With this entry I update three previous ones, in which reference was made through examples, of the path taken from Law 29/1987 of December 18, on Inheritance and Donation Tax to the current situation of inheritance and donation taxation. of non-residents in Spain, which derives from Law 26/2014.
The path from one law to the other goes through the judgment of the Superior Court of Justice of the European Union of September 3, 2014, (Case C-127/12), which considered that the Spanish tax regulations were not adjusted to the community law. inheritance and donations, insofar as it produced situations of discrimination between residents and non-residents.
A.- THE SITUATION IN LAW 29/1987 OF DECEMBER 18
With this regulation, the taxation of non-residents in the inheritance tax depended on different factors, including the residence of the deceased and the residence of the heirs. The residence of the deceased determined the application of Spanish law, but the residence of the heirs could determine which Spanish law was applicable, due to the existence of different regional laws and a state law.
For the heirs, who were residents in Spain, the law of the Autonomous Community was applicable, in which the deceased had his habitual residence, while the heirs who did not have a habitual residence in Spain, regardless of their nationality, applied the State Law.
In the exercise of their powers, most of the Autonomous Communities had made an effort to adapt the inheritance tax laws to the needs of citizens, unlike the state legislator who had left the law practically unchanged since 1987.
Let's give an example of this situation:
In 2013, a deed of partition of the inheritance of a man residing in Lleida, who died leaving a wife and three daughters, and with a patrimony consisting of three houses in the capital and some money savings, was formalized in my Notary.
This seemingly normal situation was clouded because one of the daughters had studied outside of Spain and after a while ended up living in Germany, where she worked and raised her family, while the other two sisters lived in Spain. As usual in my Notary's Office, a tax approach was made of the entire operation, and it turned out that the two sisters who lived in Spain did not have to pay anything, due to inheritance tax, while the other sister who lived in Germany came out to pay a not inconsiderable fee, around 7,600 euros.
Why did this situation occur when all the sisters inherited the same? The reason was that the tax legislation of Catalonia was applied to those who resided in Catalonia and therefore they were entitled to reductions in the tax base of 100,000 euros, with which what they received did not reach the minimum to pay, while to those who resided in Germany, state legislation was applied and they were only entitled to a reduction in the tax base of 15,956.87 euros, which gave them a taxable base of approximately 69,043.13 euros, and on that amount they had to pay approximately 11%, giving rise to the fee that we have said before.
B.- THE JUDGMENT OF THE COURT OF JUSTICE OF THE EUROPEAN UNION, OF SEPTEMBER 3, 2014 (CASE C-127/12).
The Judgment of the Court of Justice of the European Union, of September 3, 2014 (Case C-127/12), touched on the waterline of the taxation of non-residents in Spain, on inheritance and gift taxes, because it considered that the Spanish legislation (the one described in the previous section) was contrary to articles 63 of the TFEU and 40 of the agreement on the European economic area of May 2, 1992, by allowing differences in the tax treatment of donations and successions between successors and donees resident and non-resident in Spain, between deceased residents and non-residents in Spain and between donations and similar provisions on real estate located in Spanish territory or outside it.
With this ruling, the taxation regime by real obligation was eliminated in the case of successions between the deceased resident in Spain and the successor in title of community resident and in the case of donations of real estate in Spain in favor of community resident donees, in the same way that it was considered in accordance with community regulations. the existence of a plurality of tax regimes within the Spanish State, in matters of inheritance and donations.
C.- THE CURRENT SITUATION. LAW 26/2014.
As a consequence of the Judgment of the Court of Justice of the European Union, of September 3, 2014, indicated in the previous section, the Spanish legislator had to face the modification of its own laws on the matter, and we said that there were several options I had from the point of view of legislative policy:
The first was a unification of the national legislation on inheritance and gift tax;
The second was a modification of the norms that regulate the applicable legislation, when we find ourselves in inheritances and donations in which non-residents in Spain may be interested.
