Inheritances from non-residents in Barcelona and Spain have specific tax implications that we need to be aware of if we find ourselves in this situation. Although not very common, at Taxmind we are well aware that when this occurs, taxation will be influenced by the tax residence of the deceased and the heir, as well as by the location of the assets. This is information that an international consultancy such as ours must explain in detail and clearly to our non-resident clients who are involved in an inheritance.
Depending on the autonomous community in which it is received, there will be specific laws that apply. This is the case in Catalonia. We will explain this below.
Tax residence and its impact on non-resident inheritances
As we have just mentioned, it is important to take into account the tax residence of the non-resident person receiving an inheritance at a given time. Depending on this residence, we will see how taxes are applied based on the location of both the deceased and the heirs.
According to current regulations, a person is considered a tax resident in Spain if they remain in the country for more than 183 days during a calendar year or if their economic interests are mainly located in Spanish territory.
Therefore, if the deceased is a non-resident, the assets considered for taxation are limited to those located within Spain. This means that non-resident heirs are only liable for tax on the assets that the deceased owned in the country.
The key aspects arising from tax residency are:
- If both the deceased and the heir are non-residents, only the assets in Spain are taxed.
- In the case of a deceased resident with non-resident heirs, the latter will have to pay tax on the assets located in Spanish territory.
- The tax regulations of the autonomous community where the assets are located may offer tax advantages that should be carefully studied.
Possible international agreements
It should also be noted that Spanish legislation establishes international agreements to avoid double taxation. This means that an heir who has already paid taxes in their country of residence may be eligible to deduct those payments when paying tax in Spain. This aspect is relevant for non-residents who own property in the country and seeks to offer greater tax fairness in cross-border situations.
In practice, understanding how tax residence impacts non-resident inheritances can facilitate the management of inherited assets, ensuring that both the heir and the estate comply with tax obligations efficiently.
Property and rights subject to taxation
In the context of non-resident inheritances, we must understand which assets and rights are subject to taxation in Spain. The regulations establish different categories of assets that will influence the calculation of inheritance and gift tax. Defining the assets in question allows heirs to plan their tax obligations appropriately.
The main assets considered for taxation are:
- Real estate located in Spanish territory.
- Rights over movable property located in Spain.
- Shares and holdings in Spanish companies.
- Credit or property rights with respect to assets located in the country.
On the other hand, assets acquired by the deceased and located outside Spain are not subject to taxation, unless the deceased was a resident of the country. This distinction is extremely important for heirs, as it prevents assets that are not located within Spanish territory from being taxed.
Rights
Rights include those that the deceased may have over the estate. This may include usufruct rights, as well as credit rights in the case of enforceable debts. These rights are valued according to established criteria, which will have a direct impact on the tax base.
The correct identification and valuation of all assets and rights is a critical task in the inheritance process. Non-resident heirs must ensure that the relevant legal requirements in each autonomous community are met, as this may affect both taxation and available allowances.
Regulations applicable to the inheritance of non-residents
The regulatory framework governing inheritances of non-residents in Spain is mainly defined by national legislation, as well as by specific provisions that vary depending on the autonomous community in which the assets are located. This means that heirs must have a clear understanding of the relevant regulations, as these can significantly influence the final tax burden.
The Inheritance and Gift Tax Act, passed at national level in 1987, establishes the general basis for the taxation of inheritances. This law determines that, in the case of a non-resident deceased person, the tax applies only to assets located within Spanish territory. It is therefore essential to correctly identify the location of the assets to be inherited.
The autonomous communities have the power to regulate certain aspects of the tax. This means that, in addition to national regulations, there are local versions of the law that may offer allowances and deductions to heirs.
For example, in communities such as Andalusia and the Balearic Islands, tax policies have been implemented that favour direct heirs, allowing for a reduction in the tax burden.
- Non-resident heirs must declare and pay inheritance tax within six months of the date of death. This period may be extended in certain circumstances.
- It is important for heirs to be aware of the possible deductions that may apply in the relevant autonomous community. Some regions offer special benefits for inheritances of real estate.
- International regulations are also relevant. Spain has double taxation agreements that prevent heirs from paying tax on the same asset in different countries. This can be particularly useful for citizens residing in other EU Member States.
The documentation required to begin the inheritance process includes the death certificate of the deceased and, where applicable, the will. This is a key aspect, as submitting the correct documentation can simplify the process and avoid future problems with the tax authorities.
At Taxmind, we recommend that non-resident heirs seek legal advice to facilitate their understanding of the regulatory framework, which can be complex due to regional variations and international regulations.
Types of inheritance acquisitions and taxation
In the field of succession, there is not just one type of acquisition, but rather two different categories: inheritances and legacies, as well as donations made during one’s lifetime.
Acquisitions ‘mortis causa’
Acquisitions ‘mortis causa’ refer to those that take place after the death of the deceased (inheritances and legacies).
Inheritances
These comprise the total transfer of the deceased’s estate to the heirs. This type of acquisition is mainly regulated by the inheritance legislation applicable in Spain.
