I have been told that the treatment in the Inheritance Tax is worse in the case of the deceased or the heirs or legatees are not resident in Spain. Is that true and why?

 

That is so, at least as of today. Because the heirs, legatees or beneficiaries of life insurance that are not regularly resident in Spain, or even if residents, if the deceased did not have their regular residence in Spain , the  Tax Inheritance would be requested through “liability”. This means that the competent authority to settle the inheritance tax is the State and the applicable regulations of the state, unlike residents, in which case the competent authority is the Region or autonomy where the deceased had his regular residence and the applicable regulation  such, if the latter has made use of its powers.
 
The fact that the regulation to be applied is of the state and not the region/or autonomy can harm the interests of non-residents, who may end up being taxed much more than their resident counterparts. This is because the inheritance tax, despite being a state tax, has been transferred to the regions and most of these have included exemptions and reductions that actually mitigate the fiscal impact of the tax.
 
However, we recommend that you contact a tax advisor specializing in the field as Abad & Asociados, as the European Commission brought on March 7, 2012 before the Court of Justice of the EU proceedings against Spain, considering that non-residents are being discriminated in the area of ‌‌estate inheritance taxes. 
 
Have in mind that the European Commission is likely to impose an adaptation of the regulation of inheritance taxation in the Spanish State, which would open the option to request a refund of overpaid tax to the competent authority provided that the claim had not prescribed, and that the amount paid in excess has not been deducted from the tax payable in the place of regular residence of those affected.  
 
If you paid the inheritance tax to the state because you were non-resident, you may want to contact Abad & Asociados Abogados y Asesores Fiscales to keep you informed of developments that may occur in this area and exercise your potential right for a refund when possible.
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