Inheritance and donation tax refund in Spain Through judgments
Through judgments dated on February 19th, and March 21st and 22nd, 2018, the Spanish
Supreme Court (“SSC”) ruled that the regional tax allowances and incentives of the Spanish inheritance and donation tax (“SIDT”) should also apply to non-residents of both European Union (“EU”) and European Economic Area (“EEA”).
The SIDT is a local tax that applies to the acquisition of immovable property either by inheritance or donation. Considering it is a local tax, the autonomous communities in Spain are the ones entitled to set fiscal incentives, which can lead to different outcomes.
Prior to the referred rulings, tax allowances and incentives were applicable only to residents of Spain for tax purposes. Later on, and, as a result of the 2014 judgment issued by the European Court of Justice, those tax allowances and incentives were applied also to tax residents of both EU and EEA.
The particular importance of the 2018 rulings issued by the SSC is EU and EEA non-residents are also entitled to SIDT tax allowances and incentives. In other words, residents of Mexico for tax purposes can also use the SIDT tax allowances and incentives.
Thus, for example, a resident of Mexico for tax purposes can apply for refunding of the SIDT unduly sums paid to the Spanish tax authorities. They should repay the surplus or difference to be in line with the non-discrimination principle.
On this basis, if immovable property located in Spain has been acquired in the past four (4) years either by inheritance or donation and the SIDT was paid to the Spanish tax authorities, we will gladly analyze whether it is possible to request a tax refund in Spain.
Details are very important, and each case has to be studied in depth, as the location of the immovable property is highly relevant. We do work with Spanish firms on a day to day basis. We are ready to assist you as needed.