Residents and non-residents inheriting or donating property in Spain used to be treated differently when it came to tax. However, following pressure from the European Commission, a modified law was passed on 28 November 2014. This brought to an end the tax discrimination there had been against non-residents living in the European Union with property in Spain. More good news was to follow. Inheritance and gift tax is governed by the regulations of each autonomous region, such as Murcia, Valencia and Andalusia. Some of these regions have now increased the tax allowances that exist for those inheriting or receiving donated property. The combination of these two developments means that in numerous autonomous regions, non-residents with property in Spain have a greatly reduced amount of inheritance or gift tax to pay. In some cases there is now nothing to pay at all. However, a tax declaration will still need to be presented.
Andalusia is a recent example of a region in which allowances for inheritance tax have been significantly increased. From 1 January 2018 the tax threshold for close relatives with property in Andalusia has been raised to one million euros. Previously the ceiling after which you must pay inheritance tax was €250,000. In other words, if you are inheriting assets worth under €1,000,000 you will have no tax to pay at all.
The region of Murcia is another area where the tax between close relatives has almost been eliminated in 2018. There has been a reduction of 99% in the final tax to pay for both inheritance and gift tax. Both Murcia and Andalusia have followed the example already set by the Valencian Community.
Of course, each case is different and it is important to take individual advice. The inheritance and gift tax must be calculated in each case taking account of the region and the relationships between the parties involved. However, generally speaking, the outlook is promising for those inheriting or receiving donations.