Who pays inheritance tax in Spain?
Any person inheriting a Spanish asset may have to pay inheritance tax. There are 17 autonomous regions in Spain and each have their own inheritance tax rules.
Once we have valued the assets and consider who is inheriting the assets, then we can advise you how much inheritance tax is payable or not.
Generally, descendants and spouses have inheritance tax allowances and non-blood relatives or friends inheriting Spanish assets will pay more tax.
How much inheritance tax will I pay to inherit Spanish assets?
Much depends on the region in Spain where the assets are located, the value of the assets and the relationship the heirs had with the deceased. Once we have valued the assets in Spain, we will provide you with an inheritance tax calculation.
Can I defer payment of Spanish inheritance tax?
Yes, you can. Spanish inheritance tax can be deferred if this is formally requested within 5 months of the date of death. It cannot be deferred if the application to defer is presented after the five month period. The application to defer payment of inheritance tax has to be signed by all heirs with an approximate value of the Spanish assets and the reason for the request to defer payment of Spanish inheritance tax.
The Spanish authorities are likely to grant an extension of up to one year if the application is submitted within five months of the date of death and there are no Spanish assets which can be used to pay the inheritance tax. If the application to defer the tax is granted, it means that any inheritance tax paid in the future will be subject to penalty interest. If the Spanish authorities do not respond to the application to defer within one month, then the application is treated as having been accepted.
What happens if I do not complete the Spanish inheritance in six months?
There is an obligation under Spanish law to complete the Spanish inheritance process within six months. Sometimes due to the complexity of the estate and the location of the heirs & executors, it is simply not achievable to complete the process within this timescale.
If inheritance tax is payable on the Spanish estate and this is not completed within six months from the date of death, then the value of the Spanish estate is subject to penalty interest.
I cannot afford Spanish inheritance tax, what can I do?
If you cannot afford to pay Spanish inheritance tax, then you can do the following:
- Renounce the inheritance which means that you reject the inheritance;
- You can request a deferral of the inheritance tax or;
- You could seek to dispose of the Spanish assets in order to pay the Spanish inheritance tax.
We have acted for clients in similar positions and arranged a sale of a property within the Spanish estate to pay the inheritance tax.
How much is penalty interest if I do not complete the Spanish inheritance in six months?
The penalty interest is applied at 5% for a three month delay after six months from the date of death, 10% for a delay of six months and 15% for a delay of twelve months rising up to 20% for delays of 18 months of more in addition to any other penalties.
I don´t want to inherit the Spanish property and its mortgage? Can I renounce the Spanish inheritance?
Yes, you can. In order to renounce the inheritance we would arrange for you (or us on your behalf using a power of attorney) to sign a deed of renunciation of the inheritance in Spain or in your home country. The will leaving the inheritance to you has to be considered carefully as you may have to sign the renunciation on behalf of your heirs as well as for yourself.
Before this deed is signed it is important to consider all options such as whether the assets can be sold and whether any of the relatives next in line also wish to renounce the Spanish inheritance.
Is the value of the Spanish mortgage deducted from the Spanish estate?
Yes. Any debts that the deceased had before their death can be deducted from the value of the Spanish estate. In addition the funeral expenses can also be deducted from the Spanish estate before inheritance tax is calculated.
How to obtain a death certificate in Spain?
If someone dies in Spain, then after the funeral the funeral director will provide you with a death certificate. If someone has died outside of Spain then the Spanish authorities will require an original death certificate to be stamped with the apostile of the hague and translated. We can assist with the translations.
What is a power of attorney?
A power of attorney is a document that will authorise us to act on your behalf to handle the Spanish inheritance. We will draft the power of attorney in Spanish and your language and we will send this to you by email to approve.
Once you have approved the power of attorney, we will ask you to book an appointment with your local notary to sign the power of attorney. The notary will place their stamps on the power of attorney and arrange for it to be stamped with the apostile of the hague. The power of attorney is then couriered to us and we can handle the Spanish inheritance process without you having to come to Spain. Using the power of attorney the first thing we will do is apply for an NIE number for you.
What is a notary and how do I find one?
A notary (or notary public to given them the formal title) is a person authorised to perform certain legal formalities, especially to draw up or certify contracts, deeds, and other documents for use in other jurisdictions. A local notary in the UK can be found at https://www.thenotariessociety.org.uk/
To find a notary in Ireland visit: http://www.notarypublic.ie
To find a notary public in another country, contact your local law society or use Google to find one.
What is a certificate of last wishes?
A certificate of last wishes (certificado de última voluntad) is issued by the Civil Registry and it will confirm whether the deceased had signed a Spanish will before a notary before they died. It will confirm the date of the last will and the notary before whom the last Spanish will was signed. Even if you know a Spanish will was never signed, this certificate still has to be applied for as part of the Spanish inheritance process.
How can I obtain a certificate of last wishes?
As part of the Spanish inheritance process, we will apply for a certificate of last wishes on your behalf from our local Civil Registry.
How do I obtain a copy of the last Spanish Will?
Once we have an original death certificate, a power of attorney from you and the certificate of last wishes and this certificate confirms that the deceased had signed a Spanish will before a notary, we will contact that notary and formally request an authorised copy of the last Spanish will.
How do I inherit a Spanish bank account?
Once we have an original death certificate, certificate of last wishes and a power of attorney from the heirs or executors, we will contact the bank where the account is held and we will ask them to send us a certificate confirming the balance in the bank account as at date of death and an extract for the last 12 months, which we will then send to you. If this is the only Spanish asset, we will prepare a document known as an inventory of the Spanish estate which describes who died, when and the value of the assets.
