19-06-2014, 16:31
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Join Date: May 2014
Location: Pollença, Mallorca
Posts: 27
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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,
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Committed to the Satisfaction of our Clients -
Illeslex Abogados
Last edited by illeslex; 19-06-2014 at 16:35.
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