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H OW TO D E T E R M I N E T H E VA L U E O F I N H E R I TA N CE ASS E TS I N S PA I N
Spanish tax legislation establishes certain concepts common to the different taxes and duties. One of these concepts is what we call the “taxable base”, which for inheritance tax would be the net value of the assets and rights to be distributed to each individual beneficiary. Before determining the individual net value that would correspond to each heir or legatee, we must determine the total amount of the assets, rights and obligations that form part of the inheritance in Spain of the deceased, to be distributed later. Thus, Article 659 of the Spanish Civil Code establishes that “inheritance comprises all the assets, rights and obligations of a person, which are extinguished by his death”. This estate, or gross estate of a person after death, is made up of goods and rights (which would be the assets) but also of burdens and obligations (which would be the liabilities). So, what assets form part of an inheritance in Spain? Generally speaking, and merely for the purpose of giving an idea to readers, the assets and rights that may form part of the estate of a deceased person include the following: 1. Movable assets of special significance – assets that due to their special significance or value must be brought to the estate, such as jewellery, watches and works of art, all valued according to market criteria (i.e. what value these assets have on the market). Sometimes it is necessary to call in experts or appraisers to determine the value of these assets. 2. Other movable assets – shares, company shares, hire purchase, financial leases. 3. Real Estate – information about real estate owned by the deceased can be obtained from Land Registry files. If the real estate is not registered in the Land Registry, it will be necessary to use other means of proof to confirm 170
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that the deceased was the owner of the property (private contracts, deeds, supply contracts, etc.). Any encumbrances on the real estate (easements, censuses, pensions) must be deducted from the value of the real estate in Spain (whether it is determined by its market value or its tax value). Mortgages in Spain, however, should be treated as debts, from the point of view of inheritance tax in Spain, and not as encumbrances on the real estate. 4. Bank accounts in Spain and financial assets – you need to check with any banks where the deceased had accounts and other financial products (deposits, instalments, shares, stocks and shares, etc.) and request certificates of the existing account balances on the date of death. 5. Vehicles – you need to consult the Directorate General of Traffic registers to find out if there are any vehicles registered in the name of the deceased. 6. Life insurance in Spain – it should be borne in mind that the amounts received from a life insurance policy in Spain never formed part of the assets held by the deceased at the date of death and therefore, in principle, they cannot be included in the estate or assets of the inheritance. However, the beneficiary of a life insurance policy must pay inheritance tax on the amounts received. If, in addition, the beneficiary is an heir, the amounts received from the life insurance will be added to the value of the assets and rights that form part of his or her percentage of the inheritance.
Welex Lawyers & Accountants C/ Ramón Gómez de la Serna 23, Local 7, Marbella Tel. (+34) 952 775 521 info@welex.es
