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illeslex 19-06-2014 16:31

Inheritance Tax
Good afternoon,

Today we would like to talk about the strong differences between residents and non residents in the INHERITANCE TAX.

On the one hand, when you have to pay Inheritance Tax at the State level (inheritance among non-residents), there is a scale that ranges from 7.65 % to 34 % (or even more in some cases) applied on the value of the assets and rights transferred. However, when you have to pay at an autonomic level (inheritance among residents), according to the Balearic legislation, you can pay only 1% (if a list of requirements are met).

This so significant reduction is perfectly legal. However, this year there will probably be a review of it, expecting changes in this particular tax in 2015 in relation to the need to harmonize the situation in the State in order to avoid such important differences in taxation. We will keep you properly updated.

It is crystal clear that there is a patent discrimination because non-residents pay much more than residents. For practical purposes, if a non resident receives 500.000 Euros, he/she is obliged to pay 110.500 Euros approximately. On the contrary, if a resident receives the mentioned amount, he/she will pay only 5.000 Euros.

As you could see, it is a serious situation for those who cannot benefit from the Balearic taxation. ILLESLEX has known cases where at the same inheritance, death of a parent residing in Balearic Island, in favor of two children, one of them pays 1% for being a tax resident in the Balearic Islands, while the other one, non resident, is forced to pay a much higher tax. Please, take into account the large number of Spanish children who due to the economic crisis years have had to emigrate in order to achieve better job opportunities and currently they are harmed in the inheritance process.

Therefore, for practical purposes, for non residents, the value of the inheritance to receive is reduced.

On the other hand, double taxation can happen, we mean, sometimes you have to pay this tax in two states regarding the same property. Continuous cases among non-resident heirs who are forced to pay elevated amounts in Spain from inheritances formed by properties or bank accounts located in Spain, also having to pay the tax on the same assets in the state in which they reside, without having the possibility to deduct the amount paid in our country.

The problem is that Spain has only agreements to avoid double taxation on inheritance matters with France, Greece and Sweden.

Our Law Firm opens the current line of discussion, if you are interested we can go into details through this thread replying to your comments or clarifying any point.

Kindest regards,

Sparky 19-08-2015 17:25

I thought some of you might be interested in this :- European Commission - PRESS RELEASES - Press release - Daily News 17 / 08 / 2015


Cross border inheritance in the EU gets simpler
Today, the Regulation on successions rendering cross-border inheritance easier will start to apply. Until now international successions or wills with cross-border elements could be very complex since EU Member States had different rules to determine which court had jurisdiction to deal with a cross-border succession and which law applied to that succession. This resulted in a lack of clarity, as courts in different Member States could conduct parallel proceedings with potentially conflicting outcomes, and in fewer opportunities for people to choose the law that should apply to their inheritance. Commenting on the Regulation, Věra Jourová, Commissioner for Justice, Consumers and Gender Equality said: "Today we are making it cheaper and quicker to deal with international successions and wills. Citizens preparing a will can now choose to have the law of the country of their nationality applied to their estate, even if they live in a different Member State and have assets located in different countries. This will give peace of mind and legal certainty to roughly 450,000 European families each year, who are involved in cross-border cases. The result will be faster and cheaper procedures, saving EU citizens time and money in legal fees." The Regulation also introduces a European Certificate of Succession which will enable heirs and administrators to prove their status and exercise their rights and powers across the EU. As of today, the Regulation on successions will apply in all EU Member States except the UK, Ireland and Denmark, which opted out of this instrument. An information campaign addressed to citizens and professionals has been launched today on social media. (For more information: Christian Wigand– Tel.: +32 229 62253; Tove Ernst – Tel.: +32 229 86764)

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