International inheritance Spain - Italy

When does an inheritance become "international"? Where do you pay tax when an Italian dies leaving property in Spain (or vice versa)?

A succession is international whenever the legal systems of more than one country come into play. Our firm has handled many such cases between Italy and Spain, working alongside notaries on both sides. The matter is complex and the stakes are real: rules differ, taxes differ, and so do the deadlines.

EU regulation 650/2012 brought welcome clarity, but tax remains a national matter. In Spain, inheritance tax even varies from one Autonomous Community to another.

If you have not already, you may also want to read our step by step guide to probate in Spain.

A short guide to follow

1. Residency

EU regulation 650/2012, in force since 17 August 2015, applies to successions opened from that date forward. The general rule: the succession is governed by the law of the State where the deceased had their habitual residence, assessed against the deceased's life over the years before death and at the time of death.

2. The will

Check whether the deceased left a will in Italy or Spain. The Italian Registro Generale dei Testamenti and the Spanish Ministry of Justice each issue a certificate. If there is no will, the succession is governed by the law of the deceased's nationality, and the same applies if the will did not opt for the law of habitual residence.

3. The European Certificate of Succession

EU regulation 650/2012 created the European Certificate of Succession to make cross-border succession matters easier.

The certificate is meant for use by heirs, legatees, executors, and estate administrators to assert their rights or exercise their powers in another Member State. It proves the holder's status and powers, which can then be relied on simply by producing the certificate.

4. Dividing the estate

Once you hold an Italian Atto di notorietà (with or without a will), a Spanish Declaración de Herederos or a Spanish will, you can move on to the acceptance phase. This must be formalised in Spain whenever the assets are located there.

After determining the composition and value of the estate, the heirs proceed with the division before a notary, who draws up the deed of allocation and acceptance.

5. Tax

EU regulation 650/2012 does not change the tax rules. National laws still apply, along with any bilateral conventions, including the one between Italy and Spain.

When the assets pass to the heirs, inheritance tax is due either to the Italian Agenzia delle Entrate or to the Spanish authorities, depending on where the heirs and the deceased were resident and where the assets are located. Spanish inheritance tax is not uniform across the country: each Autonomous Community sets its own rates, deductions, and rebates (bonificaciones), so the calculation has to be done case by case.

Under Spanish law, heirs resident in Spain are taxed on a personal liability basis: every asset they inherit, wherever located, is reportable in Spain. Even if the assets are in Italy or elsewhere, the resident heir declares and pays in Spain.

Heirs not resident in Spain are still taxed there on a real liability basis, but only on assets and rights located in, or to be enforced in, Spanish territory.

In Italy the rule is territoriality, tied to the residence of the deceased, not the heir. As a general matter, all assets and rights anywhere in the world held by a deceased person resident in Italy fall within the Italian inheritance tax. In parallel, Italy taxes assets and rights situated in Italy even if the deceased was not resident there.

The result: with two different criteria for inheritance tax, both States may have grounds to tax the same estate, the same asset, or the same right. Double taxation is a real risk, and that is where bilateral coordination, careful timing, and professional advice make the difference.

If you need an English-speaking lawyer in Alicante, Elche, Benidorm or along the Costa Blanca, call us. We are admitted to practise across Spain and Italy.

If you have any doubts, Riondato & Partners is here to help

With over 45 years of experience across the various areas of law, the firm offers clients the chance to rely on a team of seasoned, dedicated professionals. Get in touch, we are at your disposal.