The change is forced by the sentence of the European Court of Justice dated 3rd of September 2014. It consists in the equal treatment of the non-residents of Spain and the residents living in the Autonomous community where the properties received are situated, or where the resident lives or was living. This can be quite important in some parts of Spain, as the European citizens (nationals of any of the 28 countries of the EU plus Liechtenstein, Norway and Island) can now be entitled to the same reductions as the residents. In the Canary Islands it is mainly important for inheritances or gifts made from 1.01.2008 up to 30.06.2012, when big reductions were applicable only to residents, but some good benefits will apply still today. Nobody will end up paying more inheritance or gift tax with this change; therefore it is a change to reduce inheritance tax in Spain when there are non-residents involved.

The change is of interest to 3 different groups:

  1. Non residents of Spain with properties in this Country
  2. Those who have already received a Spanish inheritance or donation as a non resident in Spain
  3. Spanish residents (regardless their nationality as far as citizens of the EU) who have received a foreign donation or inheritance while they were living in Spain.

We are now in a similar situation to the one when Spain had to change its rules regarding Capital Gains Tax affecting non-resident European citizens (residents were paying, at that moment, a 15% CGT and non-residents a 35%). Spain, not only changed the offending law but it was forced to pay back the difference between the higher discriminatory rate and the rate imposed on residents, resulting in substantial rebates being paid out by the Spanish State.

Spain has removed the discrimination in the Law 26/2014 and those who suffered a loss as a result of this discrimination now have the right to apply for a rebate from the Spanish Tax Authorities. The only question now is whether this attempt will be successful not only for those inheritance and gift taxes not yet lapsed (the lapsing period in Spain is 4 years), but also for the ones already lapsed (it was not possible to obtain rebates in the lapsed capital gains tax for the discrimination referred above).

We have already contacted the clients for whom we have organized the inheritance tax and they are not yet lapsed (gifts are normally less usual because they normally include capital gains tax to be paid by the donor, as well –which does not happen when inheriting-), but we can always help others affected, even on a no-win no fees basis.