IHT exemption

For how many years does a resident have to submit tax returns before IHT exemption is applicable, and is the time being inscribed on the Padron of importance ?

Thank you, Landlubber.

Dear Sir or Madam,

Actually registering at the Padrón is in reality not an option as it's compulsory in accordance with Law 4/1996 which amends the law of Bases del Regimen Local from 1985.

Dos. El artÃ*culo 15 de la Ley 7/1985, de 2 de abril, Reguladora de las Bases del Régimen Local, queda redactado de la siguiente manera:

«ArtÃ*culo 15.

Toda persona que viva en España está obligada a inscribirse en el Padrón del municipio en el que resida habitualmente. Quien viva en varios municipios deberá inscribirse únicamente en el que habite durante más tiempo al año.
El conjunto de personas inscritas en el Padrón municipal constituye la población del municipio.

Los inscritos en el Padrón municipal son los vecinos del municipio.
La condición de vecino se adquiere en el mismo momento de su inscripción en el Padrón.»

In any case it is highly advantageous for all expats to register at the Padrón of the Town Hall where they live for many reasons. Even the British Embassy encourages wholeheartedly expats to register:

Embassy encourages foreigners to register on local ‘padrón’

One of the many reasons to register is because you will have access to social care, discounts and you are eligible for tax reductions.

So foreigners should not fear registering at their Padrón, quite the opposite it has no drawbacks and it's all benefits for you.

Don't fear it, joint it.


Yours faithfully,
Raymundo LarraÃ*n Nesbitt

Thank you for your reply, I would like to know however for how many years one must file tax returns to be IHT exempt.
Again thank you, Landlubber.

Dear Sir or Madam,

One is not exempt of IHT for filing annual tax returns.

Joining the Padrón is good if you happen to be a beneficiary of a Spanish estate.

Spain is divided into 17 different autonomous regions and each may pass their own laws on Inheritance tax besides the national laws which act as a common general legal framework. And just to nitpick, this national legal framework is not applicable in some regions, to make matters even more complex.

Normally these regional laws establish their own tax allowances (besides the state or national ones; so they are cumulative not mutually exclusive) and specify that if you've are resident you may be exempt of paying IHT. Over 300,000 resident Ex-Pats already benefit from these regional IHT tax exemptions when the time comes.

What you are really trying to ask me is that if you file a tax return is that prove enough of residency to take advantage of the regional tax exemptions? Is this correct?

Filing tax returns no doubt will support your evidence. But some regions require you additionally to have lived for a previous amount of years i.e. 3 years. Others will take more interest in you being registered at your local Padrón, which I repeat is not an option by law, it is compulsory to register in it if you live here in Spain. So it depends of your autonomous community. Some are more fussy than others requiring more evidence (trail of paperwork) than others.

In any case fiscal residence and taking residence are two different legal concepts and must not be confused.

The matter is complex and your query is too general to give you an adequate reply, sorry.

Please read my article on the matter of IHT (Impuesto de Sucesiones y Donaciones or ISD in Spanish):

Spanish Inheritance Tax: Advantages of Making a Will in Spain - 3rd September 2009

Yours faithfully,
Raymundo LarraÃ*n Nesbitt

Again thank you for your reply, and the advice contained therein.

To fill you in, I have been inscribed on the Padron in the Valencia province for 3years, am fiscally resident and have a Residencia Certificate and own a house in joint names, so hopefully when the time comes should be IHT exempt. I do however understand that even within the Valencia province depending on which tax office deals with the affairs of one's area there is a difference in how many years one needs to have been resident for the IHT exeption to apply.

Do you have any experience of this ?

Kind regards, Landlubber

You´re welcome.

You shouldn't have any problems judging from what you've written to be exempt.

ISD state law (art 20) already prescribes 95% tax exemption on your primary dwelling, let alone generous regional tax allowances that will only add up to to this allowance.

You've done well for yourself.

Yours faithfully,

I appreciate your replies for which I thank you. I have only discovered your website recently and look forward to becoming more informed by reading your excellent article.

I remain intrigued by the fact that in the Valencia province different tax offices levy differing amounts.

Kind regards, Landlubber.