If you receive an inheritance and the testator lived in Flanders, you need to declare all the real estate in the estate. You should also include Spanish real estate in the declaration of estate. Therefore, in this article you will find more information on the declaration of estate with Spanish real estate.
Where should I declare Spanish property?
In the two countries: both in the declaration of inheritance to the Flemish Tax Administration (VLABEL) and to the tax administration of the Spanish autonomous region where the property is located. For example, if you inherit a property in Girona, you should declare this asset both to VLABEL as at the Agència Tributària de Catalunya.
How do I value Spanish property?
For the declaration to VLABEL, you should basically assume the sales value. If the sale value is not determinable, any rental income will be considered. If that also does not solve the problem, you can look at the value assigned by the Spanish tax authorities.
Since January 2022, the Spanish tax authorities automatically determine a reference value for every property. In practice, we find that this value corresponds to a normal sales value. Therefore, we recommend use the Spanish tax reference value For estate declaration with Spanish property. We can retrieve this value for you.
Note: the reference value (valor de referencia) is not equal to the cadastral value (valor catastral). The cadastral value is usually significantly lower than the market value.
For the Spanish declaration, you will have to start from the reference value. If, in your opinion, this value does not correspond to the sales value, you can appoint an appraiser. The Spanish tax authorities do have 4 years to dispute this appraisal.
Do I pay inheritance tax twice?
There is no double taxation agreement between Belgium and Spain for inheritance tax purposes. You will therefore have to pay inheritance tax in both countries. In Flanders, foreign assets count towards the calculation of the total inheritance tax. You then pay the regular rates on the entire inheritance. In Spain, on the other hand, you only pay inheritance tax on the assets located in Spain. So the Spanish tax authorities do not look at the assets located in Belgium.
However, Flemish regulations allow you to offset the inheritance tax paid in Spain against the Spanish inheritance tax. You can therefore reduce the Flemish inheritance tax by the inheritance tax paid in Spain.
A simple example: You inherit a EUR 200,000 flat in Antwerp from your father. In addition, you also inherit a property of EUR 300,000 in Calpe, Spain. The total value you have to declare to VLABEL is then EUR 500,000. On this, you will pay EUR 87,000 in inheritance tax. In Spain, at the Comunitat Valenciana, gives you EUR 300,000. On this, you pay around EUR 15,900. You can deduct this EUR 15,900 from the EUR 87,000 tax due in Flanders. For Flemish inheritance tax, this leaves you paying EUR 71,100 in inheritance tax.
Note: Heirs resident in Spain also pay Spanish inheritance tax on worldwide assets, including assets located in Belgium.
By what deadline should I file the return?
For the declaration at VLABEL basically gives you four months' time from the date of death. If the death took place outside Belgium, deadlines of five or six months apply. You can also request a two-month postponement. You need to justify a longer postponement. You will then receive the assessment notice within three months of submitting the tax return.
In case of postponement, a tax increase of 1% to 10% of the tax due. In case of a late return, there is a penalty of 5% to 20% of the tax due.
For Spain you basically have six months from the date of death, with possibility of deferral. The conditions for deferral depend on the region. However, we find that settling an estate in Spain can take a long time. Indeed, various bodies, including banks, have to issue certificates on the state of the testator's assets.
The mismatch between the two procedures ensures that you may have to file the return with VLABEL earlier than the Spanish return. In that case, you will not have filed your Spanish inheritance tax return yet. Thus, you will cannot yet reduce the inheritance tax paid in Spain of Flemish inheritance tax. In that case, you can later recover a piece of Flemish inheritance tax within five years.
Do you have questions about estate returns? We assist you with the declaration of estate of Flemish inheritance tax. In addition, we can fully guide you from Belgium for the settlement of an inheritance in Spain. Feel free to take contact on.