Double taxation on inheritances between Spain and France can be a significant tax burden for heirs, as both countries apply inheritance taxes. However, there are legal mechanisms that allow this taxation to be minimised thanks to the tax agreements between the two countries. In this article we explain how the process works, what taxes apply in each country and what strategies can be used to optimise taxation.
How does double taxation affect inheritances between Spain and France?
Double taxation occurs when two countries claim tax on the same inheritance. In the case of Spain and France, both states levy inheritance taxes, which can lead to a high tax burden for the heirs.
In Spain, Inheritance and Gift Tax (ISD) is paid according to the value of the inherited assets and the relationship to the deceased. In France, heirs must pay droits de succession, which also varies according to the degree of relationship and the value of the inheritance.
How much inheritance tax is payable in each country?
In Spain, the amount of Inheritance Tax depends on the Autonomous Community where the assets are located and the degree of kinship with the deceased. Some Autonomous Communities offer reductions of up to 99% for direct heirs.
In France, the droits de succession has a progressive structure ranging from 5% to 45%, depending on the value of the inheritance. Children can benefit from an exemption of up to 100,000 euros per heir, while unmarried couples may face much higher taxes.
Tax agreement between Spain and France
To avoid heirs paying taxes in both countries, Spain and France signed a double taxation agreement on inheritance in 1963. According to this agreement:
- If the inherited assets are located in Spain, the main tax is paid in Spain.
- France allows deduction of tax paid in Spain to avoid full double taxation.
- There are specific rules for real estate and other financial assets.
Strategies to minimise the tax burden
To optimise the taxation of an inheritance between Spain and France, the following strategies can be applied:
- Testamentary planning: drawing up a will in Spain can facilitate the distribution of assets and avoid tax problems.
- Living gifts: transferring part of the estate during life can reduce the future tax burden of the heirs.
- Benefiting from regional allowances: in Spain, ISD tax allowances vary according to the Autonomous Community, so it is advisable to analyse where you will be taxed.
- Correct declaration of assets: it is essential to present the appropriate documentation to avoid legal problems in both countries.
- Specialised advice: having a lawyer who is an expert in international inheritance law can help to reduce the final costs and ensure legal compliance.
Conclusion
Avoiding double taxation in inheritances between Spain and France is possible with good planning and proper knowledge of tax treaties. At Martínez Lafuente Abogados we offer specialised advice for French heirs with assets in Spain, guaranteeing an efficient and legally secure management of their inheritance.