Europe rules against Spain on non-residents inheritance tax

Europe rules against Spain on non-residents inheritance tax

The Spanish Government adopts the new reform of the law regulating rights of ForeignersOn Wednesday, Europe’s High court ruled in a case that may force Spain to lower the profitable taxation of inheritances involving non- residents.

The European Court of Justice stated that, by applying high tax rates in cases where either the deceased or the inheritance’s beneficiary is a non-resident, Spain is in breach of European Union treaties since in inheritances involving Spanish residents only, those rates are considerably lower.

As a consequence, Spain must comply with the ruling, even though it is yet unknown when the country will incorporate it in its legislation.

It has been the European Commission who brought the case before the European court.

The discrimination now declared and ruled as existing, is a consequence of the intricate setup of inheritance tax controlling and collection in Spain. The Country’s regional governments manage and collect these taxes, and many regions sharply diminish or even eliminate the actual  inheritance tax rate in their local a

Nevertheless, according to the regulations in force these regional rules are valid only in cases where both the beneficiaries and donees are local residents. When non-residents are involved, higher rates contemplated in national law are applied.

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