Debate on inheritance taxation procedure in Spain
The issue of correctly applying the standard rule when calculating inheritance tax has once again been raised in the Spanish capital. The highest judicial authority in Madrid has made a decision that could change the approach to determining the value of inherited property. At the center of attention is the practice of automatically including 3% of the total inheritance amount as the value of household goods, even when the inheritance does not include residential property or personal belongings.
Key issue: what qualifies as household goods
The term “household goods” (ajuar domestico) in Spanish tax law refers to personal items and possessions used by the deceased. By law, tax authorities often automatically add 3% of the total value of the inheritance to the taxable base, assuming this portion accounts for household items. However, the Supreme Court previously clarified that this category does not include real estate, cash, securities, or other financial assets. Only movable property related to everyday life may be included in this calculation.
Precedent in Madrid: case details and court’s position
In this case, the inheritance consisted solely of agricultural land, cash, and securities. There were no residential properties or furniture among the assets. Despite this, the tax authorities applied the standard 3%, which increased the taxable base by more than 228,000 euros. As a result, the heir would have had to pay almost 40,000 euros additionally. She challenged the decision, noting that there were no grounds for such a charge. The court found that the rejection of her complaint was unlawful and ordered the tax authorities to review the case.
Practical advice for heirs
The court ruling emphasizes that automatic application of the 3% is not always justified. If the inherited estate does not include residential properties or household items, the tax authority has no right to add this sum to the calculation. In such cases, it is recommended to appeal the assessment, first through administrative procedures, and if necessary, in court. This can significantly reduce the tax amount, especially for large inheritances. In Madrid and other regions of Spain, this practice could affect thousands of families inheriting assets without real estate or furniture.
Impact of the decision on tax practice
The stance taken by the Madrid court could set a precedent for similar cases across the country. Now, tax authorities must examine the composition of estates more carefully and refrain from automatically applying the 3%. This will help prevent unwarranted additional charges and increase tax transparency. It is important for heirs to understand their rights and respond promptly to disputed decisions by the tax office.
