and efficiently.
On the other hand, the face-to-face option, if chosen, must be carried out at the corresponding Tax Agency offices. This option is usually chosen by those who prefer to receive advice in person or who have difficulties with the use of technology.
Necessary documentation
The following documents are required in order to correctly complete the filing of form 650 for non-residents:
- Death certificate of the deceased
- Certificate of last will and testament
- Will or declaration of heirs
- List of assets acquired
The certificate of last will and testament indicates whether the deceased left a will and informs about the entity in charge of its management. As for the list of assets acquired, a list must be provided detailing all the assets and rights that are being inherited, as well as their estimated value.
It should be noted that additional documents proving the identity and legal status of the non-resident may also be required, as well as documentation proving the origin of the assets in the case of donations.
Inheritance and gift tax calculation
The calculation of inheritance and gift tax involves an exhaustive analysis of various factors that will determine the amount to be paid. The taxable base, tax rates and possible allowances are key aspects to consider in this tax process.
Taxable base and valuation of assets
The tax base is the real value of the goods and rights received, which must be determined in accordance with the criteria established in the legislation in force. To calculate it, the following must be taken into account:
- The market value of the goods at the time of acquisition.
- The charges and debts that can be deducted from this value.
- The specific valuations stipulated in the regulations of each autonomous community.
The valuation of real estate is generally calculated according to the cadastral value or the appraisal value, while the calculation of shares and other financial assets may depend on the market price. The valuation must always reflect the economic reality in order to avoid subsequent adjustments by the tax authorities.
Tax rates by autonomous community
We already know that tax rates vary significantly between the different autonomous communities in Spain, which consequently influences the total amount of tax to be paid. They can range from 7.65% to 34%, depending, as we have said, on the national territory where the property is located.
Each autonomous community has the capacity to establish its own tax brackets and applicable tax rates. It is well known that there are notable differences between regions and that inheritances are even waived due to adjacent tax requirements.
Applicable allowances and reductions
In the Spanish tax system, there are several allowances and reductions that can be applied to inheritance and gift tax. This makes it possible to reduce, to a certain extent, the tax burden. These allowances depend on several factors:
- The relationship of the heir or donee with the deceased.
- The type of asset received, with some assets being eligible for certain reductions.
- The total value of the inheritance, as in some cases reductions are established according to the amount to be received.
Some autonomous communities offer special allowances for certain situations, such as inheritances between spouses or donations to descendants. If we are aware of these possible reductions, we can optimise the tax burden and benefit from the aid available.
Example of a completed non-resident Form 650
To illustrate the inheritance and gift tax self-assessment process, a practical example of the non-resident Form 650 can be considered.
Let us imagine that a non-resident receives a property in Spain following the death of a family member. In this case, the taxpayer must complete form 650 including the details of the deceased, the identification of the heir, as well as the list of inherited assets together with their respective valuations.
The model must reflect aspects such as:
- Identification of the deceased (name, surname and DNI).
- Details of the heir (name, surname and ID card number).
- Description of the assets and rights acquired.
- Actual value of the assets at the time of transfer.
- Any charges or debts affecting the inherited assets.
This form, duly completed and accompanied by the required documentation, must be submitted to the Tax Agency within the corresponding legal deadline, ensuring that all tax obligations are fulfilled in accordance with current regulations.
Some practical tips
We would like to conclude by explaining and answering common questions which, in turn, provide us with useful tips when dealing with the 650 form for non-residents.
Download form 650 non-residents and other resources
Form 650 can be downloaded directly from the website of the Spanish Tax Agency, where it is possible to consult each and every one of the existing forms necessary to complete the self-assessment. You can also find informative guides explaining how to fill in the form.
Once you have accessed the electronic site to download the form, you can consult reports and explanatory documents detailing the procedure, as well as additional resources on tax regulations and obligations.
Agencies and consulting entities
JDV Expatax recommends that you consult with entities specialised in tax management for non-residents, such as our firm. We’re the best places to receive advice and provide the necessary help in interpreting current legislation.
Important aspects for Non-Residents
Non-residents should be aware of certain aspects that may affect their tax situation in Spain. They must maintain complete documentation and comply with the established deadlines to avoid penalties.
- Keep copies of all documents submitted and receipts for payment of the tax.
- Check the specific conditions of each autonomous community regarding the applicable tax rate.
- Consult about possible allowances that may modify the tax burden.
Regulations may undergo changes, so it is necessary to constantly check for legal updates and being able to count on the support of an expert will facilitate the process and ensure that all tax obligations are correctly fulfilled.
Conclusions
We have found out who is obliged to file form 650 every year when self-assessing Inheritance and Gift Tax for non-residents in Spain. When a person acquires a property or assets located in our country, they have to declare them through form 650 non-residents.
JDV Asesores for Expats and Self-employed has been representing foreign citizens in Spain for years in their fiscal and tax obligations with the Administration. If you have any doubts, queries or advice regarding form 650 or other forms, please leave us a comment and contact us through our office.
