Pete54321

I'm from the UK and have been teaching in Madrid this year and will do for the foreseeable future. If my mother died in the UK and left me, say £100,000, would I technically be liable to pay inheritance tax to the Spanish authorities?

Thanks in advance

Fred James

As you are tax resident in Spain, you are liable to pay IHT on any inheritance similar to the way your worldwide income is taxed. There are huge regional differences and in some regions you would not pay.

Luckily Madrid is one of those regions. You get a 99% exemption and the remainder would be covered by the normal state allowances

Rosemary

Hi and a warm welcome to the Spanish forum on BE. Myself and Fred James are the moderators for the Spanish forums whilst BEVS moderates Europe. Moderators are there to ensure that the site runs smoothly within the rules of BE. This is so that members gain the information that they are looking for and find their experiences on the forums to be friendly and worthwhile.

Problems and complaints should always be addressed to a moderator who will look into the matter and deal with it efficiently and fairly. Our members who post in the Spain Forums are usually friendly and helpful with a wealth of knowledge about the issues of living in Spain. I hope that you enjoy your time participating in the forums.

Please let me know if you need any further help.

Rosemary

Pete54321

Thanks very much. Do you happen to know the limit/scale of IHT exemption in Madrid?

Fred James

The 99% allowance only applies to Group 1 and 2 beneficiaries (spouses, ascendants and descendants) there is no upper limit to the exemption.

Mustard

I believe the 99% Madrid 'bonificación' only applies to inheritances from EU member states and has been reluctantly accepted by Hacienda. Brexit may give them the excuse not to apply it.

If you revert to State allowances I think that a child of the deceased has an allowance of 15,000€ before tax kicks in.

VEDShappy

Anyone know what the figures would be for the same notional £100,000 but in Valencia?

Thanks

lurchio

Believe you are right, we have just sorted an inheritance as tax residents in Andalucia. Looking at the rules, you have to inherit from another EU citizen to claim the 175k exemption limit.Other than that, as you said, 'National' rules apply, which was about 16k before the IHT kicked in. Also relevant was your' relationship' to the deceased as already mentioned.

Fred James

I can't find anything online to confirm that, so if you have a link I would like to see it. What has changed recently is that non residents now get the same allowances as residents, but they must themselves be EU citizens.

The changes seem to apply to the beneficiary, not to the source of the inheritance.

There is a great opportunity for confusion here!

CapnBilly

Setting aside that the allowances in Andalucia changed at the start of January ( now 100% relief upto €250,000 for Group 1/2 beneficiaries, and €200,000 if inheritance is more than €250,000 but less than €350,000), the state tax legislation for inheritance was amended wef 1st January 2015 and says (paraphrased)

- if the deceased was resident in a member state of the EEA, a resident beneficiary in Spain receives

i) the tax allowances of the AC where the majority of the assets of the deceased are located:
ii) If there are no assets in Spain, the allowances of the AC where the beneficiary lives.

- if the deceased was tax resident in Spain and the beneficiary is resident in a member state of the EEA
resident, then they receive :
i) The regional tax allowances where the deceased lived.

On this basis there is no excuse not to apply these rules whilst the UK is still a member of the EU. However, unless there is a separate agreement with Spain and/or the EU, then it will all revert to the old rules the day after the UK ceases to be a member of the EU. This means state allowances for non-residents in respect of Spanish assets, and residents in respect of UK assets.

lurchio

Both,


Our example was as in (ii) above, the deceased was in the UK (EEA) and held no assets in Spain and we were tax residents in Spain (Andalucía). I believe at that time, the allowance was 175,000 (My wife was 'Group1') but we were no where near that anyway.


My understanding was / is as the good Captain said.


Not relevant to todays question, but Spain lost in the European Court and had to treat every European the same, not discriminate as to whether they were resident in Spain or not. Again, not wishing to grind the Brexit axe but as you say after Brexit it could change.

Fred James

Thanks for clarifying that Cap'n. Another reason why Brexit is bad for UK expats!

lurchio

Don't start!!!! Only reason I answered this as a 'lay person' was that the OP circumstances would be the same in the event as ours, so trying to help as we had 'been there' only last year.