Calculation of inheritance tax in Spain: key information for heirs from Russia

Calculation of inheritance tax in Spain

Denis PerkovskyAn expert from the company "Second Home" explains in detail the process of calculating inheritance tax in Spain. The country attracts many foreign home buyers due to its pleasant climate, unique Spanish lifestyle, affordable real estate prices, and favorable conditions for obtaining residence permits. These advantages make inheritance tax issues particularly relevant for Russian citizens purchasing property in this country.

Legislation on inheritance tax in Spain

Inheritance and gift tax in Spain is regulated by Law 29/1987 of December 18, which establishes the basic principles of taxation, including the subjects and objects of taxation, the tax base, the amount of deductions and the conditions for their granting, as well as the procedure for calculating the rates. An important aspect is the tax residency of the testator and the heirs in Spain.

Taxation of heirs

Tax residents of Spain are required to pay inheritance tax on all inherited assets, regardless of their location. This means that an heir, for example from Russia, who has tax residency in Spain, will have to pay tax both in Spain and in Russia on the inherited assets. If the heir is a tax resident of another country, such as Russia, the tax is only levied on the assets located in Spain.

The amount of deductions and tax rates

The amount of deductions, discounts, and tax rates depends on the country of tax residency of the heir. Tax residents of Spain are also subject to the regional legislation of the autonomous community where the deceased lived.

Taxation of non-residents

Taxation of non-residents who inherit property in Spain is also regulated by legislation.

Through calculationsThe value of the inherited property for each heir will amount to €206,000. The taxable base is the net value of the property, taking into account the deductions provided by law 29/1987.

The first category of deductionsIt reduces the taxable base depending on the degree of kinship of the heirs. There are four groups of kinship that determine the deductions. In this case, we are dealing with heirs from the first and second groups.

Tax baseIt will decrease by €15,956.87 for the spouse of the deceased and the adult child (group 2). For the 16-year-old child (group 1), the deduction will amount to €35,910.47. After applying the deductions, the taxable base values will be: €170,089.53 for the 16-year-old child, €190,043.13 for the 25-year-old child and the spouse.

Deductions for disability are also provided for.from €47,858.59 to €150,253.03, depending on the disability group. depending on the disability group.

Inheritance tax in Germany

When inheriting property in Germany, the heir must pay inheritance tax. The amount of this tax depends on the value of the inherited property and the specific circumstances of the inheritance.

Tax calculation

Calculating the tax amount is not so simple, as a progressive tax scale is applied. It includes tax rates ranging from 7.65% to 34%, depending on the size of the taxable base.

Definition of the taxable base

To determine the taxable estate, you must subtract from the original valuation of the inherited property the following all deductions. Deductions may provide benefits for minor heirs or spouses.

Definition of the base range

It is also necessary to determine the range of the tax base. Depending on this range, the corresponding tax rate is applied.

Calculation of tax for an adult heir

In order to calculate the tax for an adult heir, you must subtract the value of the of the relevant band from the base and multiply it by the rate of that band. Then add up the rate values and multiply them by the relevant bases.

Individual calculation

Each heir should have a separate calculation of the inheritance tax conducted. Take into account all applicable deductions to avoid violations and penalties.

The exact amount of tax burden in the Russian system depends on the status of the heirs and the value of the inherited property.

The tax rate for a minor and an adult child

In the case of an inheritance to a minor child, the tax rate is 2.25%, while for an adult child and the testator's spouse it is 3.54%. while for an adult child and the testator's spouse the tax rate is 3.54%.

However, if we do not take into account the property deductions, the tax amount will change.

Change of tax depending on the conditions

For example, if the testator decides to sell the inherited property before the ten-year period is up, or if it is not the main asset of the inheritance, the tax will be calculated based on different base values.

For a minor heir, the taxable base will amount to €170,089.53, while for an adult child and the testator's spouse, it will be €190,043.13.

Calculation of tax burden

Calculating the final values, we get the following results: the tax for a 16-year-old child will be €25,284.87, while for a 25-year-old child and spouse it will be €29,525.01.

Comparing this data with the initial property valuation for each heir of €206,000, we get the actual tax rates: 14.86% for the minor child and 15.54% for the adult child and spouse.

Accounting for the multiplier in tax calculation

To calculate the final tax amount, a multiplier must be taken into account depending on the the value of the inherited property and the degree of kinship of the heirs.

In this case, the multiplier is equal to 1, so the tax values remain unchanged.

However, in some situations, the inheritance tax rate can reach 70% or even more, especially when inheriting expensive property.

The tax burden directly depends on the level of the heir's wealth, as well as the value of the inherited property.

The impact of property value on the amount of tax

The higher the value of the property, the higher the tax rate.

In the case of inheriting "wealthy" categories of property, such as secondary real estate, yachts, and jewelry, special tax benefits are not provided.

Inheritance taxation in Spain

Inheritance taxation in Spain is carefully regulated by legislation that defines the subjects and objects of taxation, the taxable base, the amounts and conditions for obtaining deductions, the principle for calculating the rate, and the procedure for taxing property inherited by foreigners. A tax resident of Spain is required to pay tax on property, even if it is located outside of Spain.

It is worth noting that inheritance tax depends on many factors, including the status of the tax resident and the location of the property. Therefore, before receiving an inheritance in Spain, it is important to familiarize yourself with the tax legislation in order to correctly calculate the tax and avoid unpleasant situations with the tax authorities.