Since the summer of 2014 there has been a wide media coverage on the EU ruling affecting Spanish Inheritance and Gift Tax. The existing tax legislation in Spain, at that time, created a situation of unequal tax treatment depending on whether the deceased and/or the inheritors were Spanish residents or not.
As we all know, the current economic situation in Europe, and the special vulnerability of the Spanish economic and housing market, make Spain a country with appealing potential for foreign investors wishing to acquire real estate here.
Climate, way of living, beaches, but above all affordable prices for those originating from abroad, encourage other European citizens to makes plans for their future here. At a time when accessing credit has become extremely complicated for Spanish nationals, the difficulties for foreigners in buying property in Spain are far fewer.
You may or may not know that a European regulation has been approved to regulate questions of jurisdiction, applicable law and enforcement of all successions where the deceased has passed away on or after the 17th August 2015 (Regulation No. 650/2012 of the European Parliament and of the Council of 4 July 2012).
This regulation can cause difficulties for those foreigners who have not made certain provisions regarding their last Will and Testament, especially for those habitually resident in Spain.
A new tax form was approved in Spain in 2013 by way of Order HAP/72/2013 (Tax form 720). The purpose of this is for the Spanish Tax Authority to collect information on any assets or rights of residents (mainly, although not exclusively) located abroad. This measure was adopted as a means of combating tax fraud by establishing a certain level of control over those with assets abroad. Continue reading