Spanish Inheritance Tax for non-residents

The Spanish National Inheritance and Donations Tax is regulated under a National Law. But the 17 autonomous regions (called Autonomous Communities such as Asturias, Madrid, Andalucía, etc.) are also able to create their own Regional Laws, including tax benefits for their residents.

Non-Spanish residents used to be compelled to apply the National Law, including less tax benefits for the closest relatives, compared to the 17 Regional Laws.

I.E.: The Region of Asturias increased the National reduction for the group of relatives including husband/wife, ascendants and descendants older than 21 years, from the 15.956,87€ (National) to the amount of 300.000€ (Asturias).

In 2014 the European Court of Justice gave judgement to this un-fair situation, and said that the treatment given to Non-Spanish residents, not allowing them to apply the Regional tax laws, is unlawful and discriminatory, and do not respect the free movement of capital. Therefore, the European Court forced the Spanish Government to change the rules.

Spanish tax authorities didn´t comply correctly the sentence. Since the 1st of January 2015, Non-Spanish UE residents are able to apply the nearest regional legislation, on the contrary, Non-Spanish and Non-UE residents, according the current Law, should pay their inheritance and gifts tax under the National Law.

In this background, some Non-Spanish and Non-UE residents who paid an extra Inheritance Tax because they had declared under the National Law, decided to appeal to the Spanish Supreme Court. And since the beginning of 2018 this authority has issued a number of rulings, following the European Court of Justice doctrine, considering unfair and discriminatory the treatment to Non-UE residents. And, what is more important in these cases, condemning the Estate to refund these specific tax payers the contributions paid in excess.

As a result, those Non-UE residents contributors who had paid an extra tax in the last four years, are able to request the Spanish Tax Administration the refund of the contributions paid in excess.

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