Declaring inherited 'gifts' from Ireland

I am an Irish national, and a permanent resident in the Basque country. I am currently employed, and perform my 'declaracion de la renta' in the Basque country every year. I do not have or declare income from Ireland.

My parents, both of whom are alive, are planning on making an inheritance gift of €45,000 (cash) to me in Ireland. This transaction will be declared in Ireland, and I will not have to pay tax on it in Ireland (due to Irish inheritance taxation laws). I plan on transferring this money to my Spanish bank account, and using it to purchase a property next year.

Will I need to declare this cash inheritance in my 'declaracion de la renta' next year? As I will be declaring this inheritance gift in Ireland, I think I do not have to declare it as income in Spain. Is this true?

If I do have to declare it, what tax rates are likely to apply? Is there a tax exemption status for inheritance gifts/ donations?

Thank you in advance for taking the time to reply- this website offers a fantastic source of information and is full of excellent advice.

I hope you can help me with my enquiry.

Yours sincerely,

Nathan

Hi Nathan

Thank you for your kind words. Tricky question btw.

The Basque country and Navarre are for deeply rooted historical reasons regarded as national entities within the Spanish state meaning almost they are states within another state. The afore has legal repercussions.

The State legal framework on Inheritance and Gift Tax (Impuesto de Sucesiones y Donaciones) which is applied nationwide to the remainding 15 autonomous entities is not applied to said two autonomous regional entities.

The Basque Country itself is composed of three regional entities known as Diputaciones Forales (�lava, Guipúzcoa and Vizcaya). There is a common legal framework for all three which acts as if it were of a "State" level. These are Law 12/1981 dubbed "Ley de Concierto Económico" recently updated by Law 12/2002. Said two laws act as the common legal framework for all three.

The above common legal framwork is further developed by the own laws (Normas Forales) passed by the three regional entities existing within the Basque Country. The laws of said three entities on IHGT are very similar.

You need to have lived (abode) within their territory for the prior 5 years to the gift to benefit of the generous regional tax provisions; otherwise general State law is applied by default.

Gifts from parents to offspring are tax exempt as you probably already know.

However they must be declared in your annual filing of income tax despite being tax exempt. You have a deadline of 30 working days (" dÃ*as hábiles") to declare this before your local Tax office as from the time the money is effectively gifted to you (in Ireland in your case).

Sincerely
Raymundo LarraÃ*n Nesbitt