Spanish Inheritance Tax and Making a Will in Spain – Advantages

Are you a Spanish property owner? Then, making a will is a very smart move!

No one ever likes to think, let alone talk, about this type of things. But it’s important to think about those that are left behind. Remember that bureaucracy doesn’t have a heart. The system is not going to feel for those you’ve left behind. Quite the opposite.

So, that’s why we always tell our clients that while it’s not compulsory for a property owner in Spain to create a Spanish will, it’s very important to have a will in place.

Find out why in this article.

What happens to your Spanish property when there’s no will in place?

If you haven’t made any provisions, upon your unexpected/natural death your property will come under the purview of Spanish Inheritance tax and the laws of Obligatory Heirs.

What if I had written a will in my home country?

Unfortunately, a legally accepted, foreign will can invite problems too.

• Having it legalised and translated into Spanish will increase your foreign will’s validity before Spanish law. However, this is a costly process.
• You will have to wait for quite some time for the issuance of the Grant of Probate (a legal document that authorises an executor (or executors) to manage the estate of a deceased person in accordance with the provisions of the deceased’s will).
• If you wait beyond six months, you’ll invite penalties.

Too complicated? It can be.

That’s why it makes sense to trust a local lawyer to help you draw up your will in Spain.

A lawyer specialising in Spanish Inheritance tax will inform you about matters such as:

1. The three possible types of wills you’ll encounter – Open, Closed and Holographic. Each has a specific format.
2. The fact that you may revoke your will by drawing up a new will or requesting a notary to declare the current will as ‘cancelled’, in your role as a testator.
3. In case your death reveals the presence of two Spanish wills, law will dictate the latest/newest one as valid.
4. And that a will in Spain does not need an executor. Regardless, it is recommended to invite any person of your choice, or even the lawyer, to act as one. If you fail to nominate someone, a notary will take over the process.

Special Tips for Belgian and Dutch Nationals

“In the very unfortunate circumstance that you pass away and had not drawn up a Spanish will to provide for your property in Spain, your Belgian/Dutch will have to be translated (sworn translation) and Apostilled by those left behind” says our co-worker Cristel Meeuwissen.  

If you are a Belgian citizen, they can do this at the Foreign Office in Brussels. Alternatively, a notary can also assist them.

In the Netherlands they will have to go to Court to get the Apostille, or, as in Belgium, rely on a notary to assist them with this matter.

The original will with Apostille and the sworn translation must then be sent to Spain.

Without these documents your inheritance tax in spain will not be effective.

Unfortunately, this is a lengthy and costly process.

And remember that in Spain you only have 6 months to settle the inheritance tax spain. If you fail to do so within this period, you will be forced to pay a fine.

That’s why it’s important to have everything done as quickly as possible.

If you do have a Belgian/Dutch will, your inheritors should have an official certificate drawn up by a civil-law notary stating who is entitled to the spanish inheritance tax.
This too must be sworn again and be provided with an Apostille.

Does it sound like a legal nightmare? It is! That’s why it’s advisable to provide for a will in Spain.

Your Spanish will is written in two languages – Dutch and Spanish – so both you and your notary are able to understand it.

The document will be drawn up according to Belgian or Dutch law, since you are Belgian/Dutch resident and it only applies to all your real estate in Spain.

Inheritance Tax in Spain

1.- Plan Properly

You’ve made the decision to purchase property in Spain and reside in it! That’s the good news! The not-so-good-news is that you now have to deal with the rather complex and incomprehensible Spanish rules.

It’s important you give due importance to the way Spanish Inheritance laws and taxes will apply to your unusual situation.

And remember that the laws may vary in accordance with the existing relationship between the deceased and the beneficiary. If the latter is not a natural child or a spouse, taxes will increase!

Also bear in mind that Spanish Inheritance laws vary from region to region, since the authorities formulate them in accordance with the Spanish Civil Code and local regulations.
However, you will be eligible for regional inheritance tax spain and laws only after you have lived in Spain for five years.

If your property does come under the purview of Spanish Inheritance tax, you will have to follow the Law of Obligatory Heirs (Forced Heirship Rules).

What does this mean?

It means that the Law will decide how you must settle your estate – in other words, what percentage should be allocated to each relative.

2.- The Law for Non-Residents

We already mentioned that as a foreign resident you are obliged to follow the Spanish Inheritance Laws.

This law will fail to apply to any assets if the will declares that the laws of the home nationality must apply during execution.

Spanish Property law will only view you as the owner of the property when your name shows up on the title deed.

So, unless you wish to lose your real estate, register it in Spain only!

Spanish law refuses to acknowledge other ownerships, such as trusts, equitable ownership, etc.

3.- Inheritance Laws for EU Citizens

Since August 2015, EU citizens have the permission to take into account their country of residence or native country, while planning to purchase property in Spain.
This rule is not applicable to people living in the UK, Ireland, or Denmark.

4.- Inheritance Tax Spain

After all this, you probably think it is quite enough to make sure you understand how to divide your property in your absence.

But you must also try to comprehend the impact Spanish Inheritance tax will have on your estate too.

The rate your estate will be taxed will depend upon two things:

1. The first one relates to the specific laws prevailing in the region where your property resides.
2. The other relates to the relationship between the deceased and the inheritors.
   This tax becomes due upon receipt of assets after the property owner’s death. Alternatively, it is due when the owner bestows the property as a lifetime gift upon Spanish residents and non-residents, who are eligible to inherit.

The Spanish Government declared in 2015 that both residents and non-residents are eligible for the same tax rates and allowances.

5.- Reducing Inheritance Tax

As you can see, inheritance taxes change considerably depending on the tax category.

Because of this, you should think carefully about how to plan your estate to lower your inheritance tax in Spain liability.

Here are some examples of actions your lawyer might suggest:

• If unmarried, but living with a partner, be sure to register as a de facto couple in regions allowing this exemption. By failing to register, the remaining partner will likely pay up twice as much in taxes.
• Determine how to handle step-children, as they will pay more than a natural or adopted child.
• Leave the spouse a life interest in the house. When the house passes to the children, there will often be no further taxes on that property. The surviving spouse will be able to live on the property for life without fees.
• Claim another country’s inheritance laws. Be aware that if the estate’s assets are mostly Spanish, heirs who would have a legitimate claim using Spanish law can contest the will.
• Rewrite your will whenever you remarry, have step-children, or want to include family members that pay higher taxes and have fewer exemptions.

As you can see, Spanish Inheritance law can be overwhelming.

That’s why we recommend that you discuss your concerns with a qualified professional.

At Fuster & Associates we can shed some light into this complex legal nightmare and help you reduce your Spanish inheritance tax considerably.

Book your Free No Obligation Consultation today and lift a heavy weight off our shoulder.

We want to help you navigate all the legal complexities that come with your home buying in Spain, but this article is legal information and should not be seen as legal advice.