As a resident of Flanders, your heirs will pay inheritance tax in Spain on your second residence. In addition, they will also pay inheritance tax in Belgium. This article explains which taxes apply to your estate in Spain.

Inheritance tax in Spain

The Spanish inheritance tax system is complex and is regulated partly at national level and partly at regional level. Regardless of the applicable inheritance law, Spanish inheritance tax always applies to all real estate located in Spain (unless the property is owned by a company). Note that the heirs may not dispose of the estate until they have paid the inheritance tax.

Find more information on estate declaration in Spain here.

Inheritance tax in Spain is calculated based on the inheritance of the heir and not on the entire estate itself. The rate ranges between 7.65% and 34%. However, different reductions are possible based on your relationship with the heirs. In addition, Spanish regions have introduced additional reductions that allow you to reduce the tax payable. For example, consider the inheritance tax exemption of €1 million per heir in Andalusia. Also, the autonomous region of Valencia has an exemption of 100,000 euros per heir in direct line. Catalonia then again has its own system for inheritance tax.

Find out more about how Spanish inheritance tax is calculated.

Inheritance tax in Flanders

As a resident of Belgium, your estate in Spain will also be subject to inheritance tax in Belgium.

Valuation of assets in Spain

Your assets in Spain will be valued first. For immovable property, the tax authorities apply a three-step criterion:

• First, it looks at the sale value from deeds and records;
• if the deed is not available, gross proceeds from existing leases will be considered;
• Finally, we can look at the value that was used to calculate Spanish inheritance tax.

We can obtain a tax-acceptable current valuation of your property in Spain for you. Indeed, the Spanish tax authorities have had an automated way of estimating properties since 2022. These estimates are based partly on the sales prices of similar properties in the region.

Tax calculation

Once the assets were valued, the estate is split into an estate with movable assets and an estate with immovable assets for straight line heirs and the surviving partner. Your Spanish assets are also included. On both estates, the progressive rate applied. The rate for acquisition in the direct line is between 3% and 27% in Flanders.

So know that your assets in Spain will cause your heirs to be in a higher taxable bracket.

However, there is a tax relief for foreign immovable property in Flanders. Inheritance tax paid abroad on immovable property is deducted from the Belgian tax payable on the immovable estate, but with a maximum of the amount paid in Belgium on this immovable property as inheritance tax.

Your assets in Spain will therefore be taken into account in Belgium to determine inheritance tax rates, which will result in a higher tax bracket. The tax payable on immovable property will be reduced by the inheritance tax on immovable property paid in Spain.

How to claim tax relief?

Heirs wishing to claim the tax relief should submit three documents to the Flemish tax authorities:

• certified true copy of the declaration by competent foreign authority;
• certified copy of rights inheritance by competent foreign government determined by them;
• dated proof of payment of duties paid abroad.

The heirs have two years to submit these documents. If the heirs submit the documents with the tax return, they can enjoy the reduction immediately. However, if they submit the documents only later, they can claim a tax refund.

Last update: August 2022.