The Spanish General Directorate of Taxes (GDT), which is the official organism that determines how the different tax regulations have to be interpreted when regulations are not clear enough themselves, has recently changed the criteria regarding the application of Spanish inheritance and gift tax to international cases. The change essentially consists in allowing the application of the same tax benefits to all inheritances and gifts located in Spain, no matter if they have an international dimension or not.

It all started with the European Court of Justice's Sept. 3 ruling in 2014, which declared Spain's non-compliance with its obligations under the treaty on the functioning of the European Union (EU) and the agreement on the European Economic Area (EEA) in relation to the free movement of capital. The reason to declare Spain’s noncompliance was that the Spanish inheritance and gift tax did not allow the application of the tax benefits approved by each Spanish autonomous community to inheritances and gifts with an international dimension, which usually turned out in higher taxation for the latter. The European Court stated that this was against the principle of free movement of capital provided in the treaty on the functioning of the EU.

This ruling led to a legislative change in Spain’s inheritance and gift tax regulations to avoid the mentioned discrimination. However, the change only affected those inheritances and gifts where the international dimension was limited to the EU and the EEA, which meant that the discrimination would subsist for those cases related to third countries.

As expected, the situation reached the Spanish Supreme Court. In various rulings throughout 2018, the Spanish Supreme Court declared that the free movement of capital provided in the treaty on the functioning of the European Union was beyond the borders of the EU and the EEA. Consequently, the Spanish Supreme Court ended up recognizing the applicability of the enhanced tax benefits to residents in third countries, such as Canada or Switzerland.

At this point, everything suggests that the discrimination would have come to an end with the Supreme Court’s rulings. However, the fact is that, unless the regulations are adapted accordingly, it is not so clear that a taxpayer can directly apply the criteria established by the Supreme Court.

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And here is the good news, instead of waiting for a legislative change, the Spanish GDT has taken the initiative and has issued a binding consultation (binding for the tax authorities) whereby they confirmed that the Supreme Court’s criteria were directly applicable without the need to wait for a legislative change. These criteria defended by the GDT is based on the doctrine of the Spanish Constitutional Court, which understands that EU law prevails over domestic tax regulations.

As a result, now all the inheritances and gifts located in Spain will be entitled to apply the enhanced tax benefits applicable of each autonomous region, no matter if they have an international dimension or not.


Mariano Roca is a tax and private client practitioner focused on corporate and individuals advice (specialized in tax, wealth and inheritance advice for HNWI). He began his professional career in Cuatrecasas Gonçalves Pereira from 1997 until 2012. In 2012, he joined KPMG from 2012 until 2015 where co-led the family business and private client practice in the Barcelona, Girona, Balearic Islands, and Andorra offices. On January 2016, he joined Marco Legal, Abogados & Economistas, leading as a partner the firm’s tax department. Mariano has been listed in Best Lawyers since 2013 and won the “Lawyer of the Year” award in 2014 and 2015. He has been once again recognized with the “Lawyer of the Year” award in tax practice for 2018.