In Spain, the “Inheritance and gift tax” is a state tax applicable throughout the national territory (except in the Basque Country and Navarra who have their own completely different tax system), but is transferred to the several autonomous communities, (i.e, Murcia region, Valencian Community, etc), which can approve their own rules in order to supplement or replace the basic rules laid down by the central Government.

However, this chaotic situation of delegated regional legislation, has in practice led to very high differences in treatment between expats and non residents depending on the specific location of the property or assets.

In simple words, the current Spanish law IS DISCRIMINATORY because it establishes unjustified differences in treatment between residents and non-residents in the 17 different autonomous communities of Spain.

Fortunately, the good news is that this situation is about to chance as the European Court of Justice (ECJ), has determined in a recent landmark ruling (C127/12), that the Spanish Succession and Donation tax fails to comply with the European rules, by not permitting non-residents to benefit from the tax advantages and deductions offered by regional administrations to resident and Spanish citizens. Moreover, the ECJ ruling declares that the design of the Spanish tribute is a blatant restriction on the free movement of capital within the EU territory, which is one of the fundamental principles of the European Union market, infringing the Treaty of Operation of the European Union.

According to the EU Commission, discrimination occurs when the deceased or donor, the heir or donee are not resident in Spanish territory and particularly in the case of donations, where the property being transferred is located abroad, regardless of the place of residence of the taxpayer.

The EU Court states that it is contrary to the free movement of capital, because it discourages non-residents from making or holding investments in any EU country.

To be accepted, any possible difference in treatment must be justified by overriding reasons of general public interest. In the Spanish case, the ECJ considers that there is no difference whatsoever between the “objective” situation of a resident and a nonresident that may justify a different tax treatment. Subsequently, as indicated before, any difference in treatment concerning tax reductions will simply lead to discrimination and as a result it will be forbidden.

In conclusion, This ECJ decision will force Spain to implement a “new state regulation”. Likewise, it implies a perfect argument for those non resident people who might have paid excessive taxes on inheritance or donations, to bring legal action against the Government aimed to claim back the refund of those taxes paid in excess.

Therefore, should you ever need a reliable, 100% independent, honest, cost effective and efficient English speaking Spanish solicitor, to help you with your inheritance taxation matters, (or with any other legal problem), make sure you bookmark this page, visit our websites: and

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Thank you very much for your kind attention and we look forward to helping you!

Mr Oscar Ricor

“NON-PRACTISING ENGLISH SOLICITOR IN ENGLAND AND WALES”, under the “Solicitors Regulation Authority” (SRA) SRA number 519196 and practicing Spanish Solicitor Nº1247

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