Inheritance Tax

Spanish Succession (Inheritance Tax)

Spanish "Succession Tax" works in an entirely different way to the UK, particularly between husband and wife.

In Spain, your worldwide assets are transferred to your spouse on death, in accordance to your will and how the assets are owned.

For example if you jointly own a house with no mortgage valued at say €200,000, each party is deemed to own half.
If you are not registered as tax resident in Spain, which you must do if you live 183 days and more each year, you will only get €15,956 allowance against the inherited half of the house, so you will have to pay tax on €84.044, which will be approximately €9,838. If your in the Spanish tax system and have been for 3 years, you earn higher allowances, depending in which province you live. In Murcia you get an additional €50,000 on top of the €15,956, although we are ledt to believe a 99% reduction applies on the taxable amount between tax resident spouses. In Valencia Province between tax resident spouses and tax resident direct descendents, there is a 99% exemption on death, with effect from 1st January 2007, tax residents of Spain get €40,000 allowance, and credit is allowed to 99% of the taxable value. This allowance is dor spouses and children resident in the house. There is a 10 year occupancy requirement after inheriting the property.

Example:

Jointly owned property valued at €400,000. One owner dies leaving their half to the surviving spouse:

Value inherited €200,000
less allowance € 40,000

Taxable amount €160,000
Tax payable = 1% of €23,141 = € 231.41

Relief at 99% is also given against Plus Valia, which is payable to the town hall on acceptance of an inheritance.

Non-married couples are treated as "friends" so do not get the full allowances UNLESS they obtain a certificate of civil partnership from the local town hall. I have heard that this can cost €2,000, but in the long run it could save even more tax for the survivor on first death