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Inheritance Tax for non-EU residents

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20 Apr 2018

Spain is formed of 17 different regions plus two autonomous cities that are each empowered to regulate and collect certain taxes, and inheritance tax in particular.

Non-Spanish residents were not allowed to apply the regional law but the state law, normally less favourable. Following an European Court resolution in 2014 the Spanish Government amended the legislation allowing EU residents to chose whether to apply the state law or the law of the region where the property of higher value is situated.

Last February, the Spanish Supreme Court issued a judgment declaring that current inheritance tax legal framework is still breaching the free movement of capital when taxing non-EU residents, and allowing a Canadian to apply the regional law of Cataluña.

This judgment opens the door for taxpayers to claim the refund of taxes paid in the past four years, as it happened in 2014 with EU residents. As long as the law does not change, non-EU residents have to continue paying according to state law but they have now the chance to go to Court and request for the regional law to be applicable. Of course, this makes sense only in case the regional law is favourable compared to the state law.

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