Did you know that thousands of inheritances are rejected every year in Spain? Between January and June 2021, nearly 28,000 inheritances were formally renounced, representing approximately 15.4% of the total. The most common reasons include:
- The existence of debts exceeding the value of the inherited assets.
- The obligation to pay Spanish Inheritance Tax without sufficient liquidity.
However, before renouncing an inheritance, it is essential to analyse the legal options available, including the possibility of extending or deferring the tax payment.
Deadline to pay Spanish Inheritance Tax
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Inheritance Tax accrues:
- On the date of death of the deceased, or
- When the declaration of death becomes legally final.
From that moment, heirs have a general deadline of six months to file the tax return with the competent Regional Tax Authority.
Possibility of extending or deferring Inheritance Tax
Heirs may request a six-month extension of the original deadline. The request must be submitted within the first five months following the date of death. It must include the death certificate, identification details of all heirs, the reasons justifying the request and an approximate valuation of the estate. This valuation is indicative and may differ from the final declared value.
Administrative silence is considered positive. If the Tax Authorities do not respond within one month, the extension is deemed granted. If the request is rejected, the filing deadline is extended by the number of days elapsed between the submission of the request and the notification of the refusal.
Deferral of payment
Where heirs cannot meet the tax liability due to lack of liquidity. For example, when the estate consists mainly of real estate assets, it is possible to request a deferral of payment.
Depending on the Autonomous Community, a deferral of one or two years may be granted. In certain circumstances, the deferral may be extended up to five years.
For shorter deferrals, no guarantees are generally required, although late-payment interest will accrue. For longer deferrals, the Tax Authorities may require guarantees covering the tax due, accrued interest and an additional 25% of the total amount.
Suspension of filing deadlines
If probate litigation or testamentary proceedings are initiated, the filing deadline may be suspended until the judicial process concludes.
If the judicial procedure is initiated after the tax return has been filed on time, the administration may suspend the assessment until a final ruling is issued. If proceedings begin after the filing deadline has expired, the Tax Authorities may still require submission, without prejudice to potential penalties.
How is Inheritance Tax filed?
Spanish Inheritance Tax is filed using Form 650, which applies to acquisitions mortis causa, including inheritances, legacies and life insurance proceeds. Given the financial and legal implications involved, seeking specialised advice is strongly recommended when filing the tax return or requesting an extension, deferral or suspension.
