So
if an estate is valued at €63,82.48
and is left equally divided among the spouse
and three children, each will receive €15,956.87
and there will be no tax.
2. In addition,
an inheritor in direct line of descent (children,
including adopted children, and grandchildren)
under the age of 21 have an exemption of
up to €47,858.87, depending on their
age.
3. There is no
exemption for people who are not
related or are related very distantly to
the deceased. Moreover, those who are related
but not closely, such as cousins, nephews
and nieces, have a lower exemption of €7,993.46.
4. Your house
would be virtually exempt from Spanish inheritance
tax if the following conditions are met:
The deceased was a tax resident of Spain
The beneficiaries are either the spouse
or children or relative over 65 years of
age, and they have lived with the deceased
for the two years before death
The inheritors continue to own the property
for 10 years from the date of death
Assuming these conditions are all met, the
value of the house is reduced by 95% in
calculating the tax base liable to the succession
tax. It is not a reduction of the tax payable,
but a reduction in the taxable base. The
maximum reduction is €122,606.47 for
each inheritor. The exemption is only against
the home (and can be applied to shares in
a family business), but does not apply to
investments or second homes.
5. Divorce usually
avoids gift tax
6. A 95% reduction
in inheritance and gift tax liabilities
on family businesses. The business must
be kept for 10 years following the death
of the individual.
Overseas
Taxes on Gifts or Inheritances
Where an overseas gift or inheritance tax
is actually paid, this overseas tax is deductible
against any Spanish tax liability. This
is a general rule. However, if the overseas
tax rate is higher than the Spanish rate
the Spanish authorities will not provide
a refund of the difference.
Common
Law Spouse
Spanish law does not recognise a common
law spouse. They have no standard allowance,
and are taxed at the highest rate on inheritances
(double the rates which apply for a spouse)
as they are treated as non-relatives.
Similarly, under UK inheritance tax law,
the spouse exemption does not apply. Sometimes,
the best and simplest advice that can be
given in these circumstances is to consider
marriage.
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