If you are planning on moving to Spain, one of the first factors that you should put into consideration is taxes.
You should acknowledge the tax system in Spain and how it affects you as an expat. Especially if you are a US citizen or a citizen of other countries that tax their citizens on worldwide assets. You can easily be taxed on your universal income and still be taxed in Spain.
Taxes in Spain are not as easy as they seem. There are severe fines, punishments, and penalties for citizens and foreigners that fail to pay & declare their correct taxes in Spain.
This article has been carefully constructed to guide you on the process and systems of avoiding unnecessary technicalities, settling, and paying inheritance tax in Spain.
Overview Of Inheritance Tax For Expats In Spain
Inheritance tax, also known as succession tax, gift tax, or “Impuesto de Sucesiones y Donaciones” in Spain. It is a type of tax that is regulated under the banner of Napoleonic law. It is a complicated matter for many expats in Spain.
All laws regulating and relating to this tax system have been stated in the Inheritance Tax Act of 1987 and Regulation 1629/1991. These laws govern the collection of inheritance tax across the 17 regions in Spain including autonomous Communities. But the inheritance tax rates differ slightly from one region to the other.
So, the rate you will be charged for inheritance depends on the region or autonomous community your asset or property is located. This allows each region to enact their laws and apply for their tax allowances as long as it is within limits.
There are no changes in the law regulating the Spanish inheritance tax; it applies to both expats and nationals evenly.
How Does It Work?
The Spanish inheritance tax concerns beneficiaries of inheritances & gifts from Spanish nationals, residents and, non-residents. Whether the inheritance comes in the form of a donation, insurance, monetary amount, or property, you’ll still have to pay your inheritance tax.
In Spain, you won’t be able to receive your inherited asset until you pay the whole amount you owe in tax.
Very unlike the United Kingdom where assets and properties that are obtained from a deceased spouse or relative are free from paying this tax, each beneficiary of assets and properties is liable to pay the inheritance tax. The Spanish authorities give the beneficiary a maximum of 6 months to complete their payment. If they fail to pay within 6 months, they can request an extra 3 months (183 additional days). You can also request to pay your taxes in installments.
It is determined by a system known as “forced heirship’. Forced heirship determines how properties and estate must be divided and the tax rates that the beneficiaries would be charged.
Tax Allowance & Category In Spain
Depending on your relationship with the deceased, you can get discounts on the amount of tax you are liable to pay. This section states the exact amount of money that you can avoid paying for gift tax in Spain.
There are usually four groups of beneficiaries in this system of taxation. They have been properly grouped in the table below:
| Tax Category In Spain | Beneficiary | Main State Allowance |
| Group 1 | Natural and adopted children under the age of 21. | €15,956 |
| Group 2 | Natural and adopted children over the age of 21. Grandchildren, parents, grandparents, spouses, and unmarried partners (domestic partners). | €15,956 |
| Group 3 | Stepchildren, cousins, in-laws, nieces & nephews, aunts & uncles, brother & Sisters, ascendants/descendants. | €7,993 |
| Group 4 | All other family members and unmarried partners not registered as Pareja de Hecho | €0 |
Spanish Inheritance Tax Rates
| Inheritance Tax in Spain | Tax Rate |
| Inheritance up to €7,993 | 7.65% |
| €7,993 – €31,956 | 7.65 – 10.2% |
| €31,956– €79,881 | 10.2 – 15.3% |
| €79,881– €239,389 | 15.3 – 21.25% |
| €239,389– €398,778 | 25.5% |
| €398,778–€797,555 | 29.75% |
| €797,555 | 34% |
How To Avoid Double Taxation As An Expat
So, how do you avoid double taxation as an expat in Spain? Even as a foreigner, you are still liable to double taxation. You can be a British citizen but reside in Spain, and you will still be asked to pay your taxes in both countries.
A lot of expats have suffered huge financial losses due to double taxation problems. Laws concerning double taxation depend on your nationality, but you can easily avoid double taxation by getting personalized accounting assistance and professional legal advice.
Once you get that cleared, you can sit back, enjoy your inheritance and be tax-free in Spain.