Are you a Spaniard or a foreigner and have inherited assets located in Spain? Are you a Spaniard who has inherited assets in another country? Surely you are wondering what it will cost to inherit and whether or not it is worth the legal process involved. Here we help you to clear up your concerns.
Before accepting an inheritance in Spain, it is advisable to have an idea of the costs involved. It is also important to know the total value of the estate and any debts left by the decedent, which together, provides the necessary information to decide whether or not to accept the inheritance.
To make a decision, first you must first calculate the approximate actual value of the inheritance, for which you must know:
- The value of the estate in Spain. You will need to know the market value of real estate on date of death and updated to present, the current balance of bank accounts and on date of death and the value of any other property and rights of the decedent and if the decedent had a life insurance policy.
- The debts of the decedent. Debts such as personal loans, unpaid taxes such as the Personal Income Tax of the decedent, etc. are deducted from the total value of the property and rights of the decedent and therefore reduce the net value of the inheritance.
Once the approximate value of the inheritance has been clarified, and if you have decided to accept it, you will want to know the costs associated with the acceptance of an inheritance in Spain, which are as follows:
Inheritance Tax is levied on the transfer of assets and rights by inheritance, legacy or any other title.
The calculation takes into account:
- The relationship of the heir to the decedent. According to the degree of kinship, reductions are applied.
- The place of residence of the decedent and the heir, which determines whether state or autonomous legislation governs the estate: in general, if the heir does not reside in Spain the Inheritance Tax is calculated only on the assets the decedent had in Spain, regardless of the taxes that the heir has to pay in his or her country of origin. In contrast, if the heir resides in Spain, the Inheritance Tax is calculated on the value of all the assets that the deceased had both in Spain and abroad.
- The value of the assets the heir already has in Spain. If it exceeds € 402,678.11, multiplier coefficients are applied which vary according to the value of the estate and the degree of kinship.
The debts of the decedent, such as taxes or debts with Social Security which are outstanding at the time of death, may be deducted from the value of assets and rights to calculate the net value of the estate.
Other deductible costs, such as court costs in relation to inheritance, if any, expenses incurred for the illness causing death (hospitalization, medicines, medical fees), and burial / cremation and funeral expenses paid by the heirs (not those paid by insurance), and charges or levies on inherited assets that decrease their capital and value. Mortgages do not have this consideration because they do not reduce the value of the asset transferred to the heir.
The term for payment of Inheritance Tax is six months from date of death, extendable for another six months, upon request during the first five months after the death.
Municipal Increase in the Value of Land Tax
This tax is payable only in the event that urban real estate is inherited in Spain. This is a local tax assessed by the Town Hall where the property is located.
The Tax on the Increase of the Value of Urban Land, also known as the Plusvalía Municipal, taxes the increase of value of urban property from acquisition by the decedent to date of death.
The term to pay the Plusvalía Municipal is six months from date of death, extendable for another six months, upon request during the first five months after death.
These are other costs associated with the acceptance of an inheritance in Spain to be taken into account:
- Fees for the certificates of last will and insurance coverage of death.
- Fees for the NIE (Foreigner Identification Number) application, if applicable.
- Notary fees for:
- Granting powers of representation of the heir in favor of third parties or lawyers, if applicable (usually when the heir resides outside of Spain).
- Authorized copy of the last will made by the decedent before a Spanish notary.
- Notarial deed of declaration of heirs (when the decedent did not make a will).
- Notarial inheritance distribution deed (when it is not possible to make an private inventory).
- Fees of the Property Registrar, in the case of inheriting real estate.
- Legalization and sworn translations of foreign documents and certificates of law, if applicable.
- Filing agent and legal advice of lawyers in the processing of taxes and legal documentation.
To make an approximate calculation of all expenses and taxes it is necessary to compile minimum documentation related to the inheritance:
- Confirmation of real estate property from the Property Registry if there are real estate assets.
- Death Certificate.
- Certificate of last will and insurance coverage of death.
- Bank certificate of balances at the date of death.
- Debts of the decedent on date of death.
- Last will of the decedent.
- Invoices of deductible expenses.
- Copies of the decedent´s income tax returns.
- IBI (land rates receipt) for real estate.
Do you want us to study your case and calculate the approximate taxes and expenses of your inheritance?
In our firm we have more than 20 years´experience advising Spaniards and foreigners who inherit in Spain and Spaniards who inherit abroad. Write or call us to ask about your particular case. If you want to know more about us, visit our website.
Write us with any other questions you have about inheritances in Spain in the comments to this article in our blog or to firstname.lastname@example.org and we will be happy to answer them in future publications.
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© 2017 POWERS ABOGADOS, S.L. All rights reserved. This document is a compilation of legal information prepared by POWERS ABOGADOS, S.L. which purpose is strictly informative. Consequently, the information and comments contained therein do not constitute legal advice whatsoever. The information contained in this document can not be divulged to third parties, either in its entirety, or in an extracted form, without the prior express authorization of POWERS ABOGADOS, S.L. All this in order to avoid the incorrect or unfair use of the information contained therein.