It is becoming increasingly common for donations and inheritances for which tax is payable in Spain to involve a person who is not resident in our country.
In other words, when a parent resident in Spain dies, with a son or daughter living abroad, or when a foreigner resident in Spain is the heir of a relative resident abroad.
Settlement of inheritance tax for non-resident heirs in Spain
European Union citizens residing in Spain who are subject to inheritance tax will be taxed in the same way as other Spanish citizens, thus eliminating tax discrimination with respect to European residents.
When the heir is resident in the EU, the inheritance regulations of the Autonomous Community of the deceased’s habitual residence may be applied, and under the conditions provided for by law regarding the establishment of the habitual residence and its supporting evidence.
In the case of assets abroad and residence in Spain
If the assets are all located outside Spain, and the heirs reside here, they are obliged to pay Spanish taxes under the corresponding regional regulations.
The law indicates that they can deduct what they have paid for the same concept in the foreign country.
Settlement of inheritance tax in cases of death of non-residents in Spain
In the case of the death of persons who do not reside in Spain, but who have assets in our country, the heir must pay the regional taxes of the place where most of the assets are located, regardless of whether or not he or she resides in Spain.
For practical purposes, in the event that the heirs do not have Spanish nationality or do not have a tax identification document, they must apply for a provisional tax identification number (CIF). Otherwise, they will not be able to settle inheritance tax through the State Tax Agency.
Inheritance and donations tax in Spain is applied to non-EU non-residents, with the allowances and reductions applicable in the corresponding Autonomous Communities, even though it is the responsibility of the State and is filed with the AEAT (Spanish Tax Agency). The Tax Administration has not modified the rule, although it admits the settlements with the corresponding allowances and reductions, otherwise the taxpayer would have to sue the Administration.
Currently, any non-resident in Spain who has paid Inheritance and donation Tax in accordance with state regulations instead of the regional regulations with which there is a connection point, which generally coincides with the residence of the deceased, can apply for a refund of the undue income within the four-year limitation period.
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