Introduction
Different scenarios for payment and declaration for Property transfer tax (ITP) and Inheritance tax. Each Autonomous Community has approved their measures for extending payment and declaration of such taxes. There is a discrimination for non residents in comparison with residents concerning IHT as there is no extension approved by the Central Government for the payment of such tax.
Tax Extension
In Spain, all Autonomous Communities have their internal regulations stating different bonifications, reductions, etc and jurisdiction for the payment and declaration of some taxes like Gift tax, Inheritance tax, Property Transfer tax (“ITP”) and Stamp Duty (“AJD”) amongst others.
The state of alert declared on 14 March has led these autonomous governments to adopt favourable measures for resident taxpayers, specially individuals who were caught by this extraordinary situation and had to pay and declare Succession tax for the death of a family member or bought a property and had to pay ITP.
As in previous occasions, the Spanish Government has not taken into consideration non residents, as the management and payment of Inheritance tax fails within the State tax agency jurisdiction.
The above mentioned discriminates non residents as they do not have the same extensions for the payment of Inheritance tax as a taxpayer resident in Spain, therefore non residents have to pay Inheritance tax within the 6 months after the deceased´s date of death.
For example, in Murcia, the Regional Government has agreed the extension for an additional 3 months for declaring and paying Inheritance tax and Property Transfer tax for those taxes which had to be declared and payed between the 14 March and 30 June 2020. In Madrid and Castilla y León is 1 month and Catalunya 2 months.
Non residents can however present the Inheritance tax form stamped by the bank and remaining documents to the State tax agency within the 3 months after the state of alert is over without accruing interests, surcharges and sanctions.This prerogative is not stated officially in a decree approved by the Government as it is an internal instruction issued by the State tax agency..
In regards, ITP and AJD normally payable when a buyer acquires a second hand property or an off-plan property, the situation concerning payment and declaration of these taxes is quite different in comparison with Inheritance or Gift tax, as each Autonomous Community.has adopted its own measures.
Andalucía is one of the Autonomous Communities where physical presentation of the M600 cannot be made until the state of alert is over, as the local tax offices remain closed to the public.
This has negative effects, specially on buyers who wish to transfer title to property into their names in the land register as they cannot present the deed of sale without the stamp of the tax office on the said document confirming that payment of ITP or AJD has been made.
This however does not happen when a land register has also been granted with the functions of a local tax office, as in the case of the Orihuela land register no.2, where they acknowledge receipt of payment of the ITP and deal with the registration of titles in the land register.
Non residents could also be in the same situation for registering a property that has been inherited into their names as the State tax agency office remains closed and they cannot acknowledge receipt of payment of Inheritance tax.
The State tax agency is engaging presentations of the said taxes through their electronic system and for those taxpayers who have their digital signature.
In Scudamore Law we can help and assist you with inheritance law and make declaration of taxes easier for you.