Inheritance law in Spain

Which National Law Applies?

In inheritance proceedings concerning Germany and Spain, the applicable inheritance law is determined in accordance with the provisions of the European Succession Regulation. This regulation serves as the guiding framework for determining which national inheritance legislation applies. It is important to note, however, that the European Succession Regulation does not affect inheritance tax provisions in Spain or Germany. Moreover, matters relating to matrimonial property law are exempted from the European Succession Regulation as well and are instead governed by the European Matrimonial Property Regulation. Similarly, the entry of ownership rights relating to real and personal items of property, such as real estate, in a respective register does not fall under the European Succession Regulation.

Why is Habitual Residence So Important?

Under the European Succession Regulation, the applicable succession law is generally determined in accordance with the last habitual place of residence of the deceased. There is no legal requirement for the deceased to have intended to reside there permanently, nor is a specific minimal length of residency required to establish a new habitual residence. Instead, habitual residence is determined by the social centre of life of the person concerned.

How else can a Habitual Residence be Established?

If a person lives in a different country for professional or economic reasons for an extended period of time but still has close family and social ties to their home country, their habitual residence is generally considered to still be in their country of origin. This means that the legal and emotional centre of their life is still in their home country. However, if the deceased lived alternately in several countries, their citizenship and the location of their main assets may play an important role in determining their habitual residence. Likewise, registration as a resident in Spain can only be considered as an indication of habitual residence.

Real Estate and the European Succession Regulation

According to the European Succession Regulation, special regulations of a particular country regarding real estate may take precedence over the Regulation. However, as Spain has not enacted any specific provisions to this effect, the general provisions of the European Succession Regulation apply.

Free Choice of Applicable Law

Since the adoption of the European Succession Regulation, the testator may determine in their will which national succession law is to be applied. The two factors that enable this choice are the testator’s citizenship and habitual residence. For instance, a German citizen who has his habitual residence in Spain could stipulate that German legislation is to be applied to his estate.

Application of Regional Law

The Balearic Islands, Catalonia, Galicia, the Canary Islands, Navarre and the Basque Country each have their own inheritance regulations. Therefore, in the event of an inheritance governed by Spanish law, it should be clarified in advance whether the general Spanish civil law or the regional law (foral law) of the respective autonomous region is to be applied. For Spanish nationals, the applicable law depends on their territorial affiliation at the time of their death. For deceased persons not holding Spanish citizenship, the foral law of the region in which they were habitually resident is applicable.

Inheritance Proceedings in German-Spanish Cases

In German-Spanish inheritance cases, it is necessary to prove one’s entitlement to inheritance. Particularly with regard to real estate located in Spain, registration in the Spanish Land Registry is required. This generally necessitates a notarised declaration of acceptance of the inheritance and, if applicable, a deed of partition of the community of heirs. This also applies if German inheritance law is applicable, as the registration requirements are not subject to the European Succession Regulation.

Which National Tax Law Applies?

Tax regulations must be distinguished from inheritance rules, and citizenship only plays a subordinate role in this regard. As there is no double taxation agreement between Germany and Spain relating to inheritance and gift tax, taxation is governed by the national laws of both countries.

Spanish Inheritance Tax

In Spain, the worldwide acquisition is subject to unlimited tax liability if the acquirer has their habitual residence in Spain at the time of the inheritance. If the acquirer is not habitually resident in Spain, there is limited tax liability for all assets located in Spain.

German Inheritance Tax

In Germany, there is a personal tax liability for the entire estate if the testator or the acquirer were German resident at the time of the inheritance.

Att. Prof.* Dr. Stephan J. Lang