The taxation of inheritances received from abroad in Spain is a matter that raises doubts among tax residents in the country. The regulations establish that international inheritances are subject to the Inheritance and Gift Tax (ISD), but its application varies depending on the autonomous community and the existence of double taxation agreements.
Who must pay taxes in Spain for an inheritance received from abroad?
Tax residents in Spain are required to declare and pay the Inheritance and Gift Tax for inherited assets, regardless of the country in which they are located. This principle is based on the personal obligation to pay taxes, meaning that any inheritance received abroad must be declared in Spain.
In the case of non-residents, taxation only applies to assets located in Spain, so they will not have to pay taxes in the country if the inheritance comes from assets located outside Spanish territory.
How is the Inheritance Tax calculated for international inheritances?
The Inheritance and Gift Tax is regulated at the regional level, which means that each autonomous community can establish reductions and allowances that directly affect the final amount payable. The taxable base is calculated by adding the value of the inherited assets and applying the corresponding regional and state reductions.
The main variables that determine the tax are:
- Relationship with the deceased. Direct family members (descendants, ascendants, and spouses) usually benefit from significant allowances, while heirs without a family relationship are taxed at higher rates.
- Value of the inheritance. The higher the value of the inherited assets, the greater the tax payable.
- Residence of the deceased and the heir. If the deceased resided in a country with a double taxation agreement with Spain, deductions for taxes paid abroad may apply.
Can the tax paid abroad be deducted?
When an inheritance is received abroad and local tax has been paid in the country of origin, it is possible to apply a deduction in Spain. However, this depends on the existence of double taxation agreements between the two countries.
If there is no specific agreement, Spanish regulations allow for the deduction of the tax paid abroad, as long as it is properly documented. This deduction is applied within the calculation of the Inheritance Tax in Spain and prevents double taxation.
Additional tax obligations: Form 720
Residents in Spain who receive an inheritance with assets abroad worth more than €50,000 are required to submit Form 720. This form is an informative declaration of assets located outside the country, and failure to submit it can result in significant penalties.
Form 720 does not involve the payment of an additional tax, but its submission is mandatory to comply with fiscal transparency regulations.
Deadlines and procedure for declaring an international inheritance in Spain
The deadline to settle the Inheritance and Gift Tax in Spain is six months from the date of the deceased’s death. However, an extension of another six months can be requested before the original deadline expires.
The following documentation is required to submit the declaration:
- Death certificate
- Will or declaration of heirs
- Certificate of last wills
- Property deeds or documents proving ownership of the inherited assets
- Proof of tax payment in the country of origin (if applicable)
- Form 650 or 660, depending on the autonomous community
Conclusion on how inheritances received from abroad are taxed in Spain
Inheritances received from abroad are subject to the Inheritance and Gift Tax in Spain. Taxation depends on the autonomous community, the family relationship, and the existence of international agreements that avoid double taxation. In addition, if the inheritance exceeds €50,000 in assets located outside Spain, it is mandatory to file Form 720.
Since each case can present particularities, having specialized tax advice is essential to avoid penalties and optimize the tax burden. At Lextax, we offer a comprehensive service to efficiently manage international inheritances and ensure compliance with Spanish tax regulations.
Frequently asked questions about how to declare an inheritance received from abroad in Spain
Do I have to pay taxes in Spain if I inherit assets abroad?
Yes, if you are a tax resident in Spain, you are required to pay taxes on the inheritance received abroad through the Inheritance and Gift Tax (ISD), even if the assets are not in Spain.
How can I avoid double taxation on international inheritances?
If you have paid taxes in the country where the inheritance is located, you can deduct them in Spain if a Double Taxation Agreement exists or if Spanish legislation allows it.
Do I have to declare inherited assets abroad in Form 720?
Yes, if the total value of the inherited assets outside Spain exceeds €50,000, it is mandatory to submit Form 720 to inform the Spanish Tax Agency.
What happens if I don’t declare the inheritance received from abroad?
Non-compliance may result in penalties from the Tax Agency, including fines and surcharges, as well as the obligation to regularize the tax situation with interest on arrears.