Inheritance tax is the tax payable on the increase of wealth, obtained by reason of death. The Gift tax is levied on the increase of wealth, produced by reason of gift while the transferor is still living.

Acts submitted to the inheritance and gift tax: (a) assets and rights obtained by way of succession (b) assets and rights obtained by way of gift and (c) revenue from a life insurance policy (contractor party different person from the beneficiary).

Considering the mentioned situations, the person responsible for paying the tax will be: (a) the inheritors (b) the grantees and (c) the beneficiaries of the insurance policy.

Calculation of the basis of assessment:

# Transfer on death: value of the assets and liabilities at the time of death

# Gifts are assessed at their real value, deducted charges and liabilities

# Life insurances: the proceeds that the beneficiary obtains

The tax rates may differ from one Spanish region to another. The tax rates applicable are determined depending on the amount transferred to the beneficiary, the pre-existing wealth of the beneficiary and the beneficiary's relationship to the deceased.

The basis of assessment is legally reduced depending on the degree of consanguinity between the testator and transferee. The applicable reductions are:

CLASS	BENEFICIARY	REDUCTION
I	Descendants under 21 years	13,651.99 Euros + 3,413.75 until 21 years
II	Descendants over 21 years, wife and ascendants	13,651.99 Euros
III	Second and third degree collateral relatives, descendants or ascendants by affinity	6,827.50 Euros
IV	Fourth degree collateral relatives and other beneficiaries	No reduction

To the net taxable amount the following progressive table rate is applied to arrive at the gross tax payable.

BASIS UNTIL	TAX RATE	TAX PAYABLE	REST OF BASIS	TAX RATE
6,824.94 Euros	7.65%	522.11 Euros	6,824.94 Euros	8.5%
13,649.89 Euros	8.08%	1,102.23 Euros	6,824.94 Euros	9.35%
20,474.83 Euros	8.5%	1,740.36 Euros	6,824.94 Euros	10.2%
27,299.77 Euros	8.93%	2,436.50 Euros	6,824.94 Euros	11.05%
34,124.72 Euros	9.35%	3,190.66 Euros	6,824.94 Euros	11.9%
40,949.66 Euros	9.78%	4,002.83 Euros	6,824.94 Euros	12.75%
47,774.60 Euros	10.2%	4,873.01 Euros	6,824.94 Euros	13.6%
54,599.55 Euros	10.63%	5,801.20 Euros	6,824.94 Euros	14.45%
61,424.49 Euros	11.05%	6,787.40 Euros	6,824.91 Euros	15.3%
68,249.43 Euros	11.48%	7,831.62 Euros	34,124.72 Euros	16.15%
102,374.15 Euros	13.03%	13,342.76 Euros	34,124.72 Euros	18.7%
136,498.86 Euros	14.45%	19,724.09 Euros	68,249.43 Euros	21.25%
204,748.30 Euros	16.72%	34,227.09 Euros	136,498.86 Euros	25.5%
341,247.16 Euros	20.23%	69,034.30 Euros	341,247.16 Euros	29.75%
682,494.32 Euros	24.99%	170,555.33 Euros	Excess	34.0%

On this amount, a multiplicand is applied to the figure according to the next table, taking into account pre-existing wealth as well as relationship with the deceased. The value of the existing wealth is calculated according to the wealth tax rules.

*Pre-existing wealth in €	Degree of consanguinity
	I & II	III	IV
From 0 to € 402,678.11	1.00	1.5882	2.00
From € 402,678.11 to € 2,007,380.4	1.05	1.6676	2.10
From € 2,007,380.4 to € 4,020,771	1.10	1.7471	2.20
€ 4,020,771 thereafter	1.20	1.9059	2.40

The resulting amount is the final tax payable. The inheritance tax has to be paid within 6 months from the transferor death; you may, however, apply for another 6 months extension although in this case you shall pay the belated interest. On the other hand gift tax shall be paid within 30 days after the date of the transfer.

More information:

Alex Chumillas
Tax Expert - Economist
Member of The Col·legi d’Economistes de Catalunya
Member of The British Chamber of Commerce in Spain

aamat@economistes.com
Telephone: +34 934 442 137
Mobile: +34 667 663 521