As a resident of the Brussels Region, heirs pay inheritance tax on worldwide inheritance. This means you also pay Brussels inheritance tax on an inheritance from Spain. This article discusses Brussels inheritance tax on foreign property.
Brussels inheritance tax on your worldwide income
The worldwide estate is taxed in the Brussels estate. Thus, assets in Belgium are considered, as well as the testator's assets abroad.
An example. Your late father was a resident of Etterbeek. He leaves two children and no partner. The estate consists of a home in Etterbeek worth 600,000 euros, a second residence on the Belgian coast worth 400,000 euros and a home in Spain worth 350,000 euros. He also had movable assets worth €250,000. The total taxable basis for inheritance tax is then 1,600,000 euros. Since there are two children, the taxable basis per person is €800,000. On the share excluding the family home and less the exemption of €15,000, the progressive standard rates of 3 - 30% (rate 30% above €500,000) applied to it. So, concretely, you also pay Brussels inheritance tax on property in Spain. In this example, 24%.
What about Spanish inheritance tax?
Spanish inheritance tax applies if you are a resident of Spain as an heir or if you inherit assets in Spain. If you inherit Spanish property as a resident of Brussels, you will also pay inheritance tax in Spain on the Spanish property. This is because there is no double taxation treaty regarding inheritance and gift tax between Belgium and Spain.
Find more information on estate declaration in Spain here.
However, Belgian regulations do provide for the Brussels inheritance tax to be reduced by the inheritance tax paid in Spain. So you will not pay double taxation in the end. But currently several Spanish regions provide very high inheritance tax exemptions for the direct line and surviving partner, so the reduction will not be used in Belgium. See, for example, inheritance tax in:
- Andalusia (Costa del Sol);
- Comunitat Valenciana (Costa Blanca);
- Balearic Islands (Ibiza, Mallorca, Menorca);
- Canary Islands (Tenerife, Gran Canaria, La Gomera);
- Murcia.
Gift tax was also significantly reduced or even effectively abolished in these regions.
So is succession planning still useful?
Even if you currently pay virtually no inheritance tax in Spain, there is still the high Brussels inheritance tax. Succession planning involving Spanish property can therefore be very useful. After all, you can save inheritance tax in Brussels via Spanish real estate. Think, for example, of a Split purchase in Spain Or a gift with reservation of usufruct.
Decision
Buying a property in Spain is an ideal time to think about inheritance planning. However, such planning does not aim to reduce Spanish inheritance tax, but rather to avoid the higher Brussels inheritance tax. After all, a property in Spain is also subject to Brussels inheritance tax.
Do you have questions about buying a property in Spain? Confianz looks after your interests and assists you with the full legal settlement of your investment in Spain. We can also assist you with the settlement of an inheritance or gift in Spain.
