The article 21 of the European Regulation 650/2012, says like general rule that “Unless otherwise provided for in this Regulation, the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death.”

Nevertheless, the article 22, says that a person may choose as the law to govern his succession as a whole the law of the State whose nationality he/she possesses at will.

For this reason it is very important to make explicit reference in the Spanish will that you want to choose the law of your country if you do not want to be subject by the Spanish law.

The aforementioned is referred to the civil law applicable to the succession, but regarding with the Inheritance Tax, the rule is that if a foreign owner dies with assets in Spain, the heirs must pay Inheritance Tax in Spain for these assets.

Will in Spain

CREGO ABOGADOS strongly recommend to sign a will in Spain, regarding with the Spanish assets, and if you do not want to be subject by the Spanish Inheritance Civil law, it is very important to make explicit reference in the Spanish will that you want to choose the law of your country.

A good reason for making a Spanish will with CREGO ABOGADOS, is that it makes the whole situation a lot easier for the inheritors, because in case of your deceased it is enough that they know our contact details and we will advise them in the entire process, and for other hand we will be able to advise you on the best way to reduce inheritance tax.

CREGO ABOGADOS will draw up your Spanish will in Spanish and English, and after your approval, we will accompany you to the Notary to sign it.

Inheritance Tax in Spain

In Spain, in case of decease, the tax payers of the Inheritance Tax are the beneficiaries in virtue of the article 5 of the Law for Inheritance Tax 29/1987 of 18th December, and must pay it within six months from the date of death or financial penalties will be incurred.

The calculation of the tax will be done according to their share in the estate and including the rebates and exemptions applicable to them based on the residence of the deceased, location of the assets to be inherited, the relationship between deceased and heirs, the value of the estate, the existing wealth of the inheritors, age, etc..,.

Therefore, heirs have the obligation to pay the Inheritance Tax to the Spanish Tax Authorities, either by personal obligation or real obligation.

The personal obligation implies that if the beneficiaries are resident in Spain, the Inheritance Tax will be paid in Spain, regardless of the nationality or last residence of the deceased or that the inherited properties are located in Spain or anywhere else in the world.

The real obligation implies that if the beneficiaries inherit property or rights located in Spain, the Inheritance Tax will be paid in Spain for the aforementioned property or rights, regardless of the nationality of the beneficiaries.

Before the 1st January 2015, the applicable regulations for the Inheritance Tax for Non-Resident beneficiaries by real obligation, were the State regulations, and not the Regional regulations, and for this reason they could not take advantage of reductions in the taxable figure for the main residence, bonuses that were applicable directly in the final tax figure, or tax exemptions according to Regional laws.

On the 3rd September 2014, a sentence of the Court of Justice of the European Union, ruled against the Spanish State, for breaching Article 63 of the Treaty on the functioning of the European Union as well as Article 40 of the Agreement on the European Economic Area, so the Spanish Government had to change the legislation so that there is no room for discrimination between residents and non-residents.

CREGO ABOGADOS is specialized in Inheritance Tax Planning that involves a full comprehensive review of your circumstances, needs, concerns and those of your family. Understanding where you are coming from and where you want to go is essential to the process – enabling us to identify potential issues and offer practical, as well as legal, solutions to address them.

We help you arrange your affairs in the most tax efficient way whilst not losing sight of your goals.

Also CREGO ABOGADOS is specialized in Inheritance Tax settlement in Spain, in all the process until that the heirs receive their part of the estate.

Probate in Spain

CREGO ABOGADOS can help you in all the process since a person dies until its assets are transferred to the heirs. We know that are not very good moments for the family and the legal process can involve a stressful situation, for this reason is better to trust the professionals with the experience and knowledge of the Spanish Inheritance Law to compete all legal and tax formalities.

When a foreign owner dies some situations are possible:

• The foreign owner (with habitual residence in Spain) with Spanish assets, dies after the 17th of August 2.015 without any will.

