In recent declarations raised, European courts declared that Spanish Inheritance and Donation Tax partly breaks European Union regulations. Luxembourg Court ruled on 3rd of September 2014 that this tax, a tax whose management has been transferred from central Spanish government to the jurisdictions of Autonomic governments, breaks EU ruling as it forces those citizens residing in other EU countries to pay a higher amount for it. Most Spanish Autonomic tax authorities offer tax relief only to individuals residing in their own jurisdiction. Therefore, EU citizens that are not resident in Spain or property owners whose assets are outside the country are forced to pay the governmental rate, which is higher than the autonomic rate.
The EU Court of Justice (ECJ) consider that there is "no objective difference that may justify such difference” in the application of such regulations on resident or non-resident citizens, or on properties that are located within the Spanish territory or abroad. "Difference in treatment lead to discrimination," is pointed out in this sentence.
European justice is in agreement with the European Executive, which brought the case to Court in 2012, and considers that there is a "restriction" on free circulation of capital, ‑one of the pillars in which the EU was built on‑, regardless the Autonomic authorities reduce or not the tax rates on an individual basis.
The sentence is mandatory for Spain, and no appeal can be filed against it. A spokesman for the Ministry of Finance and Public Administration admits the "complexity" involved in adapting it at present and states that the technicians are already discussing the possibilities for the correct application of the ruling.
Following this resolution, it would be possible to request the refund of the amount paid (or part of it) in the case of many heirs that paid the tax following these regulations, regulations that are now declared illegal. The procedure for requesting said funds will vary depending on the time that elapsed since this tax was paid, as it will be easier for those cases in which payment was carried out less than four years ago.
In case you are interested in getting further information on this issue or this resolution may be applicable in your particular case, please feel free to contact Manzanares Abogados for a detailed study of the situation.
Source: El País