One of the legal matters that has changed the least in Spain over the past decades is that concerning inheritance, even more so in the case of the Spanish rules of international private law regarding the law applicable to the inheritance of foreigners owning property in Spain. Despite this, the false myths and platitudes commonly heard “on the street” have not changed even where these are false and are constantly repeated and refuted. For this reason, we will now go through some of these false myths or platitudes which, for no apparent reason, would seem to have become truth in colloquial conversations among foreigners who come to Spain. My replies to these questions are general and may obviously vary where applied to specific cases in respect of details which we cannot take into consideration in this article.
A preliminary note, however: while whether or not a person is resident in Spain, whether or not they are foreign, is the most important factor when it comes to complying with fiscal obligations, a person’s country’s legislation, i.e. their personal law, is the most important factor in regulating the inheritance of foreigners owning property in Spain.
– A compatriot who has been in Spain for many years has told me that, as a foreign citizen, if I fail to execute a Will in Spain then ownership of my property and assets here will be transferred to the Spanish State and my possible heirs will have no right to them upon my death”.
This is almost in every case the first question lawyers are asked by foreign citizens with regard to their assets in Spain and, however many times we may deny it, such a false statement seems to endure in every informal conversation held by foreigners on the matter.
It is advisable to execute a Will in Spain for the reasons we will mention below, but it is not mandatory and the lack of a Spanish Will does not normally involve any entitlement on the part of the Spanish State to the assets.
The inheritance of a foreign citizen’s property in Spain is governed by their national law, i.e. the law that determines the inheritance rights of a deceased foreigner’s estate is the law of their own country of nationality (the country of the deceased person, not that of their heirs or beneficiaries).
The provisions of the deceased’s national law with regard to their estate will have to be observed both in executing a Will in Spain and in distributing such a estate among the persons determined by the said national law.
– A compatriot who has been in Spain for many years has told me that I must execute a Will in my country comprising all my estate and another Will in Spain comprising the estate situated here.
This is under no circumstance true, either. As mentioned above, executing a Will in Spain with regard to the property and assets located here is appropriate, advisable and will make things much easier, but it is not mandatory.
– A compatriot who has been in Spain for many years has told me that a Will executed in my country is not applicable to any of my property situated here.
Again, this is untrue. A Will executed in your country may regulate the inheritance of your assets in Spain on a general basis (e.g. where reference is made to “all my estate” – in general – or to “all my estate wheresoever situated”) or on a specific basis (my estate or the portion of my estate situated in Spain I leave to my children, my wife, my friend, etc).
Such testamentary provisions are valid if they do not contravene the law of the testator’s country. For example, if the law of the testator’s country allows him freely to designate his heirs but reserves a certain part of the estate for the children, spouse, etc, then the Will relating to the estate located in Spain may not contravene such a reservation or it will otherwise not be valid as far as the contravening section of the Will goes.
– A compatriot who has been in Spain for many years has told me that if I have not executed a Will in this country then the inheritance tax will be much higher.
This is also untrue.- Executing a Will in Spain has no relation to the inheritance tax payable in Spain. The tax will be higher or lower or, in other words, there will be more or less deductions, depending not on the testator’s nationality (which would be in contravention of European non-discrimination laws) but, fundamentally, on the basis of residency criteria.
– A compatriot who has been in Spain for many years has told me that the Inheritance Tax is higher for foreigners than it is for the Spanish.
Again untrue. The amount of this Tax will vary considerably depending on whether or not the foreigner (just as the Spaniard) is resident in Spain.
The amount of this tax will change a lot depending on whether the heir is a child or descendant below or above 21 years of age, on the value of the house which constitutes their habitual place of residence (not a second residence), on whether they are the spouse, parent or ascendant, brother or nephew or a third party with no “legal” relationship (e.g. a sentimental partner without any legal relationship). But this, like I say, refers to “residency” criteria, not to the resident’s nationality, whether they are Spanish or foreign.
– A compatriot who has been in Spain for many years has told me that property located in certain regions is liable for a much higher tax that that located in others.
This is neither entirely true nor entirely untrue.
In general, the Inheritance Tax has a common part for the whole of Spain, but the specific laws of each Autonomous Community also play a part, and these apply different surcharges and, in other cases, very substantial deductions.
Generally speaking we can say that this is totally true for non-residents, but it depends above all else on residency criteria and on the degree of kinship with the deceased.
If you are not resident in Spain, the Spanish State’s general regulations shall apply.
If you are resident, however, the general regulations shall apply and so shall the specific regulations of the Autonomous Community (region) where you reside, regardless of the part of Spain in which the property and assets are located.
– A compatriot who has been in Spain for many years has told me that it is best to execute a Will in Spain in respect of the property and assets located in Spain.
True. While we said above that the Will must be in accordance with the testator’s national law or, in other words, not contrary to the testator’s national law, it must also be taken into account that in order for the heirs to take possession of, or acquire valid title in Spain to, the estate, or for any real property to be registered at the Land Registry, or for title to shares, bonds, deposits, etc to be duly transferred, the required documents will need to be executed in Spain or abroad according to the legal precepts serving the purpose according to Spanish Law.
And the first document will be the Will, whose validity in Spain will need to be proved if executed abroad according to the law of the place of execution, according to the testator’s national law if not the same, and in any case legalised in any manner admitted in Law for it to be applicable in Spain. Most of this work will not be necessary if a Will is executed in Spain with regard to the property and assets located in Spain only, which on the other hand comes at a minimum cost.
– A compatriot who has been in Spain for many years has told me that…
Well, let’s leave it for some other day and we will talk about what happens if the children in whom the estate is to be vested are minors, if there are any trustees, what happens when the children come of age or reach the age required by the testator for the beneficiaries to take possession of the estate, what if…