When drawing up a valid will, it is important to understand and take into account the differences relating to succession, testamentary freedom and forced heirs, as these differences can be used in different ways depending on the testator's wishes. The compulsory share of children and spouses varies considerably depending on the applicable inheritance law.
The new rules on the choice of law applicable to succession make Spanish inheritance law particularly relevant for German nationals residing in Spain. In Spain, there are generally three different ways of making a valid will. Article 676 of the Spanish Civil Code distinguishes between the following three types of will, which also have equivalents under German law:
Inheritance tax planning is of particular interest to both German residents in Spain and non-residents, as appropriate tax planning can make it possible to benefit from the tax reliefs available in the different Autonomous Communities.
Due to the free movement of persons and capital within the European Union, cross-border inheritances have become increasingly common. In order to determine whether an inheritance is subject to taxation in Germany, Spain or both countries, various factors must be taken into account, such as the residence of the deceased.
The new European rules on the choice of law in matters of succession make Spanish inheritance law particularly relevant for German nationals residing in Spain, as they may now choose between Spanish and German inheritance law. Depending on the testator’s wishes, the application of Spanish inheritance law may offer a number of advantages.
Until August 2015, inheritances involving German nationals living in Spain were generally governed by German law. With the European succession law reform, which entered into force in August 2015, German nationals residing in Spain may now be subject to Spanish succession law unless they exercise the corresponding choice of law in their will.
In order to make the best possible use of the new European rules on the choice of law applicable to succession, it is helpful to be familiar with both German and Spanish inheritance law. In this context, the differences regarding the order of succession and persons entitled to a compulsory share are particularly important, as these differences may be relevant when planning a succession according to the testator’s wishes.
Following the death of a family member, the heirs have a period established by law in which to complete the necessary formalities for the settlement and distribution of the assets forming part of the estate. Inheritance and Gift Tax is a State tax whose administration has been transferred to the Autonomous Communities and is regulated by Law 29/1987 of 18 December.
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