Inheritance Tax Rates in Spain >

National vs Regional Tax Rules

Only those who have been ordinarily resident in a particular region of Spain over the balance of a period of five years prior to their death will have the more generous regional inheritance tax exemptions applied to their estate. 

In addition it will require the beneficiary to be resident in some part of Spain. 

If not, the national rules apply. What this means of course is that, more often than not, the rules for most non-Spanish beneficiaries will be those at the less generous national level.

Therefore it is important to understand the national tax rates and how the inheritance tax liability is calculated including any exemptions that are available. 

Firstlly, we take a look at the personal exemptions that are available at the national level.

The exemptions available at a national level may be summarised as follows:

Personal Exemptions

	Exemption
Group I	€15,956 plus €3990 for each year under the age of 21 years up to a max deduction of €47, 858
Group II	€15,956
Group III	€7.99
Group IV	No deductions available

Guide to Groups

In Spain a beneficiary is assigned a category or Group depending on their relationship with the deceased, as per the following table:

Group I            Children, including adopted children, under the age of 21

Group II           All other children, spouses and parents

Group III    Close relatives such as brothers and sisters, grandparents, aunts/uncles

Group IV         More distant relatives

Disabilities

In addition to the above exemptions, should any beneficiary be disabled, further exemptions ranging between €47,858.59 and €150,253.03 depending on the level of disability.

 

Life Insurance Policies

If the deceased took out a life insurance policy in favour of a beneficiary there is an exemption up to the value of €9,159.49 where the beneficiary is a spouse, child or parent.

Inheritance of the Family Home

An exemption also exists for tax payable on the permanent or habitual residence. The definition of habitual residence is the same as that used in Spanish Income Tax legislation and presupposes time having been spent living in the property. 

The classification of a property as the family home will be assisted throughthe presentation of supporting evidence such as tax returns with the property listed as the habitual address of the taxpayer.

This exemption applies equally to a spouse, children and parents of the deceased at a rate of 95% of the value of their inherited portion of the property up to a maximum value of €122,606.47 each. An important proviso exists in that the property may not be sold for a period of 10 years after the inheritance.

Other relatives further removed, may also benefit from this exemption but must have been living with the deceased in the property for a period of at least two years prior to the date of death. 

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