Nadia has lived in Málaga for eight years. Her mother, who lived in Lyon, died in March and leaves her and her brother Karim, who lives in France, an apartment in Lyon valued at 250,000 € and an account at a French bank with 60,000 €. The French notary has already dealt with the succession there and the two siblings have paid what they were told to. Nadia thought that was the end of it. In Spain it has only just begun.
The heir's residence is what counts
Article 6 of Law 29/1987 on the Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones, ISD) is categorical: anyone whose habitual residence is in Spain is charged the tax on a worldwide basis (personal liability), regardless of where the assets are located. Residence is determined with the income tax rules (more than 183 days in the calendar year or the core of one's interests in Spain, among others).
Nadia lives in Spain: she is taxed here on her half of everything, French apartment and French account included. Karim lives in France: in Spain he would only be taxed if he inherited assets located in Spain (limited liability under article 7), and that is not the case. Same assets, same mother, different obligations because of where each child lives.
Who manages the tax and under which rules
The mother did not live in Spain, so Nadia's tax is not ceded to any autonomous community: it is managed by the State's Agencia Tributaria (the Spanish tax agency) and filed on Modelo 650, the inheritance tax return.
However, the second additional provision of Law 29/1987 allows her to apply the rules of an autonomous community. As there are no assets located in Spain in the estate, the rule is to apply the rules of the community where the heir lives: Andalucía, in Nadia's case. If there were an asset in Spain, the community where the greatest value of the Spanish assets lies would be taken. The detail of these combinations is in which autonomous community applies.
The deadline is the same as for any inheritance: six months from the death, extendable if requested in time. The fact that the succession is being handled in France does not suspend the Spanish deadline.
The tax paid in France is not lost
The double taxation is obvious: France taxes the succession under its own rules and Spain taxes Nadia because she lives here. Article 23.1 of Law 29/1987 corrects it with a deduction for international double taxation in favour of those taxed on a worldwide basis. The lower of two amounts is deducted:
- a) what was actually paid abroad in a similar tax affecting the increase in wealth taxed in Spain;
- b) the result of applying the effective average rate of the Spanish tax to the part of the increase that corresponds to assets located outside Spain and taxed there.
How much Nadia paid in France and whether that tax is "similar" is confirmed by her French adviser, with proof of payment. We give no opinion on the French calculation; we work with the figure the adviser certifies.
Nadia's calculation, step by step
We use the State scale and the State reductions to show the mechanism; with the Andalusian rules Nadia can apply, the figures would be different. We assume the French adviser certifies a payment in France of 9,000 € for her half.
- Taxable base: half of the apartment (125,000 €) plus half of the account (30,000 €) = 155,000 €, valued at the date of death.
- Kinship reduction, group II: 15,956.87 €. Net taxable base: 139,043.13 €.
- Gross tax: 15,606.22 € + 18.7 % of 19,285.46 € = 19,212.60 €. With a coefficient of 1, that is also the tax payable before deductions.
- Effective average rate: 19,212.60 / 139,043.13 = 13.82 %.
- Limit b) of the deduction: 13.82 % × 155,000 € (everything is outside Spain) = 21,421 €.
- Limit a): 9,000 € paid in France.
- Deduction: the lower, 9,000 €. Tax to pay in Spain: 10,212.60 €.
| Step | Amount |
|---|---|
| Taxable base | 155,000.00 € |
| Net taxable base | 139,043.13 € |
| Tax (State scale) | 19,212.60 € |
| Deduction for tax paid in France | −9,000.00 € |
| Payable in Spain | 10,212.60 € |
If the asset were in a country with no inheritance tax, there would be nothing to deduct and the Spanish tax would be paid in full.
If the asset is in a country that does not use the euro, the conversion is made at the rate on the date of accrual, not the rate on the date of payment. And the value is the market value on that date: the foreign notary's valuation helps, but it does not bind the Agencia Tributaria, which can check it. It is advisable to have a documented valuation, especially for property.
The following year: Modelo 720 and income tax
Inheriting assets abroad opens obligations that last for as long as they are kept:
Modelo 720. Anyone resident in Spain who holds assets abroad above 50,000 € in one block (accounts, securities or property) must report them on this information return. Nadia will have to declare her half of the apartment (125,000 €, code B for property) in the 720 for the following year. Her half of the account (30,000 €) does not exceed the threshold on its own; if she had other accounts abroad, the block is looked at as a whole. The special penalty regime that made this form so feared was struck down by the Court of Justice of the EU in its judgment of 27 January 2022 (C-788/19), but the obligation to report remains in force. The guide how to fill in Modelo 720 explains the form.
Income tax (IRPF). The Lyon apartment generates income in Spain every year: if it is let, income from real estate capital; if it is empty or kept available, imputed income. Whatever France taxes on that income is coordinated through the double taxation treaty between the two countries, and the French side is confirmed by the adviser there. See what imputed property income is.
A future sale. If Nadia sells, her acquisition value for income tax will be the one resulting from the inheritance tax rules, not exceeding market value (article 36 of the Income Tax Act). Declaring a low value in Modelo 650 to pay less today means a larger gain tomorrow.
Documents for Modelo 650
For an inheritance with assets abroad you usually need: an apostilled and translated death certificate, the foreign succession document (the French notary's deed, in this case), a valuation of the assets at the date of death, a bank certificate of the balance on that date and proof of the tax paid abroad. If the will was made in another country, there are further questions that we deal with in my father made his will in his own country.
If you are inheriting assets located abroad and live in Spain, tell us the country, the assets and the dates in the inheritance form. We coordinate with the adviser you appoint in the other country; we do not have our own network abroad.
Nadia filed her Modelo 650 on time with the deduction for the French tax and, the following year, her first 720. Karim did not have to do anything in Spain.
The guide to international inheritances and gifts expands on these situations, and Salama Tax for inheritance and gifts describes how they fit with the other obligations of a resident with assets abroad.