Inheritance and gift tax in Spain: what is it and how does inheritance and gift tax work in Spain?
Most European countries levy inheritance and gift taxes. Spain is no different.
Spain has a specific inheritance and gift tax: “Impuesto sobre Sucesiones y Donaciones”.
Those who intend to or do own property or trade in Spain, or are about to receive a donation within Spain, will have to pay attention to this tax, as well as worrying about the IRPF (“Impuesto sobre la renta de las personas físicas”).
Before going into inheritance and gift tax itself, we should briefly explain tax residency.
What is Tax Residency?
Tax residence is nothing more than the place where an individual carries out their vital economic activities. This place can be their fixed residence or their habitual residence.
Digital nomads do not have a fixed residence, but they do have a habitual residence. Therefore, the assertion that, because they have no fixed abode, they don't have to declare their taxes anywhere is false.
It doesn't matter if the digital nomad travels every 3 months, every month or every week, everyone in the world will have a tax residence somewhere.
If you declare taxes for two countries at the same time, you will have double tax residence, i.e. you will be subject to declaring and paying taxes for two countries at the same time.
Inheritance and Gift Tax in Spain
Inheritance and gift tax is regulated by Law 29/1987. Spain levies this tax in the following situations:
“1. Constituye el hecho imponible:
a) La adquisición de bienes y derechos por herencia, legado o cualquier otro título sucesorio.
b) La adquisición de bienes y derechos por donación o cualquier otro negocio jurídico a título gratuito, «intervivos».”
Literal translation:
"1) The taxable event constitutes:
a) The acquisition of goods and rights by inheritance, legacy or any other title of succession.
b) The acquisition of goods and rights by donation or any other legal transaction free of charge, "intervivos".
In Spain, Inheritance and Gift Tax is a national tax, i.e. a single rule applies to the whole of Spain.
However, there is an exception to this rule: competence for this tax can be transferred to the Autonomous Communities. In this case, each Autonomous Community will have its own rules on the rates and collection of this tax.
Let's look at the general table applied at national level:
Liquefiable base | Total quota | Remaining taxable income | Applicable type/rates |
Up to €0 | Up to €7.993,46 | 7,65% | |
Up to €7.993,46 | €611,50 | Up to €7.987,45 | 8,50% |
Up to €15.980,91 | €1.290,43 | Up to €7.987,45 | 9,35% |
Up to €23.968,36 | €2.037,26 | Up to €7.987,45 | 10,20% |
Up to €31.955,81 | €2.851,98 | Up to €7.987,45 | 11,05% |
Up to €39.943,26 | €3.734,59 | Up to €7.987,45 | 11,90% |
Up to €47.930,72 | €4.685,10 | Up to €7.987,45 | 12,75% |
Up to €55.918,17 | €5.703,50 | Up to €7.987,45 | 13,60% |
Up to €63.905,62 | €6.789,79 | Up to €7.987,45 | 14,45% |
Up to €71.893,07 | €7.943,98 | Up to €7.987,45 | 15,30% |
Up to €79.880,52 | €9.166,06 | Up to €39.877,15 | 16,15% |
Up to €119.757,67 | €15.606,22 | Up to €39.877,16 | 18,70% |
Up to €159.634,83 | €23.063,25 | Up to €79.754,30 | 21,25% |
Up to €239.389,13 | €40.011,04 | Up to €159.388,41 | 25,50% |
Up to €398.777,54 | €80.655,08 | Up to €398.777,54 | 29,75% |
Up to €797.555,08 | €199.291,40 | From now on | 34% |
You can see from the table that the rates, depending on income, can vary from 7.65% to 34%.
Remember: the criteria can change depending on the Autonomous Community, as the communities that levy this tax have their own tables.
It is therefore essential that those who own or wish to own property in Spain carry out proper tax planning.
If you are interested in hiring professional legal services related to tax planning, we are a law firm specialising in the subject. To do so, please contact us via WhatsApp or by e-mail: thyanipuppio@gmail.com
A Warning about Double Tax Residency
As mentioned above, individuals who have dual tax residency need to declare their taxes for two countries at the same time.
However, what few people realise is that when you are a tax resident in a particular country, the principle of universal income declaration prevails. In other words, taxpayers must declare all their income, regardless of its origin.
Generally, individuals have the habit of declaring income from their country of origin only in their country of origin, and income from Spain only in Spain. However, by failing to fulfil the duty to declare assets universally, the taxpayer commits a criminal offence: tax evasion.
Spain exchanges information on tax matters with various countries around the world. This exchange of information is carried out using artificial intelligence, which searches and cross-checks the data of its taxpayers in order to detect fraud.
In addition to the risk of being criminally liable for tax evasion and thus having your passport invalidated, the amounts evaded could be collected by the tax authorities, with interest and monetary correction.
Those whose passports are invalidated will not be able to leave the country and will automatically have their visas invalidated, as Spain requires individuals to have a valid passport in order to apply for and remain on visas. In other words: no passport, no visa.
Remember: tax evasion is not just a criminal offence in Spain.
If you are interested in hiring professional legal services to avoid double tax residency, tax evasion and double taxation, we are a law firm specialising in the subject and we can help you, just get in touch via email: thyanipuppio@gmail.com, or via WhatsApp.
