The inheritance process in Spain can be complex, especially for those who do not reside in the country. When a person passes away, their assets do not automatically transfer to their heirs; the inheritance must be expressly accepted. There are legal and tax regulations that heirs must understand to avoid issues and optimize their tax burden. In this practical guide, we explore the most relevant aspects of the inheritance process for non-residents, including real-life examples and practical advice.
Legal Aspects of Inheritance in Spain
Inheritance in Spain is regulated by the Civil Code and European Regulation No. 650/2012. The latter establishes that the applicable law will be that of the deceased’s habitual residence unless they have specified in their will that they wish to apply the law of their nationality.
Real-life example:
A British citizen residing in Spain passes away, leaving assets in the country. If they did not specify another law in their will, the succession will be governed by Spanish law.
Choosing the Applicable Law in the Will
It is advisable for non-residents to specify in their will the law they want to govern their inheritance. This helps prevent conflicts between different legal systems.
Practical case:
A German citizen with properties in Spain chooses German law in their will. This may allow a different distribution of assets than that established by Spanish law, benefiting certain heirs.
Tax Implications for Non-Residents
The Inheritance and Gift Tax (ISD) in Spain varies depending on the autonomous community where the assets are located. Non-residents are taxed according to the applicable regional regulations.
Real-life example:
An heir in the Community of Madrid benefits from a 99% tax reduction on ISD, while in Catalonia, the tax burden may be significantly higher.
Tax Residence and International Taxation
Non-residents are only taxed on assets located in Spain. If there are double taxation treaties between their country of residence and Spain, they may avoid being taxed twice on the same inheritance.
Practical case:
An heir residing in the U.S. with inherited assets in Spain could benefit from tax deductions thanks to the treaty between both countries.
Required Documentation to Process the Inheritance
To initiate the inheritance process, the following documents must be obtained:
- Death certificate.
- Certificate of last wills.
- Certificate of potential life insurance policies.
- Bank certificates showing account balances at the date of death.
- Will (if available).
- European Certificate of Succession (for heirs residing in different EU countries).
- Documentation of assets and properties.
- Foreigner Identification Number (NIE) for heirs.
Inheritance Procedure for Non-Residents
1. Verification of the Will
The Certificate of Last Wills must be requested to determine whether a will exists and at which notary it is registered. A certificate regarding possible life insurance policies should also be obtained.
2. Notarial Procedures
A notary formalizes the acceptance of the inheritance by drafting the deed of asset allocation.
3. Payment of Inheritance Tax
The ISD tax return must be submitted to the Tax Agency of the corresponding autonomous community.
4. Property Registration
Real estate assets must be registered in the heirs’ names at the Land Registry.
5. Bank Procedures to Distribute Funds
To access the deceased’s bank funds, heirs must provide the bank with a copy of the inheritance acceptance deed and proof of inheritance tax payment.
Recommendations for a Smooth Inheritance Process
It is advisable to:
- Draft a will specifying the applicable law.
- Consult a specialized inheritance lawyer with expertise in international law.
- Consider the tax impact of the inheritance and plan strategies to minimize taxation.
Professional Legal Assistance
An expert lawyer, such as Malaga Solicitors, can streamline the process and prevent costly mistakes. Given the complexity of the regulations, specialized legal advice is essential for non-residents.
Differences Between Autonomous Communities
Each autonomous community in Spain has its own tax regulations, which directly impact the ISD tax.
Comparative example:
- Madrid: 99% reduction on direct inheritances.
- Catalonia: Higher tax rates and fewer reductions.
- Andalusia: Significant tax reductions in some cases, with an exemption of up to €1,000,000 per heir.
This information is provided for general information and should be not considered 100 % correct for all cases, so for precise tax advice on your particular circumstances you must seek for professional advice
Conclusion
The inheritance process for non-residents in Spain involves a set of legal and tax regulations that can be complex and require professional legal assistance from an expert lawyer. Planning ahead and obtaining expert advice can make the difference between a simple and quick process and one filled with obstacles. Each case is unique, so analyzing the specific situation of each heir is crucial to making the best decisions and expediting all necessary procedures. Contact us now.
CEO – Malaga Solicitors Group
A specialist in property and company law, José is the founder of Malaga Solicitors Group and the head of our Marbella office.
Languages: Spanish and English.
English 
Dutch