On September 3rd 2014, after 3 years procedure, the European Union Court of Justice has ruled the Spanish Inheritance and Gift Tax is incompatible with the EU rules, which impose a higher tax burden to non-residents than residents.
That relies in each region (Comunidad Autónoma), whose regulatory jurisdiction allows them to establish reductions that are applicable only to their residents.
On the other hand, non-residents are not able to apply the region legislation; they are subject to state law that does not cover any additional reductions as the regional regulation does.
As a consequence of the previous, the Court has ruled that the Spanish legislation constitutes a restriction to the free movement of capitals.
From now on, Spain shall amend the tax regulation that could lead to non-residents who have paid the Spanish Inheritance and Gift Tax, the possibility to request the reimbursement of the paid excess. They will only be allowed to ask for the reimbursement of the not prescribed tax years.
UHY Fay & Co is starting a monitoring team in order to advise non-residents to recover those taxes. Furthermore, we are at the disposal of non-residents taxpayers to answer any concern or query about this.
We will keep you informed.
Jordi Vilardell Casas
UHY Fay & Co Barcelona Offices