Daniel Ruiz was born in Toledo and has lived in Toronto for fifteen years, where he is an engineer. His mother, who never left Toledo, died in May. She leaves him, half and half with his sister Carmen, the family flat (reference value of 180,000 €), 80,000 € in an account in Toledo and 50,000 Canadian dollars in an account she opened in Toronto when visiting her son. An acquaintance has told Daniel that, because he lives in Canada, he gets "the State scale, with no discount at all, because the regional advantages are only for Europeans". That idea had some basis years ago. Today it does not match the text of the law.
Where the doubt comes from
Until 2014, a non-resident heir was always taxed under the State rules, while a resident one could apply their region's rules, often much more favourable. The Court of Justice of the European Union, in its judgment of 3 September 2014 (case C-127/12), held that this difference infringed the free movement of capital.
To comply, a second additional provision was added to Law 29/1987, the law on the Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones, ISD), recognising the right of non-residents to apply the regional rules. As the judgment resolved a problem of free movement within the Union, for years it was debated whether the remedy also reached those living in third countries, such as Canada, the United States or Switzerland. The question went to the courts, and Law 11/2021 amended that section.
What the law says today
The current wording of section One.1 of the second additional provision refers to non-resident taxpayers without distinguishing the country they live in. For inheritances it provides:
| Situation | Applicable regional rules |
|---|---|
| Deceased resident in a region, heir non-resident | Those of the region where the deceased lived (letter b) |
| Deceased non-resident, assets in Spain | Those of the region where the greatest value of the assets located in Spain lies (letter a) |
| Deceased non-resident, no assets in Spain | Those of the region where each heir lives (letter a) |
Daniel's mother lived in Toledo. Daniel is entitled to apply the rules of Castilla-La Mancha, the same as his sister. Living in Toronto does not exclude him.
What does change is who manages the tax: the tax of a non-resident heir is not ceded to the region. Daniel files with the State's Agencia Tributaria (the Spanish tax agency) using Modelo 650, the inheritance tax return (section Two of the same provision), applying the Castilla-La Mancha rules. Carmen, who is resident, files with the regional government, the Junta de Comunidades.
What Daniel is taxed on in Spain
Daniel does not live in Spain, so he is taxed under limited liability (article 7 of Law 29/1987): only on assets located in Spain or rights that must be exercised here.
- His half of the Toledo flat: 90,000 €.
- His half of the Toledo account: 40,000 €.
- His half of the Toronto account: not taxed in Spain, because that asset is not on Spanish territory.
Carmen, who is resident, is taxed under personal liability: her half of everything, including the Canadian account.
With the State scale and the group II reduction, only to compare the bases (the Castilla-La Mancha rules will change the amounts of tax):
- Daniel: 90,000 + 40,000 = 130,000 €. Net taxable base: 114,043.13 €. Tax: 9,166.06 € + 16.15 % of 34,162.61 € = 14,683.32 €.
- Carmen: 130,000 € plus her half of the Toronto account. If, at the official exchange rate on the day of death, the 50,000 CAD were equivalent to 34,000 € (a purely illustrative figure), her half would be 17,000 €: 147,000 € in total. Net taxable base: 131,043.13 €. Tax: 15,606.22 € + 18.7 % of 11,285.46 € = 17,716.60 €.
Daniel is not entitled to the deduction for international double taxation in article 23, which is reserved for personal liability. If Canada applies any levy on the death, how that is coordinated there is confirmed by his Canadian adviser; we give no opinion on foreign law.
Article 18.4 of the tax's Regulations requires taxpayers under limited liability who do not live in the European Union (or in a European Economic Area State with mutual assistance on information and collection) to appoint, before the filing deadline ends, a person resident in Spain to represent them before the authorities. The appointment is notified with the representative's express acceptance. Daniel must do this before the six months expire, or before the end of the extension if he requests one.
Formalities that tend to delay people who live far away
- NIE. Daniel needs this Spanish tax identification number for foreigners to file Modelo 650 and sign the acceptance of the inheritance. It can be applied for at a Spanish consulate.
- Power of attorney. If he cannot travel, he will grant a power of attorney at the consulate or before a Canadian notary with an apostille, so that someone can sign the deed in Spain.
- Signing the self-assessment. The representative or an authorised filing intermediary can file on his behalf.
- Deadline. Six months from the death, extendable if the extension is requested within the first five. Distance does not suspend anything: see how long I have to settle an inheritance.
A practical consequence of this asymmetry: in a family spread across countries, the heir who lives abroad may have a smaller base than his resident sibling for the same assets. It is not a privilege; it reflects the fact that Spain only taxes non-residents on what is here, and what is abroad is taxed, where applicable, by the country where they live.
If you have already paid under the State rules
Some heirs living outside Europe settled at the time using the State scale because that is what they were told. If the right to request a refund has not become time-barred (four years, article 66 of the General Tax Law), a correction of the self-assessment to apply the regional rules can be considered. Each case depends on its dates; we do not guarantee the outcome.
After the inheritance
If Daniel keeps his half of the Toledo flat, he starts to have obligations as a non-resident: the non-resident income tax (IRNR) on imputed income or on rent, and the 24 % applicable to residents outside the EU and the EEA on rental income, against 19 % for Europeans. If he sells, non-residents' gains are taxed at 19 %. We deal with this in I am inheriting a flat in Spain as a non-resident and I am selling my flat in Spain and do not live here.
If you are inheriting in Spain and live outside Europe, tell us where the deceased lived, what the assets are and where you live in the inheritance form. We check which rules apply to you and help you with the representative and the NIE.
Daniel appointed his sister as his representative, applied for his NIE at the consulate in Toronto and filed his Modelo 650 with the Agencia Tributaria under the Castilla-La Mancha rules, just like Carmen.
The guide with the table of ISD competences shows every combination, and at Salama Tax for inheritance and gifts we explain how we work with heirs spread around the world.