The Court of Justice of the European Union (CJEU) rules that Spain’s Tax on Inheritances and Donations infringes EU law

10 September 2014

The CJEU has just ruled, on September 3rd 2014, that Spain’s Tax on Inheritances and Donations (ISD) contravenes EU legislation by permitting the establishment of differences in the tax treatment of donations and inheritances as between beneficiaries and donees resident in Spain and those who are non-resident, as between testators who are resident in Spain and those who are non-resident, and as between donations and similar dispositions of real property located in Spanish territory and real property located outside said territory.  

For those taxpayers who have been subjected to discriminatory treatment in the payment of the Spanish ISD tax in recent years because they could not apply the more favourable legal provisions at the autonomous community level, it is essential that they act quickly to bring proceedings against the Spanish Tax Authorities to obtain a refund of undue amounts paid. For those cases where this type of claim would not be appropriate because it would be time-barred, another option which exists is to bring a claim of state responsibility against Spain within the year following the publication of the ruling.         
In conclusion, we wish to comment that in view of the behaviour of the Spanish State in similar situations in the past, the necessary legislative change could take a long time to materialize, even until the year 2016. Therefore, future Spanish ISD taxpayers would need to obtain professional tax advice and thus analyze how to proceed until the corresponding amendment of Spain’s Inheritance Tax Law.
For further information, please contact José Blasi