If you are a British citizen planning to inherit property in Spain, there are several important legal, tax, and practical considerations to keep in mind. Being well-prepared can help you avoid complications and ensure a smooth inheritance process.
1. British or Spanish Inheritance Law?
In principle, Spanish inheritance law applies to properties located in Spain. Since Brexit, British citizens cannot automatically apply UK law, but you may still have the option to have an English will recognized in Spain.
- If you wish to apply UK inheritance law, your will must be properly notarized and may require translation and an apostille.
- If no choice is made, Spanish law automatically governs the inheritance. Spanish inheritance rules follow statutory heir classes (children, spouse, parents, etc.).
2. Taxes When Inheriting Property in Spain
Several taxes apply for British heirs:
a) Inheritance Tax (Impuesto sobre Sucesiones y Donaciones – ISD)
- Calculated based on the property’s value.
- The rate varies by Autonomous Community. For example, Catalonia has its own exemptions and tax rates.
- Spouses, children, and direct descendants may receive tax benefits, but non-EU citizens like Britons often face different exemptions.
b) Property Tax (IBI – Impuesto sobre Bienes Inmuebles)
The annual property tax continues after inheritance, calculated on the cadastral value of the property.
c) Capital Gains Tax on Future Sale
If you sell the property later, capital gains tax applies in Spain. The UK also taxes gains, but the double taxation agreement prevents being taxed twice.
3. Notarial and Administrative Steps
- Certificate of Inheritance / Certificado de Defunción y de Herederos: Required in Spain to prove legal inheritance. UK wills may need translation and an apostille.
- Land Registry (Registro de la Propiedad): The property must be officially registered under the new owner’s name.
- Bank Account & Utilities: A Spanish bank account is useful for paying taxes, IBI, waste, water, and electricity bills.
4. Practical Tips for British Heirs
- Spanish Lawyer: Essential for navigating Spanish law and coordinating with UK inheritance rules.
- Local Tax Advisor: Important because inheritance tax rules for non-EU citizens may differ significantly.
- Observe Deadlines: ISD tax is usually due within six months of death (extensions possible).
- Review Your Will: Property owners in Spain should check and update their wills, especially post-Brexit.
Conclusion
British citizens inheriting property in Spain should carefully consider legal choices, regional taxes, notarial requirements, and land registry procedures. Proper preparation saves time, money, and prevents complications during the transfer of ownership.