Increasingly, inheritances have cross-border elements, either in the persons and/or in the property involved.
After death, the assets must be accepted, taxes paid and the change of ownership managed.
The most common categories are:
– Nationals residing in their national territory with assets abroad (Example: a Catalan resident in Catalonia who has a property in France)
– Non-nationals residing in a national territory with assets in such national territory and/or abroad (Example: a foreigner resident in Catalonia/Spain who has a property in Catalonia/Spain)
– Non-nationals and non-residents with assets on national territory (Example: a foreigner who lives outside Catalonia/Spain and has a property in Catalonia/Spain)
From a civil law perspective:
The common goal in all cases is to avoid a legal battle to determine which civil law of succession should apply to the death.
And the solution is to grant a will by making a professio iuris, that is, determining the law that will govern one’s future succession, choosing between the law of one’s nationality or that of one’s habitual residence.
From a tax perspective:
Tax law is not a matter of choice.
The taxation of inheritance in a cross-border inheritances is:
- By personal obligation
The taxpayer (who receives property by inheritance) is taxed on all inherited property – regardless of where it is located – in the state where they have established their habitual residence.
- By actual obligation
The taxpayer (who receives property by inheritance) is taxed in the State where the property is located.
In all cases, international agreements between the state of residence of the taxable person and the state where the other assets of the estate are located must be reviewed.
Note that if the property to be inherited is urban property, the municipal capital gains tax is also due, which consists of a single payment in the town where the property is located.