TAXATION APPLICABLE TO NON-RESIDENTS OF FRANCE
IMPORTANT INFORMATION ON TAX CHANGES APPLICABLE TO NON-FRENCH RESIDENTS PURCHASING PROPERTY IN ANDALUSIA FROM 2018.
– As of January 1, 2018, important changes introduced in the inheritance tax by the Junta de Andalucía are applicable. These modifications were made through the approval of Law 5/2017 of December 5.
– The main novelty introduced in this modification is the increase in the exempt minimum, raising it to an amount of 1,000,000 euros. This means that for cases where the amount the heir receives through inheritance is less than this amount, there would be no need to pay inheritance tax. This means that most inheritances that occur in Andalusia will pay a tax amount equal to 0.
– The application of the exempt minimum is applied by each of the heirs. So, for example, if the deceased of French nationality does not reside in Spain and leaves an inheritance in Andalusia (real estate property) for a value of 2,900,000 euros, and has as heirs in equal shares his 3 children of French nationality not residing not in Spain,
– None of them would have to pay anything in inheritance tax since what they receive does not exceed one million euros each.
– The application of this exempt minimum of 1,000,0000 euros is only applicable in the case where the heir is a direct relative: widow, parents, children. Therefore, it does not apply if the heir is a nephew, uncle, friend, or the like.
– Another important modification is the fact that if the value of what is inherited exceeds one million euros, the tax will only be applied to the amount exceeded. That is to say: If, at the time of death, the amount of real estate in Andalusia is worth 3,150,000 euros, and the heirs are his 3 children, each of them will have a value in the inheritance of 1,050,000 euros. Of this amount, each child would pay nothing on 1,000,000 euros (which would be exempt), and only the Tax for the excess of 50,000 euros would be applicable.
– Is this exempt minimum applicable in the case where the deceased is a foreigner, not residing in Spain (neither are the heirs), and the assets left as inheritance are in Andalusia?
Yes this reduction is applicable.
This was determined by a legal modification that the Spanish State was obliged to make after the judgment of the Court of Justice of the European Union of 09/03/14 for which there could beno discrimination in inheritance tax between residents or non-residents in Spain, as long as they are citizens of the European Union.
Recently, a judgment of the Supreme Court No. 242/2018 rejected the fact that discrimination in this tax could be established with non-European citizens.
Therefore, the application of the exempt minimum is applicable in all cases where the deceased is non-resident and the heir does not reside in Spain, whether a European citizen or not. For example , if the deceased, of Swiss or Canadian nationality, leaves a property in Spain worth 2,000,000 euros to his two non-Spanish children, and residents of Canada would not pay inheritance tax.
– The application of this legal modification is applicable to inheritances occurring from January 1, 2018. That is to say, deaths after this date.
NOTE: This document is informative in order to give a general orientation on the subject treated, without it can ever be replaced by the detailed and specific legal opinion and advice to be given in application of the specific case whether it is a natural person or morality. The relevant legislation may establish nuances and exceptions which must be the subject of detailed study in application of the specific case. For complete and detailed advice, you should contact the appropriate professional.