THE KEYS TO THE INHERITANCE PROCESS FOR FOREIGNERS IN SPAIN 2023

Over the last few months, we’ve come across more than one inheritance process at our law firm, for foreigners (from the EU and elsewhere) who owned assets in Spain at the time of their death. These are generally non-resident foreigners who owned a property as a second home. But some of them were also resident in Spain at the time of their death.

These inheritance processes when a person dies with assets in Spain tend to be more stressful on heirs. To the pain of the death of a loved one, we must add the heirs’ lack of knowledge of the inheritance regulations and the inheritance law in a country different from that of the person or his or her descendants, such as Spain.

For heirs in this situation, we’ll try to explain the most important points about the inheritance process for a foreigner in Spain.

PRELIMINARY POINTS ON THE REGULATIONS OF AN INHERITANCE PROCESS IN SPAIN

• What law should apply to the inheritance of an EU citizen with assets in Spain?

If a foreigner dies with assets in Spain, we must refer to the European Inheritance Regulation of 2012, applicable to people who died from 17 August 2015.

As a general rule, this regulation provides that the inheritance of an EU national will be governed by the law of the country where the person has his or her usual residence. This rule applies to the 27 member states of the European Union (EU), except for the United Kingdom, Ireland and Denmark, which are considered third countries. However, it does apply to the citizens of these countries who reside in any member state of the EU.

Therefore, if the deceased owned assets in Spain but was not resident in Spain, the law of the country of usual residence would apply.

• What law applies to the inheritance process of a non-EU national with assets in Spain?

If an American citizen, for example, has his usual residence in Spain and dies, Spanish law would apply to his inheritance. If the same person had died residing in the US but owned assets in Spain, his inheritance would be governed by the law of the American State where he last resided.

This is the case because article 20 of the European Inheritance Regulation provides for the universal application of the law designated by the regulation, even when that law is not that of an EU member state.

• Are there exceptions to the general rule of applying the law of the country of usual residence?

The law of the country of usual residence of the deceased will not apply to the inheritance if the deceased states in a last will, clearly and unequivocally, that he or she wishes to apply the law of his or her nationality to the inheritance. In this case, even if the deceased was resident in Spain at the moment of his or her death, the inheritance process for assets in Spain would be governed by the law of his or her nationality. In the case of nationals of multiple countries, they may choose the law of any of these.

This general rule is also not applicable when it is possible to prove that the deceased has a closer connection to a country different from that of usual residence. For instance, this would apply to a worker temporarily resident in a country for work reasons but who keeps his assets and family in the country of nationality.

• What happens if the deceased has not designated the application of his or her national law in a will?

If a foreigner is resident in Spain at the time of death and he or she did not opt for the application of the law of his or her nationality, Spanish law will be applicable to the entire estate. So this is regardless of the country in which the assets are located.

This is the case because the European regulation establishes that the applicable law should apply to the entire estate of the deceased, not only to the assets located in Spain. The European regulation establishes the universal application of the same law to the entire estate of the deceased.

Obviously, if the deceased was not resident in Spain at the moment of death, the applicable law for the entire estate would be that of his or her nationality, if so established in the will. Or that of the country of habitual residence at the time of death, if the deceased resided in a country other than the country of nationality.

RELEVANT DOCUMENTS AND INFORMATION FOR THE INHERITANCE PROCESS IN SPAIN

• Is it possible to find out if the deceased signed a will in Spain?

To confirm whether a person signed a will in Spain, it is necessary to apply for a certificate of wills from the Ministry of Justice. Through this application, the Registry of Wills will certify if the deceased signed a will in Spain, when it was signed and before which notary. Once this certificate has been received, if the deceased signed a will, the heir (or his lawyer) may request a copy from the notary office where it was signed.

It is important to note that, in Spain, for a will to be valid, it must be signed before a Spanish notary. This notary will notify the Registry of Wills that a person has signed a will at the notary office. In certain cases the person can´t travel to the notary, mostly in case of disease or immobility. In that case a local notary can also make a house or hospital visit.

