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Spain to stop 'Discriminatory' inheritance tax for non-residents

Thu 4th Sep 2014
Spain to stop 'Discriminatory' inheritance tax for non-residents

Earlier this week the European Court of Justice passed judgment against Spain in a case that could effectively force the country into reducing inheritance tax for non-residents.

Excessive death-duty for foreign citizens concerning Spanish-owned property nets the country billions each year, and has long been criticized as being both unfair, discriminatory and illegal.

The ECJ ruled that in applying high tax rates in cases where either the deceased or the beneficiary is a nonresident, the country is in breach of EU law, given that inheritance tax rates involving Spanish residents only have a much lower percentage applied to them.

An ECJ Spokesman said Spain must now abide by the ruling, however it is uncertain when the country will apply this new instruction. Cynics make be forgiven for expecting such changes to passed into law in the next parliamentary term.

A spokeswoman for the Spanish Treasury decline to comment on the issue.

It was in 2010 when the European Commission first told Spain to change its legislation on inheritance tax - as one may expect, Spain ignored the instruction and the case moved the to the higher European Court in Luxembourg.

The problem has essentially arisen over the complicated system of inheritance tax management and collection in the country.

The Autonomous Communities have the authority and responsibility for applying and collecting inheritance taxes, and each of them applies the national law in a different manner.

However, regions only apply these rules in cases where both the deceased and the beneficiaries are local residents. Wherever a non-residents is added into the equation, higher rates decided by the National Government are applied.

The ruling comes as a financial blow to Spain, where approximately 14% of the population of 46 million is foreign - one of the highest in the EU.

Recommended Reading :

* EU Commission refers Spanish Inheritance Tax Laws to Court [2011]

Comment on this Story

We urge anyone else who believes they have been affected by this tax discrimination to come forward. Taking quick action is important as the right to make a reclaim may expire due to legal time limits for making a tax reclaim in Spain. As claims can be filed only once, people affected need to look for experienced experts in EU international tax law. For more information about filing a claim please contact Spanish Legal Reclaims.
Donna Knight - Thu, 4th Sep 2014

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