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Inheritance Tax

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The inheritance tax is a series of direct taxes which would be paid to a person who will receive an inheritance or donation of life. In some situations, different situations can arise where life donations and inheritance taxes are collected towards the same figure in the legal field.

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What is the Inheritance Tax?

The Inheritance Tax consists of that type of tax that must be paid before the administration of the autonomous community when there is an inheritance process . When a person dies and leaves a fine for another person (inheritance), this latter must liquidate one tax whose value will vary according to the characteristics of the Community where the deceased lived his last years . Here are some details on this topic.

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  • What does it consist of
  • Characteristics of the Inheritance Tax
  • origins
  • Who has to pay it
  • How the Inheritance Tax is calculated
  • Where it is presented
  • When you pay
  • What happens if it is not paid
  • When prescribed
  • Inheritance Tax by community

What does it consist of

For a country to be able to maintain itself, it needs, among other things, a good tax system . There are many types, and among them you can count the so-called Inheritance Tax , which would be nothing other than that payment or settlement that is made to receive the benefit of the inheritance after a person has died . We will discuss this topic below.

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Characteristics of the Inheritance Tax

  • It is a tax paid directly by a person to the state, so that he or she can benefit from an asset inherited from a person who has died .
  • It is a subjective tax , which is why the situation that the person is going through is taken into consideration , as well as the type of relationship that the person had with the deceased .
  • As it is a direct tax , this corresponds to the assets or income to be inherited, and it is consigned to the public administration by filling in the appropriate Tax Agency form.
  • It is a progressive tax , that is, its value is directly proportional to the value of the asset or income to be inherited. The larger the inheritance , the higher the cost of the tax.
  • The cost of the tax will vary depending on the policies of the Autonomous Community

origins

Although it is a concept widely used in a variety of countries, its origins are somewhat obscure for many of the expert researchers and historians in the field. It is said that its origins lie in the times of the Emperor Octavio Augusto , who, together with Marco Antonio , in order to maintain the expenses that the state had to pay after the civil wars and the maintenance of widows and orphans . Such measures were very unpopular in their time and took several years to be established in all the extension that by then had the Roman Empire .

As in many aspects of Roman law , these measures were an important precedent for the constitution of laws on this subject in several countries in the world today.

Who has to pay it

In the case that concerns this issue, those responsible for paying the Inheritance Tax are, neither more nor less, than the beneficiaries of the inheritance in question. There is, however, one exception to the rule; if the beneficiary of such good is an NGO , for example, the application of said tax does not apply . That is, who has to pay it must be a natural person (example: a child, a grandchild, a relative of the deceased), and in the case of being a legal person (as has been the case of an NGO), said tax would not have to be paid .

How the Inheritance Tax is calculated

To calculate the value of this tax, the following procedure is followed in several countries :

  • An estimate is made of the so-called Tax Base , that is, the value of the inheritance corresponding to each beneficiary. The total value of the inherited property is calculated .
  • Immediately afterwards, we proceed with the deductions of the Taxable Base , which consists of all the reductions of all the expenses and charges that are within the Taxable Base . That is, it is about removing from the total value all the costs related to debts of the deceased, funeral expenses , degree of kinship with the beneficiary of the inheritance, among others.
  • We proceed with the Full Fee , which consists of a progressive rate that can range from 7% to more than 30%, depending on the rules or conditions of the autonomous community in question.
  • Finally, the Tax Quota would be reached , which is based on a calculation that takes into account the Multiplying Coefficient . The latter will vary depending on the set of classifications mentioned above and the assets of the beneficiary of the inheritance. Its percentage can vary from 1% to a little more, depending on the regulations of the autonomous community.

Where it is presented

As a general rule , all payments are made in the autonomous community where the deceased lived in the last years before death. There may be exceptions, such are the cases of people who die outside their country of origin. In these cases, depending on the country in question, all Inheritance Tax payments would be made directly to the State.

When you pay

Depending on the country and community where the death occurs, the Inheritance Tax should be settled after six months , although there is the possibility of requesting an extension of time to acquire another six months. In other words, an extension can be requested to carry out the payment of the Tax .

What happens if it is not paid

If for any reason the due payment is not made penalties based on an increase in the fee , which can range from 5% and more, will be applied. After a year from the date and the payment has not been made , the sanction could also include Default Interest , which may increase as time passes .

When prescribed

Every tax has its statute of limitations , and the Inheritance Tax would not be the exception. If the payment has not been made , the penalties that have already been mentioned would apply . All this, however, would have an expiration or prescription date after approximately four years . However, if by the tax administration , and low knowledge of the obligor (the recipient of inheritance), there is any interruption due to any process ofregularization, verification and inspection , the obligation of the Inheritance Tax would also suffer a prescription .

Inheritance Tax by community

As already mentioned, all Inheritance Tax would vary depending on the autonomous community where it is carried out. Its value may be higher or lower , always depending on the policies of each region. Here are some examples of it by community:

Madrid

In the case of Madrid, this tax is 99% benefited or subsidized by the state, with 1% of the amount that must be paid . The latter, it is clear, only apply in cases of groups that have a degree of consanguinity of first grade , or in the case of spouses or partners indeed .

Catalonia

In relation to this autonomous community , its laws on this subject have undergone changes for several years. To date, this region has one of the highest taxes of this type.

Galicia

This region offers, since 2016, as a minimum amount from which must pay the inheritance tax of 400,000 euros , provided there is a link primary consanguinity (parents and children, for example).

Andalusia

In this region , precisely since 2018 there have also been changes in the laws that regulate this tax . In this regard, it should be noted that the limit from which the Inheritance Tax would be charged would be from one million euros .

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