To make the inheritance processing easier, we prepare a power of attorney that you may sign before a Notary in your Country, with no need to travel to Spain. With said power of attorney, we take charge of all arrangements.
France and Spain signed, on 08th January 1963, a tax convention to avoid the double taxation of inheritances – BOE [State Gazette] of 07th January 1964 and, for the French publication, Decree No 64-3 of 02nd January 1964, OJ of 07th January 1964-. This convention, still in force, establishes that real estate properties will be subject to taxation in the country where they are located. On the other hand, article 34 establishes that financial assets will be subject to inheritance tax only "in the State where the deceased resided at the time of death".
Article 9 of the Spanish Civil Code establishes that it is the deceased's national legislation that will be applied to the inheritance. It is, therefore, French law (the definition of the inheritance right, determining the respective shares of heirs, as well as the inheritance rights of the surviving spouse) that must be applied, in Spain, for the inheritance of French persons. As of 17th August 2015, date of entry into force of Regulation (EU) No 650/2012 on international succession, the declaration of succession of French persons who reside in Spain in terms of tax regulations, will change. Indeed, any European Union citizen residing in another Member State may choose, within the framework of a will, the law of the State of their nationality to govern the whole of the succession. In the absence of a choice, the law of the habitual residence will be applied to the whole of the succession. This new regulation does not change anything to your succession if you do not have forced heirs (spouse, descendants or ascendants). It does not change either the characteristics of the Universal community of property, as marriage contracts are excluded from its scope of application.
The Spanish Notary must not necessarily be aware of French legislation. However, both in France and in Spain, we only have six months, counting from the date of death, to submit the inheritance tax return. It is thus important to be well informed in order to avoid errors and time losses that will later translate into delay penalties.
What are the steps of the declaration of succession of a French person in Spain?
1. Ask for the death certificate transcription at the French registry office: If the death takes place in Spain, carefully revise the death certificate and make sure that Mr Jean Paul DUPONT does not become Mr Juan Pablo DUPONT. Remember to report the death to the French Consulate and to request the death certificate transcription from the French registry office.
2. Obtaining French and Spanish certificates of last will. To be used in Spain, the French certificate must be apostilled and translated. A sworn translation is required.
3. The French heir who is a non-resident in Spain must obtain a Foreigners' Identification Number or N.I.E. You must be registered in the census, designated an address in Spain for notification purposes and appoint a tax representative. You can also apply for the NIE at the Spanish Consulate in France
4. You must provide the Spanish Notary with the certificate of French legislation if the French deceased, being a resident in Spain, has chosen the application of the French legislation. When a declaration of heirs has been executed in France, the authorised and apostilled copy of said declaration will be fully applied in Spain.
5. Establishing the estate. The Bank of the deceased will issue a balance certificate at the date of death. But what value should be declared for real estate properties? If you intend to sell the property shortly, it could be interesting not to settle with declaring the minimum tax value. That way you reduce the capital gain paid currently to 19%.
6. Signing the inheritance partition deed before a Notary and submitting the tax forms at the Treasury.
7. Real estate properties will also be subject to a municipal tax called "tax on the increase of land value". Transfer rights are applied unevenly in Spain. Scales vary between 7.65% and 34% depending on the family relationship and on the estate. Indeed, depending on the Autonomous Regions, the heir may benefit from deductions ranging from 40,000 to 250,000 euros. Some, in addition, grant a tax discount ranging from 75 to 99%.
8. Transfer rights may directly be debited from a bank account of the deceased.
9. After the payment of transfer rights, you may dispose of Spanish bank balances that where dependent on the succession and close the accounts. Regarding French bank assets that are subject to the Spanish inheritance, French banks will ask for a Non-Taxation Certificate in France. To obtain it, you must submit a declaration of succession at the French tax authorities and recall the application of the tax convention of 08th January 1963.
10. Registration of real estate properties at the Land Registry: to obtain the registration, you must prove the payment of transfer rights and of the municipal tax on the increase of land value.