And the third was to have regulated the entire state regime for the taxation of inheritances and donations, in a more appropriate way for current times, since it must not be forgotten that the element of discrimination that was the cause of the sentence derives from the total disparity of the existing reductions between state regulations and those of the autonomous communities
Without going into further evaluation, the legislator accepted the second option and through Law 26/2014, as we said at the beginning of this post, established the following rules:
SUCCESSIONS WITH NON-RESIDENT CAUSE
a) In the case of the acquisition of assets and rights by inheritance, legacy or any other succession title, if the deceased had been resident in a Member State of the European Union or the European Economic Area, other than Spain, taxpayers will have the right to the application of its own regulations approved by the Autonomous Community where the greatest value of the assets and rights of the relict estate located in Spain is found. If there is no property or right located in Spain, the regulations of the Autonomous Community in which they reside will be applied to each taxpayer.
INHERITANCES WITH NON-RESIDENT OWNER
b) In the case of the acquisition of assets and rights by inheritance, legacy or any other succession title, if the deceased had been a resident of an Autonomous Community, non-resident taxpayers, who are residents of a Member State of the European Union or of the European Economic Area, will have the right to apply their own regulations approved by said Autonomous Community.
DONATIONS OF REAL ESTATE IN SPAIN IN FAVOR OF NON-RESIDENTS
c) In the case of the acquisition of real estate located in Spain by donation or any other legal transaction free of charge and "intervivos", non-resident taxpayers, who are residents of a Member State of the European Union or the European Economic Area , will have the right to apply their own regulations approved by the Autonomous Community where the aforementioned real estate is located.
DONATIONS OF REAL ESTATE ASSETS OUTSIDE SPAIN IN FAVOR OF RESIDENTS
d) In the case of the acquisition of real estate located in a Member State of the European Union or the European Economic Area, other than Spain, by donation or any other legal transaction free of charge and “inter vivos”, taxpayers residing in Spain They will have the right to apply their own regulations approved by the Autonomous Community in which they reside.
DONATIONS OF MOVABLE PROPERTY IN SPAIN IN FAVOR OF NON-RESIDENTS
e) In the case of the acquisition of movable property located in Spain by donation or any other legal transaction free of charge and "intervivos", non-resident taxpayers, who are residents of a Member State of the European Union or the European Economic Area , will have the right to apply the regulations approved by the Autonomous Community where the aforementioned movable assets have been located for a greater number of days of the immediately preceding five-year period, counted from date to date, ending on the day before the date of accrual of the tax.
CONCEPT OF RESIDENTS
Individuals residing in Spanish territory will be deemed to be resident in the territory of an Autonomous Community when they remain in its territory for a greater number of days of the immediately preceding five-year period, counted from date to date, ending on the day before the accrual.
Taxpayers, who must comply with their obligations for this tax to the State Tax Administration, will be obliged to present a self-assessment, performing the necessary operations to determine the amount of the tax debt and accompany the document or declaration in which it is contained or verify the taxable event. At the time of presenting their self-assessment, they must pay the resulting tax debt in the place, form and deadlines determined by the regulations by the Minister of Finance and Public Administrations.
And what about Spanish nationals residing in a non-member State of the European Union or the European Economic Area, other than Spain?
In my opinion, this is the great question that remains unresolved and that will end up being the subject of debate in the Constitutional Court, since there continues to be an element of discrimination, not justified among Spanish nationals. Going back to the example from the beginning, if the heiress that we have mentioned, and applying the current law, instead of being a resident in Germany, were in the United States, we would be subject to the same taxation, since this country is not a member of the European Union or of the European Economic Area.
The legislator saved face before the European institutions, but forgot about his own citizens.
After the publication of this entry, the TS judgment of February 19, 2018, declares the judgment of the Court of Justice of the European Union in Judgment of September 3, 2014. For more information you can consult here
Entry updated on November 23, 2015.