Features of inheritance of property by spouses
In Spanish inheritance practice, it is common to grant the surviving spouse a universal right of use over the deceased’s assets. This means the widow or widower can manage the apartment, bank accounts, and other assets, but does not become their full owner. Ultimately, ownership passes to the children or other heirs.
Double taxation when exchanging rights
If the widow or widower decides to exchange their right of use for full ownership of a specific asset, Spanish tax authorities treat this operation as an exchange (permuta). As a result, the parties to the transaction are required to pay not only inheritance and gift tax but also property transfer tax. This requirement is established by Supreme Court decisions issued in July 2020. The judges concluded that such an exchange is considered a compensated acquisition, so it is subject to two different taxes. This rule applies both to spouses and other heirs involved in such a transaction.
Possibility to avoid double payment
However, legislation provides a way to avoid double taxation. According to a clarification from the Main Tax Office issued in February 2021, if the will explicitly states that the surviving spouse may exchange their right of use for full ownership of specific property, such an operation is considered part of the inheritance. In this case, transfer tax is not charged, and only inheritance tax is payable. This provision is set out in the Civil Code of Spain and allows widows and widowers to protect their financial interests without infringing on the rights of other heirs.
Will drafting guidelines
Experts recommend carefully considering the structure of the will and consulting with a notary who is well-versed in inheritance law. This approach helps prevent unexpected tax liabilities and possible disputes among heirs. Proper document preparation ensures the family’s financial stability after the loss of a loved one.
