We solve the main doubts that arise when inheriting assets from abroad while resident in Spain.
Inheritances with international elements are becoming more and more frequent. In tax matters, prior preparation plays a big role, but in the absence of it, we tell you how to approach an inheritance of foreign assets and what taxes you will have to face.
Previous study.
Although we can give some generalized guidelines, the casuistry can be very varied, so it is always necessary to carry out a previous study of the specific case:
1.- Where did the deceased usually reside?
2.- Did he/she have a will? Often in the will itself it is indicated which legislation will be applicable for the inheritance.
3.- Where do the heirs reside?
4.- Where are the assets to be inherited located?
With these answers, we will begin to explore the applicable legislation. Of course, it is always necessary to check if there is a double taxation avoidance agreement between Spain and the country in question, since this agreement would apply over and above the national regulations of the countries.
In case there is no such inheritance, we will now indicate how these inheritances would be taxed.
So where do I pay taxes?
As a general criterion, if the heir is resident in Spain, he/she will be taxed for Inheritance Tax in Spain. In addition, if the heir is a non-resident but inherits a property in Spain, he/she will also have to declare the tax in Spain.
Of course, we have the added difficulty of the different inheritance tax regulations, being able to be applicable the state or regional regulations.
Well, we must follow the following rules:
- If the deceased resided in Spain, the regulations of the autonomous community where he/she resided will be applicable for taxation of foreign assets.
- If the deceased resided abroad, the heir may choose to be taxed in accordance with state or regional regulations. But, which autonomous regulation? In this case, special rules apply:
- If in the inheritance there are only assets located abroad, the regional regulations of the place where the heir resides will be applicable.
- On the other hand, if the inheritance has assets located abroad and assets in Spain, the regulations of the autonomous community where the greater value of such assets is located will apply.
Will I pay taxes abroad?
In most cases, if there is no double taxation avoidance treaty, it is likely that an inheritance tax will have to be paid in the foreign country in addition to the Spanish tax.
If this is the case, when settling the inheritance tax in Spain, a deduction may be applied to the tax payable. Remember that it is the taxpayer’s right not to be taxed twice for the same thing, so he has the right to apply all the mechanisms at his disposal to avoid double taxation.
Where do I start?
As a client of our firm, you will have the great advantage of having a network of professionals you can trust, located in 650 cities in more than 50 countries, to whom we can turn to manage the foreign procedures you need.
It’s that easy, without the need to travel, and leaving your inheritance in the hands of professionals.
Contact us to get started.
Sincerely yours,
Alvaro Porcar Lawyers.