In this case it will be necessary to obtain Letters of Administration in the Country of his/her nationality and then deal with the assets in Spain in accordance with Spanish inheritance rules (Article 21, European Regulation 650/2012).

The law provides that a spouse keeps half of all property acquired during marriage, so if only one of the member of the couple dies it is only half of the property which goes into the estate.

The law provides the following:

A spouse is entitled to the life interest (Usufructo Vitalicio) in one third but bare ownership (“Nuda Propiedad”)of his/her third must be willed to surviving children in the proportion that he/she wants (Tercio de mejora)

Other third of the property must go to the surviving children in equal shares (Tercio de legítima)

The remaining one third can be disposed of freely (Tercio de libre disposición)

The foreign owner (without habitual residence in Spain) with Spanish assets, dies after the 17th of August 2.015, without any will.

In this case it will be necessary to obtain Letters of Administration in the Country of his/her nationality and then deal with the assets in Spain in accordance with inheritance rules of the habitual residence of the deceased (Article 21, European Regulation 650/2012).
 

• The foreign owner (with habitual residence in Spain) with Spanish assets, dies after the 17th of August 2.015, only with a will in his/her country.

In this case it will be necessary to obtain a Grant of Probate issued by the High Court and stamped with the Apostille of the Hague.

In order to apply for the Grant of Probate, it will be necessary to present a list of worldwide assets and their value and to calculate the Inheritance tax of his/her country. Once the Grant of Probate is obtained and the Inheritance Tax settled, it is possible to go ahead with the assets in Spain in accordance with Spanish inheritance rules

First of all, will be necessary to legalise the foreign will for Spain, process that use to be very long and expensive.

The main steps that must be taken are:

Obtain an original Death Certificate stamped with the Apostille of the Hague.

Arrange an official translation into Spanish of the Grant of Probate and the Death Certificate.

A lawyer should be empowered from each heir, to prepare a list of assets in Spain, to execute the will and to present and pay the inheritance tax.

• The foreign owner (without habitual residence in Spain) with Spanish assets, dies after the 17th of August 2.015, only with a will in his/her country.

In this case it will be necessary to obtain a Grant of Probate issued by the High Court and stamped with the Apostille of the Hague.

In order to apply for the Grant of Probate, it will be necessary to present a list of worldwide assets and their value and to calculate the Inheritance tax of his/her country. Once the Grant of Probate is obtained and the Inheritance Tax settled, it is possible to go ahead with the assets in Spain in accordance with the inheritance rules of the country of the deceased.
 

• The foreign owner (with habitual residence in Spain) with Spanish assets, dies after the 17th of August 2.015, with a Spanish will.

The article 21 of the European Regulation 650/2012, says like general rule that “Unless otherwise provided for in this Regulation, the law applicable to the succession as a whole shall be the law of the State in which the deceased had his habitual residence at the time of death.”

Nevertheless, the article 22, says that a person may choose as the law to govern his succession as a whole the law of the State whose nationality he/she possesses at will.

For this reason it is very important to make explicit reference in the Spanish will that you want to choose the law of your country if you do not want to be subject by the Spanish law.

In this case, without prejudice of the applicable law in virtue of the election of the deceased, the main steps that must be taken are:

A lawyer should be empowered from each heir, obtain all the necessary documents, to prepare a list of assets in Spain, to execute the will and to present and pay the inheritance tax.

Obtain an original Death Certificate.

Obtain the Certificate of Last Wishes, that shows if the deceased person signed or not a will in Spain, and where and when was signed.

Obtain an authentic copy of the will from the Notary where was signed.

Obtain a list of assets in Spain (Bank accounts, properties, shares, car, etc) and a valuation of them.

Sign the deed of acceptance of the inheritance of behalf of the heirs and pay the Notary fees.

Settle the Inheritance Tax and pay it. For the settlement of the tax it is necessary that each of the heirs have a NIE number.

Transfer the ownership of the assets to the beneficiaries in the Land Registry, banks, etc.

Settle the tax on the increase in value of land of an urban nature (local tax).