Carlos Baos – Inheritance Tax

When does the obligation to pay Inheritance Tax in Spain cease?

Unlike in the United Kingdom, in Spain, the Inheritance Tax is not paid from the estate itself but by each individual heir separately. This can sometimes be problematic if the heir does not have the money or a way to pay. As no heir can formally inherit and receive the assets until this tax is paid and settled with the Spanish Tax Agency. In this week’s column, we analyse when the deadline expires for the tax authorities to demand payment of this tax and also for the Plusvalía Tax.

IHT in Spain (Valencia Region). General overview.

In Spain, the ITH is a gradual levy imposed on the heirs of the deceased. The exact amount varies based on the estate’s value and the familial relationship between the deceased and their heirs. Notably, in the Valencian region, the tax liability among immediate family members (progenitors, descendants, husband/wife, etc.) has been virtually eliminated. And the taxpayer must only pay 1%. However, this generous tax regimen is only applicable for deaths that happened from May 2023 onwards.

The timeline for the payment of the tax, as we have explained previously, is of six months. Although it is possible to request an additional six months if the request of extension is filed in the first 5 months after the death. The same timeline (6 months) applies to another tax associated with inheritances: The Plusvalía Tax. This tax will only be paid, in principle, when there are real estate assets among the assets of the deceased.

Does the obligation to pay these taxes extinguish?

Let’s now get to the heart of the matter. How much time does the Spanish Tax Agency and other authorities have to demand payment of these taxes from me? Can the mere passage of time extinguish my obligation to pay? Yes. If four years and six months pass, in the absence of any interruptive acts of the Spanish Administration, from the ones established in the General Tax Law, the obligation to pay ceases.

These interruptive acts include the tax agency initiating inspection actions, providing formal notification of the existence of the debt, initiating proceedings against the heirs for the payment of the taxes, etc. So those heirs whose family members passed long ago, and did not take any steps in Spain, in order to complete the inheritance, may have their tax liabilities extinguished, depending on the case, if no interruptive acts have occurred within the prescribed timeframe.

In conclusion. If you find yourself navigating the complexities of inheritance tax and other legal matters in Spain, White-Baos Lawyers is here to help. With our expertise and dedication, we can guide you through the process. Feel free to reach out for expert legal advice.

You may be interested in the following services and articles:

Municipal Plusvalia Tax. Liability of the buyer if the vendor is non tax resident in Spain..

We explain when it’s possible to request the suspension of the deadline for paying Inheritance and Gift Tax in Spain..

Buying from an heir. Real Estate in Spain. Key issues to consider. Inheritance tax. Deductions and allowances. Land Registry tax charges.

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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Carlos Baos
Written by

Carlos Baos (Lawyer)

Lawyer Carlos Baos has been advising on variety of expat-related legal issues for years and weekly column offers free weekly insights.

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