It is possible to sign a will without a notary being present but we won’t delve further into this case, as this is very infrequent in Spain and would require a judicial procedure for legalisation to be considered valid.

• What documents do heirs need in the Spanish inheritance process?

If the deceased has assets in Spain and the inheritance is being handled according to the law of the nationality of the deceased, or that of his or her residence outside of Spain, the heirs should get one of the following documents from the country of origin:

• • European Certificate of Succession.

This is only possible in EU countries.

• • Certificate of succession or probate

Obtained in the country of nationality of the deceased. This is possible in EU countries and non-European countries.

In addition to either of the documents mentioned, it’s also necessary to obtain an original death certificate and the certificate of wills in the country of residency.

If the deceased had property in Spain, the Public Deed of Acceptance and Adjudication of Inheritance must be signed by the heirs before a Spanish notary. This document is where they receive the title of the property and the other assets that the deceased may have in Spain. This might be a house, but also a bank account or vehicle.

Once this deed has been signed, the Inheritance Tax return will be submitted and the property will then be registered with the appropriate Property Register, so that heirs become the official owner of the property or properties of the deceased.

• Is it necessary to pay Inheritance Tax in Spain?

It is always necessary to file an Inheritance Tax return in Spain for any type of inheritance. In other words, Inheritance Tax must always be paid in Spain for goods and assets located in Spain, regardless of whether Spanish law or the law of a different country applies. Liability for inheritance tax arises from the simple fact of inheriting assets located within Spanish territory.

Here, it should be noted that Inheritance Tax in Spain presents great variability, depending on the Spanish autonomous community where the deceased resided or where the deceased had assets if he or she was non-resident. Note that, in Spain, both residents and non-residents pay the same inheritance tax (including non-EU resident and there have been no tax differences in this sense for the last few years.

• What is the Inheritance Tax rate in Spain?

In Spain, each autonomous community is free to establish its own Inheritance Tax regulations and there are large differences in taxation among them. For this reason, when buying a property for either personal or investment use, it is convenient to become familiar with the Inheritance Tax rate in the region where property is to be purchased.

If you’re thinking about buying a home in Spain, our advice is to get an estimate of the Inheritance Tax for your intended heir that may be due on that property in case of death.

For more information on this subject, I recommend you read our post from April 2021 on Spanish inheritance tax. However, the autonomous community of Andalusia has one of the lowest rates of Inheritance Tax in Spain. Heirs such as a widowed spouse, children and grandchildren of the deceased, pay no Inheritance Tax in Andalusia, although it is always necessary to file a tax return.

• What documents does a British citizen need to inherit in Spain?

Since Brexit, British citizens with assets in Spain have become more worried about the impact that their assets in Spain may have on their heirs.

It is widely known among notaries in Spain that British citizens are free to leave a will. If British law applies to the inheritance and the deceased had a will in Spain, it will not be necessary for heirs to provide an English probate document. In this case, the Spanish will is enough to process the inheritance in Spain, along with the rest of the necessary documentation.

If the deceased had no will in Spain, it would be necessary to make the UK probate and legalize it with The Hague Apostille.

• What documents does a USA citizen need to inherit in Spain?

We are currently dealing with different inheritance processes for US citizens, which is why we would like to shed some light on this situation.

Inheritance processes for US citizens where the law of the State of nationality is applied, the main document necessary for heirs to provide is the Grant of Probate. If the deceased died without a will, they must provide a Letter of Administration.

• Is it a good idea to sign a will in Spain?

If you have assets in Spain, even if you have a will in your country of origin, it is always advisable for a will to be signed in Spain covering only the assets located in Spanish territory.

It will always be possible to choose to apply the law of your nationality in this will. If you are not resident when you sign the will but then decide to move to Spain, through this will signed in Spain, the law of your nationality will apply to your inheritance instead of Spanish law. The financial cost of this last will signed in Spain isn’t high and will always help to make the process in Spain easier and cheaper for your heirs.

