Inheritance of a French person in Spain

Article 30 of the Spanish-French tax Convention on double taxation of 8^th January 1963, Spanish O.J. of 07/01/1964 and, regarding the French publication, Decree No 64-3 of 02^nd January 1964, O.J. of 07^th January 1964, establishes that real estate properties will be subject to an inheritance tax return in the country where they are located, in this case Spain. You must thus sign and submit in Spain, both the partition deed and the declaration of succession. The latter must be submitted before the non-resident central tax Administration in Madrid.

Article 34 of the same convention establishes that the tax return regarding the financial assets must be submitted in the State of the deceased's last address. In such conditions, the Spanish financial assets of a French citizen who resides in France for tax purposes will be taxed in France.

In Spain, like France actually, you have a period of 6 months counting from the date of death, to submit the inheritance tax return. After this six-month period, the delay penalties will be applied as follows:

Per month of delay: 1%

More than 12 months: 15%, in addition to the delay interests

 We can ask for a deferment of the tax return deadline. Indeed, up to the 5^th month after the death, whether intervened in Spain or abroad, we can ask, just once, for a deadline extension for six months or more. The inheritance tax return must then be submitted, without penalties, at the latest one year after the death. After this new deadline, penalties will be applied with retroactive effect to the first deadline of six months after the death. The suspension of delay penalties does in no case affect the application of delay interest. It is of course possible to submit a preliminary tax return and to settle the succession rights to bring to an end both the interest and the delay penalties.

 In civil matters, Article 9 of the Spanish Civil Code establishes that it is the deceased's national legislation that will be applied to the inheritance.

However, the entry into force, on 17^th August 2015 of Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 affects international successions. The Regulation introduces the option between national civil legislation and that of the deceased's place of residence. If no prior choice is made, the legislation of the place of residence will always be applied. For the Spanish succession of a French citizen who for tax purposes resided in France, this does not change anything. It is the French civil legislation – in no case taxation – which remains applicable even in Spain. This means that, in civil matters, it is the notarial deed signed in France that will be applied in Spain. The French marriage contract, the donation to a surviving spouse as well as the legal reserve of descendants, for example, are strictly respected and applied in Spain.

Taxation falls within the sovereignty of each country. Actually, Spain assigns the competence of succession imposition to Autonomous Regions. They all establish deductions, close to 100,000 euros to inherit as well as tax reductions close to 99% per heir. Let us compare taxation in the Community of Valencia (Alicante, Castellón and Valencia), the one in Murcia and then Madrid. The Spanish real estate property of a couple, married under the marriage contract of joint property, is assessed at 650,000 euros. The deceased leaves a surviving spouse, aged 80, who chooses a usufruct, as well as two children who inherit the rest of the estate in equal shares. The surviving spouse will be taxed, under the succession right, zero euros, in the Valencian Community, against 14.34 euros in Murcia and zero euros in Madrid. Each of the children will be taxed 50.57 euros in the Valencian Community against 183.97 euros in Murcia and 50.26 in Madrid.

The transfer of real estate property, whether or not in return for payment, is also subject to a local tax called local tax on the increase of land value. The calculation takes into account the municipality where the asset is located, the duration of ownership, the purchase value as well as the transfer value.

Finally, I particularly bring to your attention the fact the non-residents are subject, in Spain and every year, to the non-resident income tax, whether their real estate properties are rented or not. In fact, the potential rent only increases the tax base. They will be subject by the mere fact of owning the real estate property which is not their main place of residence. The tax return must be submitted before 31^st December of the next financial year.

 What are the steps of the declaration of succession of a French person in Spain?

 You are advised to follow the following steps:

1. To obtain a multilingual death certificate.
2. To obtain a certificate of the French last wills, which must be apostilled. The office will take care of the apostille procedure for you. This document will justify the existence or non-existence of a will in France. Usually, French Notaries incorporate it to the notarial deed.
3. To check the Spanish last wills;
4. To check the Spanish central registry for life insurances. This is a mandatory formality here;
5. To prepare the inventory of the furnishings as well as their appraisal. It is not a compulsory procedure in Spain but it will be taken care of if you wish;
6. To appraise the real estate property. The Spanish tax administration most often proposes a minimal appraisal. The proposed value is usually lower than market value but by retaining a higher or equal value than that of the Administration, you are sure to avoid a tax adjustment. Here it is necessary to examine the price of similar assets on sale. If you consider to put the asset up for sale in the short or medium term, we could provide you a study aimed at minimising the capital gains tax, currently taxed at a rate of 19%;
7. To prepare a power of attorney, in French, that each heir can sign before the Notary of their choice in France. The deed must be apostilled. The office will take care of all the apostille procedures. This power of attorney will allow to regularise the whole succession on your behalf in Spain;
8. To obtain a Spanish tax number. You can apply for and obtain yourself a Foreigner's Identification Number or NIE from the Spanish Consulate in France. Failing that, we will obtain from the local Administration a Tax Identification Number that will replace your NIE;
9. To appoint a tax representative in Spain for each heir and inform of a Spanish address for the purposes of notification of administrative actions;
10. To obtain a certified copy of a potential marriage contract, of a donation to a surviving spouse, of the report for the opening and description of a potential holographic will, of the notarial deed signed in France;
11. To order a sworn translation of all the deeds written in French;
12. To sign the partition deed concerning the acceptance of the succession in Spain and before a Notary;
13. To prepare and then submit the declaration of succession to be submitted at the non-resident service in Madrid;
14. To request the settlement of the local tax on the increase of land value;
15. To register the new property deed with the Cadastre in order to update the identity of future debtors of the local taxes;
16. To register the new property deed with the Land Registry;
17. To underwrite a home insurance if you wish;
18. To update the identity of the new owners of the contract with the water, electricity and possibly gas companies, if you wish;
19. To update the identity of the new owners with the Home owners' Association;
20. To request the direct debit of local taxes, of electricity, water and/or gas bills, of the insurance premiums and the fees of the home owners' association directly to your French bank account if you wish, without opening a bank account in Spain and multiplying the bank charges. The IBAN was conceived to simplify your life and you could take advantage of it;
21. To report our intervention;