At our last post we advanced that there are very interesting changes in the Spanish inheritance tax laws and that new advantages be available for Europeans. The advantages will depend on the autonomous region where the property to inherit was located. In Spain, the different regions have different tax laws including different types of benefits, its not the same thing every where in Spain.

It all happened as a consequence of a judgement from the European Tribunal of Justice where Spain was found guilty of discrimination towards citizens of the EU, not allowing them to benefit from the advantages in place at the time for locals. After the judgement Spain had to pass laws to make possible that those benefits could be enjoyed by any citizen of the EU.

Now, time enough has passed to have a reliable interpretation of the new law passed. At this post we will focus on the taxation applicable to the inheritance of assets, to be totally precise on the inheritance of property.

Just as a basic introduction to the previous situation towards the inheritance tax in Andalusia say that Europeans where not allowed to benefit from the tax advantages existing at the different regions (locally called Autonomous Communities) for locals. Now this has changed and Europeans can, same as locals.

In practical terms the most significant advantage is that now, when the total value of the good or group of a good (or parts of them as when spouses or descendants inherit a quote of ownership over a property from any of their parents) has a value of 175.000,00 € or less, the inheritance will be free of tax according the inheritance tax law in Andalusia.

It is important to understand this advantage correctly. Those 175.000,00 € are not the usual tax threshold or reduction of the taxable base, this is different. Anyone inheriting a good or group of goods with a total taxable value over 175.000,00, for example 180.000,00 €, will pay taxes for those 180.000,00 € same as happened before, rather than for the difference, 5.000,00 € if we where talking of a real tax threshold.

A solution for a good tax planning could be to purchase the family holiday home making the deeds in the name of the whole family at the time of purchasing the property. Note that doing this in a later stage will be subject to costs and taxes. Property transfers among relatives are taxed in Spain. Its not possible to simple add or modify a title deed holder without costs and taxes.

The arithmetic is simple. A decision like this could save a good amount of money in the future when taken at the right time. At the end of the day it has the same cost purchasing in the name of two individuals than in the name of four, to say a number. The number of owners at the deed doesn’t make the process of purchasing significantly more expensive at all. Perhaps instead of needing two NIE numbers you may need four, that’s all. There won’t be more taxes and the sales deed will not be more expensive.

In posts to follow we will explain more benefits and local advantages resulting from the modification of the Inheritance tax in Spain.

INHERITANCE TAX IN ANDALUSIA was last modified: by

Leave a Reply
