Once we have tried to give an answer to the regulations governing Inheritance Tax in Spain and who is subject to this tax depending on various personal and territorial criteria, we will continue to unravel the essential elements affecting Inheritance Tax such as the value of the assets of the inheritance in Spain. Let’s continue:
The Taxable Base of Inheritance Tax in Spain:
Spanish tax legislation establishes certain concepts common to the different taxes and duties. One of these concepts is what we call the Taxable Base, which in Inheritance Tax would be the net value of the assets and rights to be distributed to each individual beneficiary.
Before determining the individual net value that would correspond to each heir or legatee, we must determine the total amount of the assets, rights and obligations that form part of the inheritance in Spain of the deceased, to be distributed later.
Thus, Article 659 of the Spanish Civil Code establishes that “inheritance comprises all the assets, rights and obligations of a person, which are extinguished by his death”.This estate, or gross estate of a person after death, is made up of goods and rights (which would be the assets) but also of burdens and obligations (which would be the liabilities).
What assets form part of the gross estate (assets of an inheritance in Spain)?
Generally speaking, and merely for the purpose of giving an idea to our readers, among the assets and rights that may form part of the estate of a deceased person, we can cite the following:
- Movable assets of special significance. Here we can find assets that due to their special significance or value must be brought to the estate, such as jewellery, watches, works of art, which must be valued according to market criteria, i.e. what value these assets have on the market. Sometimes it is necessary to call in experts or appraisers to determine the value of these assets, which should be brought to the estate in Spain and quantified in order to avoid problems or “forgetfulness” in the future.
- Other movable assets: shares, company shares, hire purchase, financial leases.
- Real Estate. Normally, real estate in Spain is registered in the Property Registers where it is located. Information about the real estate of the deceased can be obtained from the Land Registry books. It is possible that the real estate is not registered in the Land Registry. In these cases it will be necessary to use other means of proof to confirm that the deceased was the owner of the property (private contracts, deeds, supply contracts, etc.)
From the value of the real estate in Spain (whether it is determined by its market value or its tax value, according to certain criteria established by tax regulations to determine its tax value), any encumbrances on the real estate (easements, censuses, pensions) must be deducted. Mortgages in Spain, however, should be treated as debts, from the point of view of inheritance tax in Spain, and not as encumbrances on the real estate.
4. Bank accounts in Spain and financial assets. We will have to go to the banks where the deceased had open accounts and other financial products (deposits, instalments, shares, stocks and shares, etc.) and request certificates of the existing balances in the account on the date of death.
5. Vehicles. We will have to bring to the inheritance the vehicles owned by the deceased. We can consult the Registers of the Directorate General of Traffic to find out which vehicles are in the name of the deceased.
6. Life insurance in Spain. It should be borne in mind that the amounts received from a life insurance policy in Spain never formed part of the assets held by the deceased at the date of death, and therefore, in principle, they cannot be included in the estate or assets of the inheritance. However, the beneficiary of a life insurance policy, other than the deceased, must pay inheritance tax on the amounts received. If, in addition, the beneficiary is an heir, the amounts received from the life insurance will be added to the value of the assets and rights that form part of his or her percentage of the inheritance.
In legal and tax terms, the sum of all the assets of the inheritance is known as the “relict estate”. To the relict estate we must add the “household goods” and “additional assets”, which we will see in future posts of our blog.
From Welex we invite you to contact our lawyers specialised in inheritance in Spain with any doubts or queries you may have. In addition, we invite you to read our previous posts if you wish to obtain more information about Inheritance Tax in Spain.
Although our law firm in Marbella does not wish to give our readers false expectations, we pretend to solve in the below mentioned text doubts that Inheritance Tax in Andalusia may entail.
However, its a pleasure to explain in the following lines a general summary when it comes to Inheritance Tax in the Autonomous Community of Andalusia (Spain).
Introduction: Who pays inheritance tax in Andalusia, Spain?
In general terms, Inheritance Tax in Spain is payable in the Autonomous Community where the deceased had his or her habitual residence.
What do we mean by habitual residence for Inheritance Tax in Spain purposes?
I am a legitimate heir or I have been named as heir in a will, but am I obliged to accept an inheritance in Spain?