Spain is the second highest OECD country when it comes to inheritance, only below Austria. According to the stats, the average inheritance in Spain is above 105,000 EUR (about £ 93,600).
These data are surprising if we take into consideration that Spain is in the 28th position in terms of GDP ranking among OECD countries – well below the average. However, the explanation is easy; one of the financial ideas Spaniards have burned into their minds is the convenience of buying property instead of renting.
As a result, Spain is a country with a big culture of buying and selling real estate properties, and this kind of investment has traditionally been very profitable (with the general exception of 2008 crisis).
The Average Can Be Misleading
Nevertheless, the average can be misleading. Although it is true the inheritance average is very high, it is also a fact that Spain has one of the biggest inequalities among the OECD. The bottom 20 % of inheritances in Spain receive less than 10,000 EUR (£8,900), while the top 20 % receive more than 350,000 EUR (£311,750).
Are There Changes on the Horizon?
When it comes to tax paying, succession tax is one of the most polemic topics in Spain. Though there is a general law for the full country, the country is divided into regions called comunidades autónomas and the tax regulation is transferred to each of the regions, meaning that there are very big differences in inheritance between the different regions.
In 2018, all the regions can expect to obtain a total amount of more than 2,600 million euros (£2,300 million), but the Congress has been discussing a raise in the minimum amount that doesn’t need to pay any tax, and they have even been debating removing the tax completely.
The justification of this is because an individual should have already paid taxes for their goods when they have obtained them, and as a consequence the succession tax would be a double taxation situation.
The party that made the proposal is not currently governing, and it is not even the main party of the opposition. Besides, the Spanish government is weak, now with the prime minister’s party highly dependent on negotiation with their coalition partner, who have already stated that they do not support such a change.
However, while the central government discuss the convenience of these changes, the regions with right wing parties in the government (mainly PP and/or Ciudadanos) may take the steps needed in order to remove succession tax in their regions.
No matter what, it seems that probate will continue to be a difficult process for everyone in the near future. If you want help with your Spanish will or the probate, call us now for a free initial consultation! Contact Details.