Having bought your property in Spain, you should now start considering what will happen to it in the event of your untimely death.
The Spanish Laws on Inheritance state that, for NON-RESIDENTS on your death, your property will be shared among the heirs as per the law of the country from which you originate, i.e. German Law for German nationality, British Law for British nationality. Most European nationalities, with the exception of the British, should therefore be warned that, as per their country´s Laws of Inheritance, the children have an automatic right to a part of the Estate on your death, even if they are not expressly mentioned in your Last Will and Testament. If, however, they do not wish to claim their legal share of the Inheritance, the children must, on your death, ‘renounce’ their right in front of a Spanish Notary, and the property will then be shared among whomever you may have designated in your Last Will and Testament.
British owners should also note that, although Spanish Law states that British Law applies in the event of your death, British Law then throws the ball back and states that it is the Law in the country where the property is situated, i.e. Spain, which determines the legal heirs. Spanish Notaries, however, generally practice the application of British Laws of Inheritance in such matters.
For RESIDENTS, Spanish Law now states that SPANISH LAW will be applied to determine the heirs to the property. Spanish Law of succession states that the children must inherit 66% of the estate on your death. This means you cannot leave the property to your spouse. To avoid any misunderstandings and to hasten the legal procedure after death it is, therefore, advisable for most people to prepare a Spanish Will and Testament, relating to their property here in Spain and to state that they wish their NATIONAL LAW to be applied in the event of their death. This can easily be prepared by your Fiscal Representative, who will then make an appointment at the Notary Office for you. Separate Testaments must be prepared (Spain does not accept joint Wills) and the approximate costs for the Notary are 90.00 Euros per Testament.
On the unfortunate death of any of the property owners, the remaining heir(s) must collect together a number of papers to claim the inheritance, the Escritura for the Acceptance of the Inheritance must be signed and handed in to the Property Register and taxes paid – all within 6 months of the date of death.
The papers required are:
Once all the documents are assembled you, and any other heirs, must then sign the official Escritura accepting (or renouncing) the Inheritance in front of the Spanish Notary. The value to be declared should be the approximate market value of the property or asset – too low a value will incur later penalties from the Tax Office.
Based on the value declared in the Escritura, a self-declaration of the Inheritance Tax must be prepared and the amount paid within the 6 months allocated after the date of death.
As per the new European Law, if the heir(s) is RESIDENT or NON-RESIDENT in the Generalitat of Valencia when the direct relative (parent/child/spouse) dies, then a 75% reduction will be applied to the Inheritance Tax payable.
The amount of tax payable depends, mainly, on 2 factors: a) the relationship of the heirs to the deceased and b) the value declared.
Those heirs who are directly related to the deceased will each receive a tax free amount of 100.000 Euros.
This category includes:
Husband/Wife: Children/Grandchildren Parents/Grandparents
After presenting the Escritura and Tax Declaration to the Property Register and Tax Office, they will then check the validity and calculations. If they deem anything to be incorrect (i.e. papers missing, value too low etc.) you or your representative will be notified by post so that you may appeal against their judgement.
One final point to note is that, according to Spanish Law, should you ‘forget’ or be unable to claim your inheritance until after 4.5 years have elapsed since the date of death, then the Inheritance Tax is ‘proscribed’ and is no longer due. You may then claim your inheritance without paying any tax (you will still, of course, have to pay the Notary Fees – approx. 1.000 Euros; the Property Register Fees – approx. 300 Euros and the Plus Valia Tax to the Town Hall).
This “option” should, however, be considered very carefully as you would not be able to sell the property during this 4.5 years ‘waiting time’ while the property is still in the name of the deceased person. You would first have to accept the Inheritance as explained above and change the title of the property into your name, which would incur substantial tax penalties and interest charges for late payment of the tax payable.
For those people considering handing over the property as a gift to someone else during their lifetime, in order to try and avoid liability to Inheritance Tax, you should bear in mind that the Amount of Gift Tax payable by the person receiving the gift is the same as Inheritance Tax (see table above) but with NO FREE ALLOWANCE.
NOTE: An APOSTILLE is a Certificate prepared to confirm the signature on any legal documents required in a country other than its country of origin. Normally, the Foreign Office in your country of origin will be able to assist in the preparation of this Certificate.