1 - First step: Determine if a will was signed by the deceased
2 - Second step: Identify the assets of the inheritance and the law that governs them
3 - Third step: the settlement and calculation of inheritance taxes in Spain
4 - And then?
The death of a loved one is never an easy thing, and despite the shock of the news, many steps will have to be taken. After having settled the questions relating to the person of the deceased and his funeral, it is now necessary to resolve the formalities related to his assets. And if some of the assets are located abroad, for example in Spain, the exercise is all the more complicated.
This comprehensive guide is intended to shed light on the specific succession and inheritance process that governs the Iberian Peninsula, and to guide you on what to do when dealing with the death of a loved one with real estate assets in Spain. Where do you start? How do you surround yourself? We tell you everything you need to know in this practical guide.
And remember: if you’ve inherited a property, we can help you with all the steps involved in selling the property in Spain.
First, it is essential to identify whether or not a will was written by the deceased person. Three scenarios then emerge:
In this case, the beneficiaries are required to have it translated in order to formulate the application for certification. To this must be attached the death certificate, a birth certificate of the deceased, or even a marriage certificate. These documents must also be translated and apostilled at a notary's office.
This process is essential because without obtaining a certification of the documents, the applicant does not have the possibility of paying inheritance taxes. However, if these are not paid within 6 months following the date of death, the heir (s) incur fines imposed by the Spanish tax authorities for late payment. This is why we recommend that you complete this process as soon as possible, as the translation and legalization of the document may take some time.
Good news, this makes the procedure considerably easier, and the last wishes of the deceased will be able to be carried out without much difficulty! In fact, if the assets are located in Spain, it is recommended to make a will in Spain because it greatly facilitates the application of laws and procedures concerning the last wishes of the deceased. In addition, this will avoid the translation of documents, which can be particularly expensive. Beneficiaries must still make sure to pay the inheritance tax in force.
If the deceased did not make a will before his death, or if it is not valid under the law, Spanish inheritance rules apply. The legal order of succession governed by Spanish common law is therefore as follows:
In this case, it is therefore imperative for the beneficiaries to go to a notary (in case of a family relationship), who will proceed with the drafting of an act of notoriety (Declaración de Herederos) whose purpose is to establish the hereditary status of beneficiaries recognized by law. In the absence of a family relationship, it will be necessary to refer the matter to the competent court: in this specific case, it is the court of first instance.
As you will have understood, neglecting inheritance aspects after the acquisition of real estate in Spain can be expensive. Having a will written in Spain will save your heirs time and money!
In Spain, the procedures are similar to France. The notary will formalize, as required by regulation, the last wishes of the testator in an official document: the famous will. To be valid in Spain, it must be registered in the Spanish Register of Wills (Registro Central de Ultima Voluntad).
Locating all the assets of the deceased person: real estate, furniture, furniture, bank accounts, the existence of possible life insurance... is a truly essential step in the inheritance process.
In order to determine the assets (or even the liabilities of the deceased in the event of unpaid debts), you must first use a notary, remembering that he does not have the same skills as in France.
In Spain, the notary only makes a simple study, but not an overall study of the situation of a deceased foreigner. For example, he will therefore not be able to identify whether the testator has assets in another country or if he has already signed another will in his country of origin that may conflict with the will signed in Spain.
There are two procedures that can be initiated, again depending on whether or not the deceased signed a will setting out his last wishes.
What law applies to wills?
Since the law of 15 August 2015, the will may mention the choice between the applicable law regime between Spanish law and the law of the country of origin in the event of death. Two cases therefore arise:
In this specific case, there is no debate. As explained above, in the absence of the last wishes written by the deceased, Spanish inheritance law applies, and the assets will be distributed between the various heirs according to the law in force in Spain.
However, it is necessary to highlight the particularities of Spanish inheritance law, which in some way restricts the freedoms of the testator concerning the distribution of his assets.
If ordinary Spanish law applies to inheritance, and once the heirs who will share the inheritance and the assets that make up the deceased's assets have been identified, you should know that it is divided into three thirds:
In summary, only a small part of the estate can be transmitted freely according to Spanish inheritance law.. This means that if you choose to write in your will your wish for Spanish law to apply to your inheritance, or if Spanish law applies automatically (in the absence of a will), at least two-thirds will be reserved for your children, your parents (up to the 4th degree), your spouse, or the State if the previous four are missing.
Who says inheritance also says taxes. Spanish inheritance tax applies to all real estate located in Spain, regardless of the content of the will or if the deceased is a foreigner. This means that real estate located in Spain is all automatically subject to Spanish inheritance tax.
Here are the tax rates established by national legislation:
However, it is not necessarily the final amount that you will end up paying. You will probably be given several bonuses, which will reduce this amount.
The Iberian Peninsula includes seventeen regions, and seven legal inheritance regimes, which means as many different inheritance tax calculations. Of course, there is no exception that allows the beneficiary to avoid this tax. However, it is essential to pay it in order for the succession to be released by the Spanish authorities.
Moreover, the calculation of inheritance tax in Spain does not only depend on the regions, it also depends on other factors such as:
Thus, it must be taken into account that the calculation of the tax depends not only on the value of the inheritance, but also on the means, age or even the family relationship of the beneficiary. Based on these criteria, significant exemptions apply in some Spanish regions.
For example, in Andalusia, successions equal to or less than 1,000,000 euros are not subject to any tax. After this threshold, the tax is almost zero because the heirs of an EU resident benefit from a 99% tax reduction. Another example, in Catalonia, successions between spouses are almost completely exempt.
Because of the technicality of the subject and the difference between the legal regimes that weigh on each region, we obviously maintain our recommendation to surround you with specialized legal advice, in order to be able to calculate the tax adapted to your particular situation.
Inheritance taxes in Spain for a non-resident are different from those of residents. Until then, non-resident heirs were subject to the Impuesto de Sucesiones y Donaciones (ISD), the inheritance tax and gift tax in Spain, discussed earlier, whose rate varies according to the value of the inheritance, ranging between 7.65% and 34%.
Residents could benefit from a tax deduction, which does not apply to non-residents. This discriminatory treatment was condemned by the Court of Justice of the European Union (CJEU), which obliged Spain to reimburse taxpayers who were victims of this tax differentiation.
These changes were made in 2014 to allow non-resident heirs to benefit from the same tax advantages as residents. It is also possible for non-resident heirs who have already paid taxes to request a refund from the Spanish tax authorities.
Once the inheritance tax has been duly paid to the autonomous community in which the property is located, you finally see the end of the tunnel: you only have a few simple administrative formalities left to complete.
If you want to dispose of the property, you must first make sure that you are registered as a new owner in the Spanish land register, change the address of the IBI receipt (in order to be able to pay future taxes relating to the property without any problems), and finally, change your name with the various suppliers (electricity, gas, water, etc.).
Finally, if you want to sell a property in Spain, we recommend the support of our experts, who will get rid of the additional hassles associated with this sales project!
