International Inheritances: Keys to Managing the Succession of a Foreigner with Assets in Spain
Increasing globalization has made successions with international elements more and more common. When a foreign national passes away leaving assets in Spain, a crucial question arises for the heirs: which country's law governs the inheritance? The answer is fundamental, as it determines who the heirs are, what shares they are entitled to, and whether there are forced heirship rights to respect.
The General Rule: The Law of Habitual Residence
To harmonize succession law within the European Union, Regulation (EU) No 650/2012 came into effect on August 17, 2015. This regulation establishes a clear and uniform criterion: the law applicable to the succession as a whole shall be the law of the State in which the deceased had their habitual residence at the time of death.
This principle of unity and universality of the succession means that a single law will govern the entire estate (assets and liabilities), regardless of where the assets are located — whether in Spain, their country of origin, or a third country.
Practical Example
A German citizen who, after retiring, has been living in Marbella for the last 20 years, passes away. Even though their nationality is German, their habitual residence was in Spain. Therefore, Spanish law will govern their entire succession, including their properties in Spain, their bank accounts in Germany, and a holiday apartment in Portugal.
The Exception that Confirms the Rule: The Choice of Law (Professio Iuris)
The Regulation also provides a vital tool for estate planning: the ability to choose the applicable law. A person may choose the law of the State whose nationality they possess at the time of making the choice or at the time of death to govern their succession.
This choice, known as professio iuris, must be made expressly in a disposition of property upon death, typically in a will. This allows a person to avoid the application of the law of their country of residence if it does not align with their wishes — for example, regarding the mandatory forced heirship rules that exist in Spanish law.
What About Taxes? A Separate Analysis
It is crucial to understand that the EU Regulation only governs the civil aspects of the succession (who inherits and how) but does not regulate tax matters.
Heirs of an estate with assets in Spain will be subject to the Inheritance and Gift Tax (ISD) in Spain for those assets located within Spanish territory. For years, there was discriminatory treatment against non-residents. However, case law has corrected this, now allowing heirs residing in third countries (outside the EU/EEA) to benefit from the tax regulations of the Autonomous Communities, which often include significant tax reliefs and allowances.
Conclusion: The Importance of Planning
Managing an international inheritance requires a clear roadmap. The key steps are:
- Identify the deceased's habitual residence: This will determine the default applicable law.
- Review the will: Check for an express choice of law clause (professio iuris) in favor of the deceased's national law.
- Separate the civil and tax analyses: One thing is to determine who the heirs are according to the applicable civil law, and another is to calculate and pay the corresponding taxes in each country where there are assets.
A well-drafted will is the most effective tool to ensure that the testator’s wishes are fulfilled and to simplify the process for the heirs, avoiding legal uncertainty and potential conflicts.