When Belgians or Dutch people inherit property in Catalonia, they owe Spanish inheritance tax. Spanish national legislation regulates both inheritance tax and gift tax, but the various autonomous regions may differ from this. For example, the region of Catalonia has its own interpretation. This article will explain more about inheritance taxes in Catalonia.
In the case of an estate, you should first determine the value of the property. For this, we use the tax value.
The tax value is the minimum acceptable value of a property for the Spanish tax authorities. This prevents taxpayers from understating the value when purchasing property to avoid registration duties. This system is similar to the control valuation in Belgium and is also used when valuing estates in Spain.
We use this tax value to value the property in the estate. We can obtain the tax value for you.
Specifically: you inherit a flat and the estate agent estimates the market value at 190,000 euros. However, the tax value is only 118,000 euros. Then the flat is declared in the estate deed at 120,000 euros.
Inheritance tax deductions
Once the value of inheritance is determined, deductions are applied. These reductions differ depending on the age of the heir and the relationship with the testator. For example, for a child over 21, there is a reduction of €100,000. There are also reductions for people with disabilities and the elderly. The reductions are per heir.
An example. You and your brother inherit a flat in Catalonia from your mother. The tax value of the flat is 120,000 euros. In addition, there are bank balances in Spain worth 20,000 euros. The total value of the Spanish estate is 140,000 euros.
You will then both be entitled to 70,000 euros. However, you are eligible for a reduction of 100,000 euros per heir. This means that you do not have to pay any inheritance tax, as the taxable base is 0 euros.
For example, if the total value of inheritance is €500,000, you will both inherit €250,000. You are then also entitled to a reduction of 100,000 euros, so the rates will be applied to an amount of 150,000 euros.
Inheritance in Catalonia: the rates
Rates in Catalonia start from 7% up to the first 50,000 euros and go up to 32% from 800,000 euros. In the previous example of the estate of 500,000 euros, where you and your brother each inherit 250,000, the tax is then calculated as follows.
Value of estate per person: €250,000
Applicable reduction: - 100,0000 euro
Taxable base = €150,000
Disc I from 7% to 50,000 euros= 3,500 euros
Disc II from 11% to 150,000 euros = 11,000 euros ((150,000 euros - 50,000) euros * 7%)
The total inheritance tax in this example is then €14,500.
Other taxes and charges
In addition to the inheritance tax, the heirs will also have to pay the plusvalia muncipal pay. This is a municipal capital gains tax on the cadastral capital gain.
There are also costs associated with settling an estate in Spain. Consider notary and registry fees, administrative costs, powers of attorney, translations, etc.
Inheritance tax in Belgium?
The total value of the estate will additionally be taxed in Flanders, Brussels or Wallonia. This concerns not only the Belgian assets in the estate, but also the Spanish ones. However, the Flemish inheritance tax provides for a reduction of the inheritance tax paid in Spain.