SPAIN Law and Practice Contributed by: Álvaro Paniagua Rico and Borja López Pol, Anaford Abogados
2.2 International Planning The international component of inheritance is particu - larly relevant today, given the increasing mobility of the population and the resulting dispersion of families. Each country treats inheritance taxes differently, so it is essential to anticipate the inheritance issues that may arise given the different jurisdictions and avoid double taxation as far as possible. Spain is a country with a long tradition of signing agreements to avoid double taxation for the purposes of personal income tax and wealth tax. However, for inheritance tax, it has only signed three such agree - ments, with Greece, France, and Sweden. Outside of these three countries, it is impossible to regulate the regulatory power for the tax in question; therefore, comprehensive advice is crucial to avoid undesirable effects. 2.3 Forced Heirship Laws Spanish civil law recognises the concept of legitimate inheritance and compulsory heirs. Legitimate inherit - ance is the portion of the estate reserved by law for certain heirs, who are therefore known as compulsory heirs. The testator cannot deprive the heirs of their legiti - mate portion except in cases expressly provided for by law (cases of disinheritance) and cannot impose any charge or encumbrance on it. The law prohibits agreements between the testator and their compulsory heirs concerning the legitimate portion of the estate. As a result, any waiver or trans - action related to this portion is considered null and void. When the testator passes away, the compulsory heirs have the right to claim their legitimate portion. The only requirement is that they must bring into the estate any benefits they may have received through the waiver or transaction. Mandatory heirs are: • children and their descendants with respect to their parents and ascendants;
• in the absence of the above, parents and ascend - ants with respect to their children and descend - ants; and • the widower or widow. The legitimate portion of children and descendants consists of two-thirds of the inheritance assets of the father and mother. 2.4 Marital Property The matrimonial property regime applicable in Spain depends on the Autonomous Region where the spouses reside. By default in Spain, the regime regulated by the Civ - il Code is the community property regime. In other words, assets acquired by one or both spouses dur - ing the marriage are considered joint property and are divided equally in the event of dissolution of the regime, whether by divorce or death. This regime uni - fies the marital property, where gains and debts are shared equally, regardless of who generated them. That said, there are Autonomous Regions that estab - lish different regimes by default. 2.5 Transfer of Property In general terms, when an asset or right is transferred, whether inter vivos (donation) or mortis causa (inher - itance), its tax value is updated for the next transfer. There are always exceptions to this rule, which are usually related to transfers that have not generated taxation or have been subsidised in some way (for example, the transfer of a family business with a 95% subsidy). 2.6 Transfer of Assets: Vehicle and Planning Mechanisms One of the possibilities or tools established by the regulations is a 95% tax credit when transferring a family business with the characteristics explained in 1.2 Exemptions . The various autonomous communities have also developed tax credits for this type of superior assets.
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