Bequests
These are specific provisions in a will whereby specific assets are assigned to a particular heir. Taxation is applied to the value of the bequeathed asset at the time of acquisition.
Acquisitions ‘inter vivos’
On the other hand, ‘inter vivos’ acquisitions refer to transfers that take place during the lifetime of the deceased. This group includes donations.
These are transfers of assets or rights that are made free of charge. They must also be declared as assets in the corresponding gift tax return.
Tax implications
The tax treatment of each type of acquisition varies. In the case of acquisitions mortis causa, the heirs must file an inheritance tax return, which is calculated based on the value of the assets and rights that make up the inheritance. For inter vivos acquisitions, such as gifts, gift tax applies, which also takes into account the value of the transferred asset.
It is important to note that, in both cases, heirs and donees may benefit from the regulations of the different autonomous communities, which offer variations in tax allowances, deductions and reductions. This can have a significant impact on the final tax burden.
In the case of assets located outside Spain, taxation will be governed by the regulations of the corresponding country, although any double taxation treaties that Spain may have with those states must be taken into account. This will prevent the same asset from being taxed in more than one jurisdiction.
Inheritance tax procedure and filing
For non-resident inheritances, the regulations stipulate that heirs must act within a certain period after the death of the deceased. Generally, the deadline for filing the declaration is six months (the period begins on the date of death).
That said, it should be noted that, in some circumstances, it is possible to request an extension of this period. Please pay close attention to the regulations of each autonomous community in this regard.
Initial documentation
When initiating the procedure, non-resident heirs must gather a series of documents that are necessary for the correct filing of the tax:
- Death certificate of the deceased.
- Will or declaration of heirs if there is no will.
- Valuation and list of assets and rights comprising the inheritance, both in Spain and abroad (key to determining the amount to be paid to the Spanish tax authorities).
- Documentation proving the value of the assets included in the inheritance.
Once all this documentation has been compiled, non-resident heirs must complete form 650, which is the form used to declare inheritance tax. It must be submitted to the tax office corresponding to the location of the assets.
Appointment of a tax representative
The law requires that, for non-resident inheritances, the heirs must have a tax representative in Spain to carry out tax management. This professional will facilitate the process and ensure compliance with tax obligations.
Non-resident heirs are required to obtain a Spanish tax identification number (NIF) in order to carry out any procedures related to the inheritance.
Finally, once the tax obligations have been settled, the inheritance will be divided, which can be done by mutual agreement between the heirs or, failing that, through the corresponding legal process.
In person or online
Tax returns can be filed in person or, in many cases, through digital platforms provided by tax agencies. Both in-person and online options require the use of electronic identification systems, such as electronic ID cards or digital certificates.
Once the declaration has been submitted, the tax authorities will carry out a valuation of the assets and then issue a tax assessment. If the result is not satisfactory for non-resident heirs, they have the option of submitting appeals or appeals in accordance with current regulations.
Important: Heirs of assets located in Spain, whether resident or non-resident, must understand the process and requirements of the inheritance tax declaration and payment procedure.
Frequently asked questions about inheritance for non-residents
When managing the inheritance of non-residents in Spain, numerous questions arise that are important to clarify. We summarise them here:
☑️ What is the deadline for filing inheritance tax?
Generally, the deadline for filing inheritance tax is six months from the date of death of the deceased. However, it is possible to request an extension, which may extend this deadline under certain conditions.
☑️ What documentation is required to manage an inheritance?
It is essential to gather certain documents in order to carry out the inheritance process, including:
- Death certificate of the deceased.
- Will or declaration of heirs.
- List of assets and rights to be inherited.
☑️ Can non-resident heirs benefit from tax allowances?
Yes. Non-resident heirs can access the allowances and reductions offered by the tax regulations of the autonomous community where the assets are located. These advantages can vary significantly between regions.
☑️ How is double taxation avoided in inheritance tax?
Spain has double taxation agreements that allow heirs to deduct taxes that have already been paid in their country of residence. This provision helps to avoid double taxation on the same inheritance.
☑️ Is a tax representative in Spain necessary for non-residents?
To facilitate compliance with tax obligations, non-resident heirs must appoint a tax representative in Spain. This representative will be responsible for managing the tax return and payment of the corresponding tax.
☑️ What is the tax treatment if the deceased was a resident of another country?
When the deceased was a resident of another country, the heirs are only taxed on the assets located in Spanish territory. In this case, they may also benefit from the corresponding regional regulations, depending on the location of the assets.
Conclusions
At Taxmind, we recommend that, due to the many tax issues involved, heirs seek specialist advice to help them understand their rights and obligations. Each situation is unique and requires a detailed study of the tax implications, especially in such a variable transnational environment.
At Taxmind, we are specialists in non-residents in Spain and a leading international consultancy in Barcelona. Contact our office for more information.
And remember that proper management of international inheritances gives heirs the opportunity to optimise their tax burden, ensuring that all legal obligations in the different territories are met. Therefore, in-depth knowledge of each case and appropriate advice are essential for an efficient inheritance process.
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