Excellent news for those NON RESIDENTS in Spain, in relation to reduction of the inheritance tax in Spain.
This week, on the 03/09/2014, it is obtained a decision from the honorable Court of Justice from the European Union on the appeal brought by the European Commission against Spain, in relation to the benefits and reductions made between residents and not residents in Spain, in both Spanish Inheritance Tax and Donation (Gift).
This decision comes from the initial Court case opened last 08/01/2014 from the European Commission against Spain for discrimination against non-residents in Spanish Inheritance Tax and Donation.
The Europe and Community sued Spain in a Court case (Case C-127/12), establishing that Spain had infringed Articles 21 and 63 of the European Union Treaty and Articles 28, and 40, of the Agreement on the European Economic Area European, due to the introduction of to discriminatory laws on inheritance tax and donation that non-residents have to pay higher than residents in Spain and in the CCAAs (“Comunidades Autónomas” or Regions). The normal reductions and benefits in taxes in Spain are usually the ones only for surviving spouses, descendants and ascendants.
According to the legal representative of the European Community, the articles 32, and 48, of the Spanish Law 22/2009, of 18 December, approving how the financing system of the Autonomous Communities is regulated, infringes EU law because only relative (normally surviving spouses, ascendants and descendants) with residency in Spain may have eventual reductions or benefits in IHT (Spanish Inheritance Law) or Donation, and not offering these benefits to non residents in Spain. In terms of the EC, this difference of tax treatment was violating the principle of free movement of people and capital in the EU territory, determining the right to choose where to live or how to materialize your investments.
The Courts, in appeal, accepted the case, although Article 65 of the Treaty on the Functioning of the European Union permits a country member to apply provisions which distinguish between taxpayers whose situation with regard to their place of residence, or with regard to the place where their capital is invested. The 65 art., is an exception to Article 63 (which guarantees the free movement of capital) and, in the case of Spain to taxpayers, discriminates objectively comparable situations, unless that the conditions of proportionality and justification.
This case has a precedent in the European Court, where the same situation arose in Germany after court proceedings, between a national, and a tax resident of Switzerland, and the German tax authorities. The European Court decided its judgment on 17 October 2013, when resolved the question referred as to whether the German tax rules on the ISD should be considered opposed to the European Constitution (CE), in the case of acquisitions “mortis causa” assets located in that country Member, by establishing that a reduction in the tax base of the ISD was much greater for residents, than that permitted to non-resident in Germany. So, the ECJ considered that the analyzed German rules constituted a restriction on the basic European principle of free movement of capital Article 56.
Coming back to the recent sentence, the Judgment issued states that “… Spain has failed to fulfill its obligations in terms of restricting the free movement of capital prohibited by paragraph 1 of Article 63 TFEU…”. And this due to the fact that Spain has allowed to discriminate in the tax treatment of gifts and succession, among the successors and grantees residents and non-residents in Spain, overall surviving spouses, descendants, and ascendants.
The main consequences of this decision are the following:
– For future inheritors or receivers of donations non residents in Spain:
- They will be considered in the same way as Spanish residents.
- The IHT and the Donation Tax will be highly reduced
- It will not be necessary for testators to create difficult, and risky, legal and complicate formulas to avoid or to reduce these taxes.
– For previous inheritors:
- They may have the chance to ask for some amount refundable from the already tax paid.
1.- Who are entitled to claim the refund of the tax paid as non residents? – As explained above, the normal reductions in the different CCAAs (regions) has been made to:
Surviving spouses (being married or “legally recognized as partners”)
Descendants: Sons, daughters, grandsons, granddaughters, etc.
Ascendants: Parents, grandparents, etc.
But, these benefits have not been created to the rest of inheritors, like partners (with no agreement of connivance legally recognized), brothers, sisters, nephews, nieces, cousins, uncles, etc. So, if you are in one of these last mentioned relatives, you will not have any kind of rights for reduction.
2.- Is there a maximum time in which I can ask for the refund? – YES. Normally, you may not be entitled to ask for a refund for a tax paid more than 4 years before. So, Spain will not consider any refunds for taxes paid more than 4 years.
3.- Does TLACORP deals to claim the refund? – YES. We will deal with the case obtaining the refund of the amount following the legal proceedings.
4.- Will this service be based in No Win-No Fee? – Yes. This service will be offered in terms of No Win-No fee.
Do not lose more time, and contract now our NO WIN-NO FEE INHERITANCE TAX CLAIMING AND REFUND SERVICE