INHERITANCE AND GIFT TAX REFUNDS

Juan Fernández Rey – Rey Quiroga Fiscalistas Partner and official on a temporary leave Senior Group of the State Tax Administration Agency (AEAT).

The recent judgment of the Court of the European Union of 3 September 2014 on the discrimination against nonresident taxpayers and deceased in the Spanish Inheritance and Gift Tax with respect to Spanish residents who can resort to Autonomous Community Legislation, allows residents from the European Economic Area (the EU 28 and Iceland, Liechtenstein and Norway) to request the refund of the excess tax paid in Spain.

The refund assumptions are valid in the following cases:

• Nonresidents in Spanish territory, when the inheritance or legacy deceased resides in Spanish territory or when they received donations of estates or other assets located in Spain.

• Spanish residents, when the inheritance or legacy deceased does not reside in Spain or when they received estate or other asset donations located outside Spain.

The refunds, according to each case, can reach the entire amount paid in Spain, as shown in the following example of a succession of property and rights amounting to €5000,000 (taxable base) at 1 January 2014 inherited by a son.

See the attached graphic.

To obtain the refund there are the following action:

1º If less than four years have passed between the payment and the submission of the request, there is the need of a procedure of sums unduly paid sufficiently substantiated and documented before the Spanish Tax Agency (AEAT). The expected return period would be between three months and one year.

2º If more than four years have elapsed since the payment, to my judgment, it is possible to initiate a procedure of patrimonial liability of Public Administrations, first before the Administration and later before the appropriate Court. This process is slow and expensive, it must be formalised and properly founded and documented. Besides, the deadline for submission finishes within a year since the said judgment was rendered, in this case, 3 September 2015.

However, this path has its days numbered since there is currently a bill amendment of the General Taxing Law pending, which prevents the use of this solution when the liquidation on which the refund is being planned has been prescribed.

In any case, there is an evident need of working together with a fiscalist specialist in tax procedures of the AEAT in order to avoid any mistake that leads to the non-admissibility of the application, the prescription of your right or the dismissal of your claim.

Your fiscalist will need the same documentation used to pay the tax, your own tax declaration and the proof of the payment of the tax.

Not only will you receive the refund of the paid tax excess, but you will be entitled to a refund of the correspondent interest on arrears since the payment date, which since 2009 has been 5%. Therefore, if five years elapse between the payment and the refund, there will be an addition of about 25% in interest of arrears when calculating the total refund.

Ultimately, those citizens from the European Economic Area who find themselves in one of the refund assumptions should:

1º Contact a fiscalist specialist in AEAT procedures and check the refund amount they would be entitled to, the procedure they need to follow, the required documentation and the cost of intervention (usually a percentage of the refund).

2º Initiate the procedure as soon as possible to have all the necessary documentation to avoid the right to refund prescription or the expiry date of the proceedings for damages against the State.

Filed under: http://www.theleader.info/article/45457/

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