Some of the most common doubts related to international inheritances are the following: What happens if a foreigner dies in Spain? Which law applies? Where are the taxes paid? Can a foreigner make a will in Spain? In this article, we focus on the inheritances of foreigners in Spain to address the main questions raised by this situation.
Which law applies to foreigners who pass away in Spain?
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Many foreigners retire, decide to move to Spain, and later pass away in our country. At that moment, the question arises as to whether Spanish law, the law of the deceased’s country of origin, or the law of the place where the assets are located applies to the inheritance. To resolve this matter, the European Union approved Regulation No. 640/2012 of the European Parliament and of the Council, which establishes the following in Article 21:
- Unless otherwise specified in this Regulation, the law applicable to the entire succession shall be that of the State in which the deceased had his habitual residence at the time of death.
- If, exceptionally, it is clearly evident from all the circumstances of the case that, at the time of death, the deceased had a manifestly closer connection with a State other than the State whose law would be applicable in accordance with paragraph 1, the law applicable to the succession shall be that of that other State.
Additionally, Article 22 of the mentioned Regulation regulates the possibility of choosing the law applicable to the succession:
- Any person may designate the law of the State of which they have nationality at the time of making the choice or at the time of death.
Therefore, if the foreigner who passes away in Spain, where they have resided habitually, wants Spanish succession law to apply, they don’t need to do anything. However, if they want the law of their nationality country to apply, they must make a will and establish their will in that direction.
What does the applicable law affect in the inheritance?
The choice of the law applicable to the inheritance has consequences on important aspects such as:
- The cause, the moment, and the place of the opening of the succession.
- The determination of beneficiaries and their corresponding share of the inheritance.
- The capacity to inherit.
- Conditions for accepting or renouncing the inheritance.
- The heirs’ powers to transfer assets or pay creditors.
- Liability for debts and charges of the inheritance.
- The portion of the inheritance available for free disposal.
- The obligation to include or exclude lifetime donations.
- The partition of the inheritance.
What should a foreigner consider when making a will in Spain?
The aforementioned Regulation establishes that the will made by the foreigner who dies in Spain (resident in our country) must comply with the formalities of the country of their habitual residence (in this case, Spain) or the country of their nationality.
It may happen that the testator has assets in several countries (in Spain and in their country of origin) and their heirs are outside of Spain. In these cases, it is advisable to seek advice from a lawyer specialized in international inheritances to determine which regulations are more favorable and can simplify the heirs’ procedures.
What documents are necessary to process the inheritance of a foreign resident in Spain?
As a general rule, the following documentation must be obtained in these cases:
- Death certificate.
- Certificate of last wills.
- Copy of the will.
- Documents related to the deceased’s assets and debts (insurance, mortgages, loans, deeds of real estate, stocks, bank account certificates, etc.).
Where should the inheritance tax be paid for a foreign resident?
If the heir(s) of the foreigner do not reside in Spain, they must pay the inheritance tax in Spain. The tax is calculated as a percentage applied to the amount of the inheritance. It is essential to consider that the inheritance tax in Spain is ceded to some autonomous communities, so the taxation may vary significantly from one to another, and it is important to be aware of the available tax reductions. You can find more information about Inheritance and Donations Tax by region through the following entry.
The assistance of a team of lawyers specialized in tax advice and international inheritances is crucial to quickly gather all the necessary documentation so that the heirs can receive the inheritance as soon as possible and pay the corresponding inheritance taxes, thus avoiding penalties or surcharges.