Spanish lawyer files a complaint with the EU against inheritance tax

by Lorraine Williamson
inheritance tax

MADRID – A lawyer from Mallorca has filed a complaint with the European Commission against the Spanish Ministry of Finance. This would go against the freedom of establishment and the free movement of capital within the EU by levying an inheritance tax. 

Alejandro del Campo’s complaint is against the obligation for non-residents who buy property in Spain through foreign companies to pay inheritance tax on property located outside Spain. 

The Spanish tax authorities implemented the tax change in December last year. However, the problem is due to the government’s change in inheritance tax in 2017, which was introduced by the PSOE and Unidas Podemos. This change also included a new wealth tax, the so-called solidarity tax on large fortunes. 

Illogical 

According to Diario de Mallorca, the lawyer from Mallorca states that Spain, together with Norway and Sweden, is one of the last countries in Europe where inheritance tax is still paid. He further points out that it is illogical for the Spanish treasury to require non-residents who do not live in Spain to pay taxes on properties located outside Spain. 

Contrary to EU regulations 

Del Campo has lodged a complaint with the European Commission, citing that this violates Articles 49 and 63 of the Treaty on the Functioning of the European Union, which protect the freedom of establishment and the free movement of capital. 

The Spanish tax authorities believe that if the main asset of an entity is a property in Spain, then that entire entity is located in Spain and must pay taxes there. However, Del Campo vehemently rejects this position, saying it is against EU law. 

In any case, Alejandro del Campo reminds us that once the complaint has been lodged, the investigation must be started to determine whether the European Commission opens an infringement procedure against Spain. It will therefore take a few years before the final decision is known. 

Precedent Model 720 

Del Campo won another victory against the Spanish tax authorities over a year ago about the 720 model. He got the European Court to overturn the model and related sanctions. This measure required taxpayers to declare the assets they had abroad. The penalties were very high in case they did this after the deadline or failed to submit that declaration and there was no statute of limitations. That only happens with serious crimes. 

Related post: Fines for failure to declare foreign assets on modelo-720 in Spain null and void 

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