SOME IMPORTANT ISSUES ON THE INHERITANCE TAX FOR FOREIGNERS

SOME IMPORTANT ISSUES ON THE INHERITANCE TAX FOR FOREIGNERS

On this occasion, I would like to remark some relevant issues included in some legal provisions and tax laws and that I consider very interesting because they are directly related to inheritance tax in Spain.

First of all, let us point out some aspects of the present rules by using the British case as an example:

1.- The inheritance will be governed by the law that applies to the personal situation of the deceased person at the moment of the death (according to the British law)

2.- The forms and solemnities of the will shall be governed by the law of the country where they are granted.

3.-The principle of universality applies in the Spanish law, that is, all the assets of the estate of deceased person are counted regardless the country where they are located. The Spanish law applies to the real estates and when it comes to registration and publicity matters.

On the other hand, we must bear in mind that the European regulation number 650/2012 that will come into force in August 2015 and that will change some relevant questions, among them the inheritance law aforementioned, taking into account the residence of the deceased person, for instance. This regulation will also provide the will with direct effects all over the European Union.

Finally, the extremely important judgement of the TJUE given on 3rd September 2014 provides that the Spanish State failed to comply with the European regulations owing to the different treatment or discrimination of the heirs (or deceased) residents and non-residents, as well as the location of the real estate of the inheritance.

This situation is very likely to cause a change in the Spanish regulation in order to adapt it to the TJUE judgement provisions. We hope that the Spanish authorities will take this opportunity to simplify the complex deductions system and special standards of each Autonomous Community and that cause huge internal differences in taxation.

Perhaps, the most important issue is the effects of the judgement which allow the refund of the overpayments occurred on the settlement of the inheritance. These overpayments may imply significant amounts and the application of the resident regime to a person that is non-resident in future settlements.