Marta is 58, lives in Valladolid and has just lost her mother, a widow, who leaves her 200,000 € made up of a flat and some deposits. Marta's life is settled; her two children, aged 27 and 30, are trying to buy a home. Her idea is simple: "I'll renounce and they can receive it directly, so we save a step." It is a good idea, but it only works if the renunciation is made in one specific way, and the other way costs twice as much.
Two renunciations that sound the same and are taxed differently
Article 28 of Law 29/1987 on the Spanish inheritance and gift tax (ISD) distinguishes between:
- A pure, simple and gratuitous renunciation. The heir repudiates without naming anyone. The estate goes to whoever the law or the will calls in their place, and only those beneficiaries are taxed on the share they receive (article 28.1).
- A renunciation in favour of a specific person. The heir "renounces so that so-and-so receives it". For tax purposes that is not a renunciation: the renouncing heir is taxed as if they had inherited and, in addition, on whatever corresponds to the later assignment or gift (article 28.2).
The Spanish Civil Code says the same from the civil side. Its article 1000 treats the inheritance as accepted when the heir renounces it, even free of charge, for the benefit of one or more co-heirs, or when they assign their right to a third party. Whoever "renounces in favour of" has already accepted and is giving away what they accepted.
The first question: who gets the share if I genuinely renounce?
Before doing any sums you need to know whether the pure renunciation ends up with the children. That is not always the case.
Without a will. Article 922 of the Civil Code means that, if there are several relatives of the same degree and one does not wish to inherit, their share accrues to the others of the same degree. And article 929 prevents a living person from being represented, except in cases of disinheritance or incapacity. If Marta had a brother, her pure renunciation would swell her brother's share, not her children's. Only if all the closest relatives renounce, or if Marta is an only child, do those of the next degree inherit in their own right (article 923).
With a will. Many wills include a simple substitution: "I appoint my daughter Marta as heir, substituted by her descendants." With that clause, if Marta renounces, her children take her place. And for tax purposes, article 26.f) of the tax law says that in a simple substitution the substitute inherits directly from the deceased, that is, from the grandmother.
Marta is an only child and her mother died without a will. Her children inherit in their own right if she repudiates. The case fits.
The numbers in Marta's case
For the comparison we use the State scale in article 21 and the multipliers in article 22 of Law 29/1987, without regional reliefs. The applicable region may reduce the figures a great deal, but the difference between the two routes holds in its logic: one creates a single taxable event and the other creates two.
Route A: pure renunciation before a notary.
- Each grandchild acquires 100,000 € from their grandmother. They are descendants aged over 21: group II, with a State reduction of 15,956.87 € (article 20.2.a).
- Net taxable base per grandchild: 100,000 − 15,956.87 = 84,043.13 €.
- Gross tax: 9,166.06 € + 16.15 % on 4,162.61 € = 9,838.32 €.
- With low pre-existing wealth, a multiplier of 1: tax of 9,838.32 € per grandchild.
- Total for the family: 19,676.64 €.
Route B: Marta renounces "in favour of her children".
- Marta inherits 200,000 €. Net taxable base: 200,000 − 15,956.87 = 184,043.13 €. Tax: 28,250.01 €.
- Marta gives 100,000 € to each child. For gifts, the State rules have no reduction for kinship (article 20.5): a base of 100,000 € per child and tax of 12,415.36 € each.
- Total for the family: 28,250.01 + 24,830.72 = 53,080.73 €.
| Item | Route A: pure renunciation | Route B: renunciation in favour |
|---|---|---|
| Taxable events | One inheritance (grandmother → grandchildren) | One inheritance (grandmother → Marta) and two gifts |
| Kinship reduction | Yes, for each grandchild | Only on Marta's inheritance |
| Total tax (State scale) | 19,676.64 € | 53,080.73 € |
| Municipal plusvalía on the flat | Once | Twice (inheritance and gift) |
The municipal plusvalía, a local tax on the increase in value of urban land, makes route B worse: the flat would go through two gratuitous transfers within weeks, and each one pays its own.
Article 997 of the Civil Code declares acceptance and repudiation irrevocable once made, except where consent was vitiated or an unknown will comes to light. Before signing, check who the renounced share goes to and that there are no debts or assets that would change the decision. A badly planned renunciation is not corrected with a second deed.
The limits worth knowing
The form. Repudiation is made before a notary in a public instrument (article 1008 of the Civil Code). A private document or a letter to the bank will not do.
The renouncing heir's creditors. If Marta had debts and renounced to the detriment of her creditors, they could ask the court for authorisation to accept in her name up to the amount of their claims (article 1001).
Which kinship applies. Article 28.1 of the tax law contains a safeguard: the beneficiaries of the renunciation are taxed with the multiplier of their own pre-existing wealth, but as regards kinship the renouncing heir's is taken if a more burdensome one applies to it. In Marta's case nothing changes, because grandchildren and daughter are in the same group. It would change if the renouncing heir were in a kinship group more distant from the deceased than the person who ends up receiving the share: then the renouncing heir's group prevails.
A late renunciation. If the renunciation is made once the tax on the inheritance is already time-barred, article 28.3 treats it as a gift. It is not a way of dodging anything.
When renouncing does not pay
Renouncing makes sense when the renouncing heir does not need the assets and the person called in their place is the one you want to receive them. It does not when:
- the renounced share would go to a sibling or another co-heir, not to the children;
- the renouncing heir wants to keep control (by renouncing they lose all rights);
- the children are minors and the estate would need court authorisation for certain acts;
- there are assets in another country and the effect of the renunciation there has not been checked. That is confirmed by the adviser the client chooses in that country.
An alternative that is sometimes overlooked is to accept and give later, in a planned way, when the children need the money. It is taxed twice, but it allows you to stagger the gifts and decide the amounts. We compare the two in whether a lifetime gift is cheaper than an inheritance.
If you are considering a renunciation, tell us who the deceased is, whether there is a will and who would inherit in your place in the inheritance form. With those three details we can tell whether the idea works before talking about figures. It is also worth reviewing the deadlines for settling the inheritance, because the six months run just the same for someone who renounces as for someone who accepts, and the deed of renunciation must be signed before the grandchildren file.
Marta signed the pure repudiation at the notary's office on a Tuesday; her children each filed their own self-assessment as grandchildren of their grandmother, and nobody paid twice.
We deal with renunciations involving heirs in several countries within Salama Tax for inheritance and gifts, coordinating with the foreign adviser each heir appoints.