The European Union has stated to inheritance tax in Spain is discriminatory towards non-residents and towards assets located outside Spain.

Autonomic regulation of the Inheritance and Gift Tax

Inheritance and Gift Tax is a State tax, except in the Basque country and Navarre. However, it is regulated by autonomous communities, so each of them has the possibility of determining the tax rate and applicable benefits. Therefore, the tax amount depends on where the deceased or donor resides.

From the point of view of the free movement of capital established in the European Union, this differentiated tax requirements implies a discrimination when the deceased or donor are not resident in Spain or where the assets are outside the said country.

What is the ruling of the Court of Justice of the European Union?

The ruling of the Court of Justice of the EU of 3 September 2014 sets out that there is indeed discrimination between those people living in a particular autonomous community and who are entitled to exemptions, and those who either do not reside in Spanish territory or whose assets are not located in Spain. Some will be eligible for benefits and tax exemptions and others will not.

The European Union urges the Central Administration to amend the current legislation and make the necessary changes to prevent autonomous communities from discriminatory treatment in this regard. In order to do so, the ruling requires compensation to those subjects who have been harmed by this law, and namely, the successors in title, the deceased or donors who do not reside in Spain, as well as donations of real estate located outside or within Spanish territory.

Claim the money that you have paid unduly

The resolution has caused a wave of claims against Inheritance and Gift Tax returns filed by residents in Spain and EU citizens in order to request equal treatment and return of payments made unduly.

In the event that you have paid Inheritance and Gift Tax without benefiting from the tax rate or benefits in your Autonomous Community, this ruling enables claim for amounts paid unduly as well interests on arrears. Among others, the Contentious Administrative Court No. 3 of Valencia has ruled in this regard in Ruling of 3 May 2016.

Our team of lawyers specialised in probate, tax law and procedure of equity claim is responsible to claim refund of the undue payments, as well as interests on arrears.

Do not hesitate to contact us!

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