·                        Taxes differentiate depending on whether the assets have been accepted first or not

Author: Eva Díaz

Source: El Economista 09/05/2024

The General Directorate of Taxes (DGT), the governing body of the Ministry of Finance, clarifies the taxation of an inheritance when the heir renounces it. In a consultation on June 7, it indicates that there are two ways to renounce the legacy and, therefore, with different tax implications.

On the one hand, it explains that, if the renunciation is pure, simple and free, it is considered that the renouncer has not accepted the inheritance and, therefore, is not an heir or legatee nor, consequently, a taxpayer of the Inheritance and Gift Tax. That is, he will not have to pay the tax.

However, the governing body of the Treasury adds that in any other case of renunciation, it is considered that the taxpayer has accepted the inheritance and then rejected it. In these cases, it indicates, two events subject to taxation occur.

Firstly, the taxpayer, having accepted the inheritance, will have to pay the Inheritance and Gift Tax for increasing his/her assets through the acquisition of assets and rights by inheritance.

Secondly, the waiver will entail a transfer of these assets or rights to a new beneficiary, so he/she will be subject to the Inheritance and Gift Tax for the concept of acquisition by donation.

However, if the waiver is free of charge, he/she will be subject to the concept of acquisition by donation or by any other legal transaction free of charge and inter vivos and, if the waiver is onerous, to the Tax on Patrimonial Transfers and Documented Legal Acts, for the concept of onerous patrimonial transfers.

In the case of the query, the taxpayer received an inheritance after the death of his/her parents, which he/she renounced purely, simply and free of charge. Taxes concludes that “it is understood that the consultant has not accepted the inheritance and, therefore, is not an heir or legatee nor, consequently, a taxpayer of the Inheritance and Gift Tax.”