Understanding Inheritance and Gift Tax in Spain

Posted on Mar 13, 2025 in Law

Nature and Scope of Inheritance and Gift Tax

Re: Gravel equity gains obtained for profit (free) or any other right of inheritance (either by inheritance or right).

Territorial Scope

Concerning the entire Spanish territory, the tax transfer to the Autonomous Communities shall be governed by the provisions of the rules governing the Assignment of Taxes of the State to the Autonomous Communities and have the scope and conditions for each. Specifically, its Cession sets that serious inequality may occur. It is a tax (tribute) yielded to the CCAA, while the collection, management, and control. Notwithstanding, it corresponds to the central state. In taxation, responsibility lies with the state. The state enables the ACs (Act 21/2001). The State has the authority but authorizes the CCAA to carry them out.

Taxable Event

  • Procurement of goods and rights by inheritance, bequest, or inheritance. Heritage title: Mortis causa – because of property and rights.
  • Acquisition by gift or other legal business for free, inter vivos. Property and rights on grant amounts.
  • Perception by the beneficiaries of life insurance contracts. Insurance beneficiary. Life gratuitously.

Taxable Persons

  • For acquisitions mortis causa.
  • For-profit grants and other comparable international broadcasts alive, the donee or those helped by them.
  • In life insurance, beneficiaries.
  • The fully taxable personal habitually resident in Spain, regardless of where the property or rights are located.
  • The taxable real liability: it acquired taxed on Spanish territory.

Taxable Base

Inheritance:

  • Real value of the property and acquired rights.
  • Deductible Loads: temporary or perpetual actually diminish the value of property.
  • No Mortgage Debts: debts actually recorded on these assets.
  • Deductible liabilities: Accounts payable for taxes, social security, etc.
  • Deductible expenses: last illness, funeral.

Donations: (inter vivos) real value (real and vested) – deductible debt burdens and deductible debts with real rights that fall on the same property conveyed.

Life Insurance: Quantities received by the beneficiary. Reason for the tax: to avoid inequalities.

Household Furnishings

Household furnishings will be part of the estate and valued at 3% of the real value of the assets and rights unless it is established that it is worth less.

Determination of the Base

By the tax administration under the direct estimate, no exceptions other than those identified here. In inheritance and gift tax, there are only inputs, not outputs. Determine which is the input value = Taxable; the amount of profit made for profit. The problem is the valuation of assets.

Reductions: This is where the powers come from the CCAA, but implementing State Law 87. These reductions will be practiced in the following order: first, the state and then the Autonomous Communities.

Mortis Causa (Including Life Insurance)

  • Reduction by degree of kinship:
    • Group I: Procurement of descendants and adopted children under twenty years of age.
    • Group II: Acquisitions and adopted by descendants of twenty or more years, spouses, ascendants, and adoptive parents.
    • Group III: Acquisitions by side in the second and third grade.
    • Group IV: Acquisitions by side in the fourth grade.
  • Handicap taper.
  • Taper for the beneficiaries of life insurance.
  • Property and rights reduction for an activity – business person, business value, provided it is not of mere possession of property or portfolio.
  • Acquisition of single residence.

Inter Vivos

  • For the purchase of a residence or house grant.
  • Transfer of shares, for the spouse, descendants, or adopted, of an individual company.

Double Taxation Relief

Where the clamping occurs tax liability, the taxpayer will be entitled to deduct the lesser of two amounts:

  1. The actual amount of paid abroad for tax reasons similar.
  2. The result of applying the average effective tax increase of this.

Due

On asset purchases and the cause of death in life insurance, the tax shall be payable on the death of the insured or when the insured has become final, or where the declaration of death of the absentee.