Inheritance Tax in Spain

Impuesto sobre Sucesiones y Donaciones (ISD)

Here we deal largely with the inheritance taxes payable when property is transferred by way of the death of one of the owners.

Residents

Spanish Residents are liable to ISD – Impuesto sobre Sucesiones y Donaciones on receipt of an inheritance or gift wherever in the world it is situated.

Non Residents

Non residents are liable to ISD on receipt of a gift or inheritance only on property that is situated in Spain.

Property can be land, buildings, residential or commercial properties or any other asset including shares in registered or private companies, cash, car’s and personal goods and chattels.

Tax is payable within three months and if not settled within six months may incur penalties of up to 20% of the original sum plus interest.

Tax is levied on the recipient.

In the case of the transfer of assets because of death (inheritance) the property to be transferred may not be used as security or collateral for a loan, neither may the property be sold to raise funds to meet the liability.

In any event the tax due must be paid before the land registry can change the escritura.
Tax Calculation.

The amount of tax to be paid is calculated by ascertaining the degree of kinship between the transferor and the transferee, and the pre-existing worth of the transferee. Depending upon which group of kinship the donee or legatee falls into a multiplier is added to the basic calculation.

There are four kinship groups;

  • Group 1 : Direct descendants under 21 years of age – An allowance of Euros 15,956.87, plus Euros 3,990.72 for each year under the age of 21 to a maximum of Euros 47,858.59.
  • Group 2 : Direct descendants over 21, Spouses, ascendants – Each gets an allowance of Euros 15,965.87
  • Group 3 : Other relatives e.g. brother, sister, uncle, nephew, niece – Each gets an allowance of Euros 7,993,46
  • Group 4 : Remote family and unrelated persons, including common law partners.

Tax Table:

Spanish Inheritance Tax Rates 2008

No allowances

Common Law Spouse

Common Law Spouses or (partners) are not recognised in Spanish Law.

They are not entitled to any allowances and they are taxed at the highest scale on inheritances (double the rates which apply for a married partner) because they deemed to be non-relatives.

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