A will does not reduce taxes, i.e. it has no tax advantages, but it does help heirs deal with the bureaucracy of the inheritance process that will take place in Spain after your death.

Likewise, consider that Spanish law provides for forced heirs and it is not possible to leave your assets to whomever you choose. Therefore, if Spanish law were to apply to your inheritance, these minimum shares for forced heirs must be respected.

• Is it possible to sell a property in Spain without having completed the inheritance process?

Many heirs receive a property in inheritance and consider putting it up for sale as, in many cases, they have no interest in holding on to that property.

Sometimes these heirs don’t have sufficient financial resources to carry out the inheritance process in Spain and pay the potential inheritance tax and Plusvalue tax. However, if they sold the property, they would indeed have the financial resources to cover the inheritance expenses and also obtain capital gains from the sale of the property.

If the heirs of the property have not completed the inheritance process in Spain, the property will be registered in the land registry and in the cadastre registry in the name of the deceased. For which reason they will be unable to sell this property, without first completing the Spanish inheritance process.

However, in Spain, it is possible to put a property on the market through any agency, even if the inheritance process has not been completed yet. In this case, any potential buyers should be informed that the inheritance process is underway and that the selling heirs will complete it, before the deed of sale is signed at the notary office, with the payment by the buyer of the total price.

It’s also possible to sign a private sales contract, through which the buyer will pay a certain amount (usually 10%) of the selling price and, using this money, the sellers/heirs will be able to complete the inheritance process and cover their expenses in Spain. The seller will have enough time after the private agreement is signed to finish the inheritance process and register the property in the Property Register, prior to signing the purchase title deed, at which time the remainder of the selling price will be paid.

IMPORTANT: Since a private contract requires the seller to complete the process within the agreed timeframe, it is very important to hire a lawyer/solicitor specialising in (international) inheritance processes. Before the private contract is signed, the lawyer will be able to confirm that the heirs’ documentation is correct, which would reduce the risk of any problems arising during the inheritance process in Spain.

• Is it necessary to hire a lawyer to complete the inheritance process in Spain?

In Spain, there is no legal obligation to hire a lawyer for procedures of this type, but not only would I find it difficult for someone to complete this process without the advice of a specializing lawyer on these matters, but it also does not seem very advisable to forego.

It’s necessary to obtain a lot of documentation and information, and an expert lawyer will save time, headaches for heirs and surely money as well, since, from the beginning, the lawyer will only ask you for what is necessary for you in Spain as an heir to become the owner of the assets of the deceased.

For instance, obtaining a correct tax valuation of the property to be inherited may be key if heirs intend to sell the property later on, so that they can pay less capital gains tax in Spain. A lawyer would be able to give you an estimate of Inheritance Tax and Municipal Capital Gains tax (Plusvalue, the latter only being applicable to urban properties) before you accept the inheritance in Spain.

If you are going to inherit a property in Spain, it will be necessary to sign an inheritance deed before a notary. The lawyer advising you can also choose the appropriate notary to sign the deed of inheritance, as there are notaries who are very experienced in inheritance and testamentary matters for foreign citizens, whilst other notaries may be less experienced and may require more documentation than necessary.

A law firm specializing in inheritance?

C&D Solicitors is a law firm specialized in Inheritance processes and wills in Spain, with extensive experience in inheritance and testamentary matters. We have been advising both EU and non-EU citizens since 2006. Many Dutch, Belgian, Swedish, German, British and American citizens are regular clients of ours, just to give an example.

We offer “full service” advice throughout the process in your native language: English, Dutch, Swedish, French and German. You can call us at +0034 952 532 582, send us a WhatsApp message at +34 639 54 16 02 or write to us at info@cdsolicitors.com. We’ll look into your case, we’ll send you information about the process and a cost estimate for this, with no commitment whatsoever.