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Cross-border Inheritances: end of discrimination against outside EU residents

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The Supreme Court finally passed a judgement on the 19th of February 2018 which put an end to the discrimination against outside EU residents in relation with the Inheritance and Donation Tax.

In Spain there is an Inheritance Tax Law at estate level, which is common to the whole of Spain. Each autonomic region has the power to introduce allowances and reductions, which can reduce considerably the final tax to pay in relation to the common estate tax. These reductions were not applicable to the cases in which a non resident was involved. In these cases the estate law was applicable. Here is where the discrimination arose.

The Court of Justice of the European Union sentence dated 3rd of September 2014 put an end to the above mentioned discrimination but only when the non-resident in Spain resided in an EU-Country. The outside EU residents could still not profit from the autonomic reductions.

Finally the Spanish Supreme Court judgement dated 19th of February 2018 eradicated the discrimination against heirs leaving very clear that the sentence of the Court of Justice of the European Union also safeguarded the residents outside the EU. The Supreme Court also considered that the infringement of the EU Law was severe and manifest, so the Spanish Administration was condemned to compensate the outside EU residents.

This sentence opens the possibility to adversely affected heirs who paid their Inheritance Taxes in Spain within the last four years (counted from the day the sentence was published) to claim for the refund of the unlawfully paid taxes.

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