How is an international inheritance processed? How is it taxed?

Version Spanish

When a person dies in Spain and leaves assets outside the country, or when the deceased was a foreigner but had international assets, the heirs experience a certain amount of confusion when it comes to distributing the inheritance.

Why? Because: which laws apply? Do procedures have to be carried out in several countries? Where are taxes paid?

International inheritance is becoming increasingly common, and it is becoming essential to know how to deal with it should the need arise.

What do we mean by international inheritance?

We refer to this inheritance as somewhat different when there is a foreign element in the succession. For example:

If the deceased had assets in other countries.

If the deceased was a foreigner (even if they resided in Spain).

The death occurred in Spain, but part of the estate is outside Spain.

If the heirs live in different countries.

If any of these circumstances arise, the inheritance is no longer purely national and a «game» with special rules begins.

What law applies to an international inheritance?

One of the most important points.

Since 2015, Regulation (EU) 650/2012, known as the European Succession Regulation, has applied in most cases.

As a general rule, the law governing inheritance is that of the country in which the deceased had their habitual residence at the time of death, regardless of their nationality and the location of their assets.

In other words, imagine that a person habitually lives in Spain and dies. Well, Spanish law applies, even if they have assets in France, Germany, Italy, or anywhere else.

The choice of law in the will

The Regulation allows a person to choose in their will that the law of their nationality should apply rather than that of their habitual residence. This is what usually happens with foreign citizens residing in Spain who prefer their inheritance to be governed by the law of their country of origin.

Finally, it should be noted that it applies in almost all European Union countries, except Denmark, Ireland, and the United Kingdom. If there are assets in any of these countries, it may be necessary to analyze the specific regulations of that country.

How to process an international inheritance

Even if there are assets in different countries, the procedure begins in a similar way to a domestic inheritance.

• Application for a death certificate
• Application for a certificate of last will and testament
• Will (if there is one) or declaration of heirs (if there is no will).
• Inventory of assets in Spain and abroad

In an international inheritance, it is essential to identify and assess whether there is real estate (homes, businesses, land) in other countries, as well as accounts, shares, funds, or investments. It is also important to find out whether there are any debts outside the country.

In many cases, it is necessary to have documentation issued in the country where they are located, translated and, sometimes, legalized or apostilled.

Is it necessary to complete inheritance procedures in different countries?

One of the most common questions our clients ask us.

The answer is: in many cases, yes, although it is not always that complicated. Whether you have to complete paperwork in several countries depends mainly on where the goods are located, the type of goods, and whether the countries involved belong to the European Union.

Let’s look at each case in detail:

Procedures in Spain

If the death occurs in Spain or the deceased had their habitual residence here, the main inheritance proceedings are normally initiated in our country, and the following procedures, which we have outlined above, are mainly carried out:

• Obtaining the death certificate and the certificate of last will and testament.
• Locating and processing the will or, failing that, declaring the heirs.
• Acceptance and award of the inheritance before a notary.
• Filing inheritance and gift tax returns, where applicable.

This procedure already serves as a basis for justifying heir status before foreign authorities.

Procedures in other European Union countries

If the deceased person had assets in other European Union countries, the European Succession Regulation greatly facilitates the process.

The European Certificate of Succession

This is key in these cases, as it allows you to prove your status as heirs, legatees, or administrators of the estate in other European Union countries, without having to initiate new succession proceedings in each country. This means, for example, that you can access and carry out procedures relating to accounts and real estate in other Member States, as well as carry out procedures before notaries or administrative authorities.

This document is normally requested in the country where the main inheritance is being processed and is directly valid in other EU countries that apply the Regulation.

However, some countries may require additional formalities, such as official translations, presentation before a local notary, or the payment of specific taxes.

Procedures in countries outside the European Union

When assets are located in countries that do not belong to the European Union, the situation becomes complicated because it is common for:

• An independent succession procedure is required in accordance with local legislation.
• It is necessary to provide Spanish documents that have been legalized or apostilled.
• The involvement of lawyers or notaries is required in the country where the assets are located.

Furthermore, not only that, but since each country has its own rules on inheritance and taxation, the deadlines, costs, and requirements vary considerably.

Can the entire inheritance be centralized in a single country?

In practice, this is not always possible, especially when there are properties or businesses abroad. However, good planning and the use of tools such as the European Certificate of Succession can reduce duplication, avoid unnecessary procedures, and streamline the overall management of the inheritance.

How is an international inheritance taxed in Spain?

Taxation is one of the aspects that raises the most questions in international inheritance.

Knowing where to pay taxes, on which assets, and within what time frame is essential to avoid penalties and problems with the authorities.

In Spain, international inheritance is mainly taxed through inheritance and gift tax, although other taxes may apply depending on the type of assets inherited.

It is a tax that heirs must pay on the assets and rights they receive as a result of a person’s death.

In international inheritances, the first thing to determine is whether or not the heir has tax residence in Spain, as this will be fundamental.

Heirs with tax residence in Spain

You are required to pay tax in Spain on the entire inheritance, regardless of where the assets are located. In other words, for tax purposes, Spain taxes the worldwide inheritance of the resident heir.

Heirs not resident in Spain

If you are not a tax resident here, you are only required to pay tax in Spain on assets located in Spanish territory.

What happens if you also pay tax abroad?

In many international inheritances, assets located in other countries are subject to local inheritance taxes. This can lead to double taxation, meaning that the same asset is taxed in two different countries.

Deduction for international double taxation

Spanish regulations allow for a deduction for taxes paid abroad, provided that:

The foreign tax is similar to Spanish inheritance tax.

The asset is effectively taxed in both countries.

The deduction has limits and does not always cover the total foreign tax, so it is essential to calculate the overall tax liability carefully.

Agreements to avoid double taxation

Spain has a number of international agreements that allow double taxation on inheritance to be avoided or reduced, although these are not as numerous as in the case of income tax.

When no agreement exists, Spanish law allows deductions to be applied for taxes paid abroad, within certain limits.

As we can see, international inheritance can become a little complicated depending on the countries involved. Due to its unusual nature, it is one of the areas of inheritance law where it is most necessary to seek specialized legal assistance to inform you of everything from the outset and accompany you throughout the process so that you do not make decisions that could be detrimental to you.

Autor

Manuel Hernández García

Director and Partner, Vilches Abogados Law Firm

Lawyer of the Madrid Bar Association 72,539

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