Spanish Inheritance & Tax Law

Information about Spanish inheritance and gift tax law

Every German who inherits assets in Spain or obtains them through gifts, especially real estate, is subject to inheritance tax or gift tax in Spain. This tax liability depends on where you live. There is no agreement between Germany and Spain to avoid double taxation in inheritance and gift tax law. This means, for example, that in principle a German heir residing in Germany who inherits an estate with assets in Spain has to pay inheritance tax both in Spain and in Germany. However, the national German tax regulations for unlimited taxpayers allow for the transfer of inheritance tax paid abroad. Another peculiarity in Spain is that there is an inheritance and gift tax law that is applicable nationally and regionally. The autonomous regulations grant considerably low tax rates or higher exemptions, however these regulations are in most cases not applicable to German non-residents. If the heir or the recipient of the gift is habitually resident outside of Spain, the national inheritance tax law applies to all goods in Spain:

In this case, the allowances are:

In the case of inheritance, direct descendants and spouses have an allowance of EUR 15,638 and relatives of the 2nd and 3rd degree of EUR 7,831. In individual cases, additional or increased allowances are granted. There are no allowances at all for donations.

The following remains to be done for the evaluation of the genetic mass:

In the case of accounts and securities, the account balance or the listed value on the day of the deceased's death is decisive. When valuing real estate, Spanish law is based on the real value (valor real), i.e. the market value. The assessment basis for the Spanish gift or inheritance tax on real estate is therefore not the purchase price at that time according to the document or the cadastral value, but rather the market value at the time of the inheritance or the gift. In Spain, auto-liquidation is common, meaning that the heir states the value of a property in the tax return itself, but it must be ensured that if the value is set too low, the Spanish tax office is capable of subsequent taxation, combined with sensitive fines. Here it is advisable to hire a knowledgeable lawyer in advance to determine the property value relevant to the tax office in advance. In summary, wise and forward-looking estate arrangements can reduce, if not avoid, unnecessary taxation.