Inheriting in Spain does not only imply receiving goods or money: it also means facing the Inheritance Tax, a tax whose amount varies according to the value of the inheritance, the degree of kinship and, above all, the autonomous community in which it is taxed. The territorial disparity (Madrid or Andalusia apply almost total bonuses, while in other regions the cost can be very high) has generated controversy in recent years.
In this context, many people wonder if there is a real possibility to avoid this tax. And according to the lawyer Isabel Merino, from Debelare Abogados, the answer is clear: there is only one way.
What is Inheritance Tax and how does it work?
Inheritance tax is paid when “it is levied on the transfer of assets, rights and obligations of the heirs of a deceased person”. This is how Merino defines it, according to statements collected by 20minutos, recalling that it is a tax regulated by Law 29/1987 and its regulations.
However, since Law 22/2009, the autonomous communities have full capacity to set rates, reductions and allowances within certain margins. This distribution of powers explains that the same inheritance can have completely different tax treatments depending on the territory.
The only way not to pay: resignation pure and simple
Merino makes it clear: “The only way to avoid this tax is to renounce the inheritance”. But not just any renunciation will do. Only one specific modality allows to avoid the payment: the pure and simple renunciation, with which the heir totally rejects the inheritance and does not receive anything.
In this case, explains the lawyer, “he does not take anything, but he does not pay any tax either”. And she adds: “as there is no transfer of assets, in this case, there is no tax to pay”. This is, therefore, the only legal way to avoid Inheritance Tax. Everything else involves paying.
Renouncing in favor of a third party: the mistake that doubles taxes
A common, and mistaken, belief is to think that renouncing the inheritance in favor of another relative avoids paying. The lawyer warns that this option is, in reality, the most costly.
Merino recalls that both Law 29/1987 and the Civil Code consider this gesture as a “tacit acceptance”. The consequence? That the heir has to assume two different taxes:
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First, “the tacit acceptance of the inheritance, which would give rise to the payment of inheritance tax“.
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Then, “the donation of the part of the inheritance to a third party, which would give rise to the payment of gift tax“.
In other words: paying to inherit and paying to give away what has been inherited. A double tax hit that many are unaware of.
Tacit acceptance: everyday actions that force you to pay
The expert also warns of a frequent risk: certain actions may be considered tacit acceptance even if no document has been signed.
For this reason, he insists on the importance that “the waiver must be express“, because there is the possibility that “the heirs may take actions that may be understood as tacit acceptance of the waiver“.
A simple administrative procedure, disposing of an asset or even managing the deceased’s accounts can trigger the obligation to pay the tax.
Is it advisable to renounce the inheritance?
Although renouncing avoids the tax, it is not always the best decision. Before doing so, it is a good idea to evaluate:
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If the estate has debts.
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If the Autonomous Community applies extensive bonuses.
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Whether the inherited wealth may have emotional value or future utility.
In communities where the tax is almost 100% subsidized for direct relatives, renouncing can be a mistake. In others, where the cost is high and the inheritance is accompanied by debts, it may be the most prudent option.
