Q. My husband deceased a year ago in the u.k. while on holiday even though we have both residen in Mojacar for over 20 year . He has left me half of a villa and a bank account (both in Mojacar). The total value of the estate was just over 120000 euro, and I paid no tax as my solicitor said that as we where resident in Andalucia I was entitled to 175000 euro tax free. This was all done and dusted and my solicitor gave me all my paperwork over six months ago.
I have just received a letter from the Agencia Tributaria in Madrid claiming I owe them just over 13000 euro in inheritance tax plus just over 650 euro surcharge plus as small amount of inheres. What is all this about?
A. In Spain non resident beneficiaries and resident beneficiaries do not pay the same amount of inheritance tax ( their is a lot of details to this and the European courts have recently told Spain they must change this , but this would be another article ). If you as the beneficiary are resident in Andalucia (and you prove it ) you are entitled to present your inheritance tax self assessment form in Andalucia and in this case your inheritance would be exempt as inheritance received in Andalucia from a husband are exempt if they are worth less than 175,000 euro. . What has happened is that you presented your self assessment form in Andalucia claiming the exemption that you where entitled to as resident). The tax office in Andalucia on looking at your inheritance deed have decided that your self assessment should not have been presented in Andalucia , and instead it should have been presented in Madrid as a non resident heir. In Madrid as a non resident heir you where only entitled to 16,000 euro exemption , so they have taxed you on the rest and then applied surcharge and interest for late payment .
Why have they done this ? Because you did not provide sufficient indication on the acceptance of inheritance deed of you and your husband being a resident in Andalucia, made worse by the fact that your husband deceased in the u.k. which makes them presume unless proved otherwise that you where non residents. On the deed you should have at least made a manifestation that you and your husband where resident in Andalucia, and you should have incorporated a certificate from the town hall manifesting you are resident in the municipality (plus it never does any ham to provide other proof of residence you may have even though with what we have said it should be sufficient). As your husband deceased in the u.k. ( I presume while on holiday), and their are no other documents or manifestations on the deed to prove otherwise they simply consider that you have incorrectly presented the deed to them to enable you to claim the much higher exemption.
Solutions:
To your case in particular: within the timescale provided on the letter you have received to respond (normally 15 days ) you respond stating that the file needs to be sent back to Andalucia on the basis of you and your husband being residents , providing as much evidence as possible. These situations can become very difficult to unravel and almost important is a reply is not provided within the timescale.
To other readers: A. When accepting an inheritance: Do not assume that the inheritance tax office in Andalucia will assume you are resident in Andalucia when you claim the 175000 euro exemption. You need to make sure you prove this is the case and it is much easier done when the deed of acceptance is signed then later on when they challenge the situation. B. During your lifetime : Always make sure that you have thing in place to enable the spouse to prove residency. the most important thing is to be on the Padrón at all times and not let it lapse.For more information about this and other topics, please visit our new website: www.daviesolicitors.com
Michael Davies.
Abogado.
