By way of introduction, we will clarify that the inheritance tax is a state tax assigned to the Autonomous Communities, so, each community establishes what the heirs will pay when they receive an inheritance. In this sense, each community fixes what taxes the heirs will pay in their Autonomous Community considering two extremes: the wealth of the inheritance and the kinship with the heir.
It is important to know in which community we must submit the inheritance tax.
The inheritance tax must be settled in the Autonomous Community where the deceased had his last habitual residence. As an example: if a man who lives in Nerja dies and leaves all his property to his only heir, his son, who lives in Asturias; the son will have to settle the inheritance tax in Andalusia.
At this point, the heir who is the one who must pay the inheritance tax in Andalusia, will want to know how much he should pay.
Pérez Parras Economists & Lawyers Firm are pleased to inform you that as from January 1st 2018, the following are exempted from paying inheritance tax: family members of groups I and II, i.e. spouses, children and parents when the goods received do not exceed in value one million euros. In addition, the pre-existing assets of the heir should not exceed at any time one million euros to be able to benefit from the aforementioned tax exemption.
We want to emphasize that the million euros is calculated for each heir, not by the complete inheritance. For example: if father leaves two and a half million euros in equal parts to his three children, they would be exempt from paying this Tax.
Before this reform came in to effect, the regulations were more restrictive and the minimum for tax exemption was € 250,000 per heir. We appreciate that it is a small step forward, but it does not make everyone happy: brothers, cousins, nephews, and most of distant relatives that inherit, will still have to pay the usual tax.
Likewise, it is important to indicate that this reform does not have a retroactive effect, that is, it will only affect the inheritances in which the deceased dies in 2018.
In Pérez Parras Economists & Lawyers Firm we have a department specializing in inheritances, both national and foreign. If you want to prepare your will, settle an inheritance or have any questions related to this matter, do not hesitate to consult us we will be very happy to study your personal case and assist you.