We will then sign the inventory using the power of attorney and register the estate with the tax authorities. Once it has been registered, we will contact the bank and send them the completed inventory and proof of inheritance tax return and ask them to transfer the funds in the account to a given bank account, after which we will ask them to close the account.
Will the Spanish bank freeze the bank account if they find out about the death?
If there is a bank account in the Spanish estate, then we will contact the bank, provide them with the death certificate, certificate of last wishes, will (if there is one) and the power of attorney and request the value in the bank account as at date of death. The bank will then block the account for the amount that is stated in the certificate.
For joint accounts, 50% of the balance will be blocked and authorisations on the account will no longer be valid. However the bank will accept certain payments from the account such as expenses related to the funeral and those involved involved in the maintaining the estate, such as direct debits for water, electric, community, etc.
How can I unblock the Spanish bank account?
To unblock the account in the name of the deceased the bank will ask for the following documents:
- Death certificate
- Certificate of Last Wishes
- Copy of the deed of inheritance
- Power of attorney if applicable
- Copy of the Tax Form presented and paid.
Unblocking is not immediate. After the documents are revised by the bank´s legal department the accounts will be transferred into the heirs´ names or they can be closed.
How do I inherit a Spanish property?
Once we have an original death certificate, certificate of last wishes and a power of attorney from the heirs or executors, we will consider with you the value of the property to be inserted in the deed of acceptance of the Spanish inheritance. We will prepare the deed of acceptance of the inheritance with our local notary, the property will be accurately described in the deed and a value apportioned.
Once this deed is signed before a notary accepting the inheritance on behalf of the heirs using the power of attorney, we will register the estate with the tax authorities, pay any tax due (if applicable) and then register the property in the heirs´names.
How do I inherit a Spanish car?
Once we have an original death certificate, certificate of last wishes and a power of attorney from the heirs or executors, we will obtain a taxable value of the car and agree this with you. If this is the only Spanish asset, we will prepare a document known as an inventory of the Spanish estate which describes who died, when and the value of the car. We will then sign the inventory using the power of attorney and register the estate with the tax authorities.
Once it has been registered, we will contact the Traffic Department, send them the completed inventory and proof of inheritance tax return and ask them to register the car in the heirs´ name.
How do I prepare a Spanish Will?
By completing our online form at www.yourspanishwill.com and arranging payment. Once we receive your information, we will prepare a Spanish will for you in English & Spanish to approve. Once it has been approved by you, it can be signed before your local notary in Spain who will notify the Civil Registry that you have signed a Spanish will so there will be a record of this at the Civil Registry. The Spanish notary will hold onto the original Spanish will and will issue you with an authorised copy.
Do I need a Spanish will?
If you have inherited Spanish assets, then is is strongly advisable to put in place a Spanish will to mitigate inheritance tax and ensure your heirs inherit your property. If you would like us to help you put in place a Spanish will, click here.
Can I sign a Spanish Will outside of Spain?
Yes you can. Once we have drafted your Spanish will and it has been approved by you, we will send it to you with signature instructions. The Spanish will has to be signed before a notary and once notarised and legalised, it has to be returned to us so we can register it with the Civil Registry. Once it has been registered, we will return it to you.
How can I value a Spanish property?
We work with national firms of valuers and estate agents and can arrange valuations for you. All we will require is access to the property and we will contact the agents/valuers, agree their professional costs and once agreed with you, ask them to value the property.
What is an NIE number?
An NIE number (a numero de identificacion de extranjeros) is an identity number for foreigners in Spain. It is a document that provides a number which you are required by the various authorities in Spain to have when dealing with them.
Why do I need an NIE?
The Spanish authorities will need your NIE number to enable you to be registered as a possible tax payer and or pay taxes in Spain for the inheritance of a property, car or bank account. Basically, without an NIE number in Spain you will struggle to deal with any official organisation.
Will all of the beneficiaries and executors require an NIE number?
Yes they will and using the power of attorney we will obtain these for you.
Why do I need a Power of Attorney to get an NIE number?
If you do not want to apply directly completing Spanish paperwork and attending the police station for an appointment with a local Spanish police official, then you will need a respected agent to act on your behalf. In order to do this, you will need to give Power of Attorney to that third party. It is important to ensure that the third party is a recognised, professional company as you will be passing over personal details to them to gain your NIE number.
I am an Executor (or trustee) of a Spanish Estate – what do I need to do?
Download our free advice leaflet setting out the Spanish inheritance process. If you would like us to act for you, send us the following information by email to email@example.com and we will then send you terms of business with fixed costs:
- copy of death certificate;
- copy of Spanish will or will signed in home country;
- names of beneficiaries and copies of their passports;
- marital status of deceased;
- names of parents of the deceased;
- copy of passport of the deceased;
- list of Spanish assets.
Do all beneficiaries need to sign a power of attorney?
Much depends on how the will has been worded. If there is a property in the Spanish estate, then the Land Registrar who will consider the inheritance documents may require all of the beneficiaries to formally accept the inheritance even though executors have been appointed. In these cases, we will obtain a power of attorney from the beneficiaries which can be signed in their home country.
Can you search and locate a Spanish property?
Yes we can. Using the deceased’s full name and passport or NIE number, if available, we can carry out land searches at the land registry to see if the deceased owned Spanish property. The land search result, if positive, will have a description of the property, its address, surface area, who the owners are and if there are any charges on the property.
Any other questions?
If you have any other questions concerning gaining succession planning, inheritance tax or managing assets in Spain then please contact us and we will get back to you as soon as we can.