Carlos Baos Lawyers: Inheritence tax in Spain

How much Inheritance Tax must be paid when inheriting from a step-father or a step-mother? Expert legal advice by Inheritance Solicitors in Marina Alta.

When assisting our clients in an inheritance there is one question that keeps coming up: How much Inheritance Tax (IHT) will I have to pay to inherit the assets?. Inheritance proceedings are not always straightforward. They can be a source of conflict between family members, depending on the circumstances of the deceased and the heir, the amount of IHT can be very high, etc. In today’s article, we analyse this issue from a different angle. How does inheriting from a stepfather affect the IHT to be paid in Spain?

Types of kinship and Tax implications in the IHT.

The Spanish Civil Code contemplates two types of kinship. Kinship by blood exists between the members of a family connected by blood (including adoptees). And kinship by affinity, which links a person with the relatives of his/her spouse. For instance, if David marries Anna, and his wife had a child from a previous marriage, a relationship by “affinity” will automatically be established between them. Being David his stepfather, and Hannah’s son, his stepson.

Why is this important? The Spanish Inheritance Tax establishes different categories or groups among the relatives of the deceased. In general, the closest they are to the deceased, the less inheritance tax is paid. For instance, the children of the deceased will most likely pay less IHT than the most distant relatives such as uncles, aunts or nephews.

What about stepchildren and other in-laws? This is precisely where the controversy lies. For many years, the Spanish Taxes General Directorate considered that if the person who served as a link between stepfather and stepchild died, the latter would no longer have any legal relationship with each other. Which would result in the stepchildren being placed in the category of distant relatives and strangers (Group IV). Therefore, they would have to bear a much higher tax burden in the IHT.

Fortunately, the Spanish Supreme Court (in a ruling handed down on April 6^th, 2017) confirmed that this is not the case. According to the Spanish High Court, the link between a stepson and his step-parent is maintained even after the death of the person who “brought them together”. Therefore, the step-children must be included in the group of relatives who receive better tax treatment in the Inheritance Tax (Group III). Resulting in the stepchildren and other in-laws, having to pay a lower IHT.

At White Baos Abogados we are experts in inheritance planning, inheritance tax and advice on the preparation of wills. If you have any questions about this, or any other subject, please do not hesitate to contact us.

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Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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