Inheritors at different levels

It comes as a surprise to some people. Not only is inheritance tax applied in Spain but inheritors are taxed at different levels. There are two major factors which influence the amount of Spanish inheritance tax you must pay:

1.    the relationship the inheritors have to the deceased
2.    whether they are resident or non-resident

There are four levels which relationships are categorised into:

Group 1: children and grandchildren under the age of 21(including adopted children)
Group 2: children and grandchildren (including those adopted) over the age of 21, spouses and parents
Group 3: brothers, sisters, uncles, aunts, cousins, parents-in-law, daughter/ son-in-law
Group 4: anyone else, including non-married partners

The group your inheritor is in affects the amount of the allowance he/ she is entitled to before inheritance tax is calculated. So, for example, if you are in Group 2 you can expect an allowance of €15,956.87 if you are non-resident or 40,000€ for residents.

The reason for distinguishing between Groups 1 and 2 is that there is a graduated threshold for Spanish inheritance tax payments for children and grandchildren under the age of 21. For every year that a child is under the age of 21 they receive an additional €3,990.72 for non-residents and 8,000€for residents up to a maximum allowance of €47,858.59/ 96,000€ respectively.

The exact amount of the allowance does vary between different parts of Spain. But the principles remain the same. What often comes as a surprise is that non-married partners, even within a civil partnership, are only classed at group 4. However, some areas of Spain do recognise non-married resident partners in the same way as if they were married. For example, if you live in the province of Murcia a non-married partner is classed as a spouse but not in the Valencian Community.

If you are a non-resident only the national rates apply meaning that it doesn’t matter where the house is located, Murcia or Torrevieja, if you’re not married you will not receive an allowance.

The following table identifies the threshold allowance levels according to the different relationships and according to whether you are resident or non-resident. 

Group	Resident	Non-resident
1. Descendent below the age of 21 (includes children and grandchildren)	40,000€ with an additional 8,000€ for every year they are under 21 to a maximum of 96,000€	15,956.87€ with an additional 8,000€ for every year they are under 21 to a maximum of 47,858.59€
2. Grandchildren and children older than 21, parents, spouse	40,000€	15,956.87€
3. Sisters, brothers, aunts/ uncles, nephews/ nieces and parents in law	7,993.46€	7,993.46€
4. others	No allowance applies	No allowance applies

Each case is different and there are additional complications. For example, if the deceased is resident and leaves property to a non-resident the full allowance applies provided the property isn’t sold for another ten years. If it is, then the non-resident allowance applies instead and the difference between the two must be paid.

Is all that clear? Probably not. Inheritance tax is complicated and individual circumstances need to be assessed separately.  ÁbacoInheritance includes a will-making service that will help you establish how much inheritors will have to pay and what the best arrangement for you and them is. Our inheritance experts also offer a free estimated calculation of what the inheritance tax payable might be. A little forward planning can make a big difference.