Spanish Inheritance Tax

Deductions at the State Level

Factors that determine inheritance tax in Spain:

tax exemptions (if any)

tax rates

the wealth of the beneficiary

the proximity of the relation between testator and

beneficiary

Tax Exemptions are available at either State or Regional Level. The level of the exemption depends on which group the heir is deemed to be in as follows:

Group I Children, including adopted children, under the age of 21

Group II All other descendants, spouses and parents

Group III Close relatives such as brothers and sisters, grandparents,

aunts and uncles

Group IV More distant relatives

Once the heir has been assigned a group according to their relationship with the deceased, the exemption available at a state level can be calculated.

These exemptions are made after other reductions that the heir are entitled to have been applied.

Examples of other deductions available at the state level are:

If the beneficiary is disabled:

Additional exemptions ranging between €47,858.59 and

€150,253.03 available

The exact rate is determined by degree of disability

Income from a Life Insurance Policy:

The beneficiary must be either a direct descendant (or

adopted), spouse or parent of the deceased

If this criteria is fulfilled there is an exemption up to €9,159

Inheritance of the Family Home:

Exemption exists for child, parent and spouse of the

deceased

95% of value up to max of €122,606 per beneficiary

Property may not be sold for 10 years after inheritance

Inheritance of the Family Business:

Exemption exists for children and spouse of the deceased

Value of exemption is 95% of value of the business

Business should be maintained for 10 years

In the absence of a child or spouse of the deceased other

relatives may benefit from this exemption

Other Deductions:

Funeral Expenses

Final Medical Expenses of the Deceased

Debts held be the deceased that are evidenced by public

documents e.g. a mortgage

Once again, after any applicable deductions have been made, the below exemptions can be applied:

Once the final amount of tax payable is determined then the following rates are applied:

Example: The taxable amount after applying all legal deductions is determined to be €45,000. The beneficiary is a child of the deceased and is a penniless student at the time.

1) First find the amount immediately below this in the table.

2) The tax payable up to €39,943.26 is therefore €3,734.59

3)The portion above €39,943.26 (€45,000 – €39,943.26 = €5,056.74) is taxable at 11.9% = €601.75

4) So, tax payable is:

€3734.59 + €601.75 = €4,336.34

5) If the wealth of the beneficiary is above a certain threshold then this tax amount may be increased by a set coefficient as follows:

Pre-existing wealth in euros Groups

I y II III IV

From 0 to €402,678.11 1,0000 1.5882 2.000Between €402,678.11 and €2,007,380.43 1.0500 1.6676 2.100Between €2,007,380.43 and €4,020,770.98 1.1000 1.7471 2.200Above €4,020,770.98 1.2000 1.9059 2.400

In this case as the beneficiary is a child of the deceased and therefore in Group I with pre-existing wealth below €402,678.11 then the coefficient to apply is 1.000 which means the final tax payable is €4,336.34

Each year in Spain thousands of expats pay more

tax on inheritance than they should – simply

because they fail to follow some simple rules.

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For the most comprehensive analysis

in English on Inheritance Law in Spain go to:

Spanish Inheritance Tax

Inheritance Law in Spain

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