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Inheriting assets in Spain can be a complex process, especially when heirs reside in different countries or when the deceased owned properties in multiple jurisdictions.
Spain’s inheritance law is based on EU Regulation 650/2012, which establishes the applicable law governing the inheritance and how it should be administered. Additionally, tax differences between residents and non-residents may impact estate taxation.
International inheritances in Spain are regulated on two levels: first, inheritance law determines which jurisdiction applies and how the estate is distributed; second, tax regulations establish the taxes heirs must pay based on their residency and the value of inherited assets.
This article explains Spain’s inheritance and tax laws, the specifics of international inheritances, and key aspects for effective estate planning.
Applicable law in Spain
General principle: the law of the deceased’s habitual residence
Under EU Regulation 650/2012, an inheritance is generally governed by the law of the country where the deceased had their habitual residence at the time of death.
Therefore, if a person was residing in Spain, Spanish law applies to their estate, even if they had a different nationality or owned assets in multiple countries.
Exceptions: closer connections and choice of law in a will
There are two key exceptions to the general principle:
- If the deceased had closer ties to another country, the law of that country may apply instead.
- If the deceased chose the law of their nationality in their will to govern the succession, this choice will be valid and must be respected.
Taxation of international inheritances in Spain
Inheritance taxation in Spain depends on the heir’s residency and the location of the inherited assets.
It is crucial to distinguish between the obligation to declare an inheritance and the obligation to pay inheritance tax, as in some cases, an heir may need to report the inheritance in two countries but only pay taxes in one, if a double taxation agreement applies.
Heirs residing in Spain
A resident in Spain who inherits assets must declare the inheritance in Spain and, in most cases, pay inheritance tax in Spain, regardless of the asset’s location:
- Assets located in Spain: tax is paid in the autonomous community where the assets are located, applying the corresponding regional reductions and exemptions.
- Assets located outside Spain: the heir must declare the inheritance in Spain and pay taxes according to the regulations of their autonomous community. If the country where the assets are located also taxes the inheritance, a double taxation treaty (if applicable) may help avoid being taxed twice.
If no double taxation agreement exists between Spain and the other country, the heir may be required to pay taxes in both countries.
However, in some cases, a tax deduction can be requested in Spain for the amount already paid abroad.
Non-resident heirs in Spain
A non-resident heir inheriting from an estate opened in Spain must determine whether they must declare and pay taxes in Spain and/or their country of residence:
- Assets in Spain: the heir must declare and pay inheritance tax in Spain.
- Since a European Court ruling, non-residents can benefit from the same tax reductions as residents, based on the autonomous community’s tax rules where the assets are located.
- Depending on the tax regulations of their country of residence, the heir may also need to declare this inheritance there and pay taxes if no double taxation agreement exists with Spain.
- Assets outside Spain: if the inheritance is opened in Spain but the assets are located abroad, the heir does not have to pay taxes in Spain on these assets.
However, in some cases, they may be required to declare the inheritance in Spain for informational purposes, depending on their tax residence and the country where the assets are located.
Estate planning for international inheritances in Spain
Proper estate planning can help avoid legal disputes and optimize inheritance taxation.
If a person owns assets in multiple countries, it is advisable to draft a will. There are two main options:
- A single international will: one will covering all assets in different jurisdictions. It must be carefully drafted to avoid conflicts with foreign laws.
- Separate wills: wills made in each country where assets are located, ensuring they do not contradict each other.
It is also important to determine the applicable succession law and assess the tax implications for heirs.
Options for heirs
Once the succession is opened, heirs have three choices:
- Accept the inheritance outright, taking on all the deceased’s assets and debts.
- Accept the inheritance under benefit of inventory, which limits their liability to the value of the inherited assets.
- Renounce the inheritance if they do not wish to take on assets or debts.
If multiple heirs cannot agree on how to distribute the assets, an executor (appointed in the will) or a court may intervene.
Conclusion and legal advice
International inheritances in Spain can be complex from both a legal and tax perspective. To avoid complications, it is recommended to:
- Draft a will in Spain if you own assets in the country.
- Seek legal advice from a lawyer specializing in international inheritances in Spain.
- Verify tax treaties to avoid double taxation.
The Delaguía y Luzón law firm, based in Valencia, has specialists in succession law, international inheritances, and tax law. We assist in optimizing estate planning and managing inheritances in Spain, ensuring compliance with legal and tax obligations.
If you need assistance with an inheritance in Spain, contact us for a personalized consultation.
