EU Court Rules Against Spain Over Discriminatory Tax Rules

02.10.14

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The European Court of Justice has ruled that Spanish succession tax legislation is discriminatory. An article by The Telegraph looks at the implications.

Under Spanish succession tax legislation, a range of tax relief options can reduce tax to very low amount, but these are not available to non-residents.

The European Court of Justice has now ruled that this is discriminatory and that non-residents should not pay more tax than residents.

Speaking to The Telegraph, Jason Porter, Business Development Director at Blevins Franks, explained that the difference can be as much as 80%.

In Spain, inheritance and gift tax (known as succession tax) is governed by both the state and the 17 autonomous communities.

Many of Spain’s autonomous communities have amended the state rules to make them more beneficial, but only for residents – that is, people who have been living there for five years. For example, in Murcia, the Balearic Islands, Madrid and Valencia, up to 99% of the deceased’s assets can be exempt from succession tax where the beneficiaries are children and/or a spouse.

Such generous exemptions are in stark contrast to the state rules, where the allowances are very much reduced,” said Mr Porter. “Under the state rules, the general allowance is only €16,000 (£12,600) for inheriting spouses or children.

You can read the full Telegraph article here http://www.telegraph.co.uk/finance/personalfinance/expat-money/11104976/EU-court-rules-against-Spain-over-discriminatory-tax-rules.html

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.

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