Form 650. Inheritance and Donations Tax INSTRUCTIONS

Transcription

1 Form 650 Inheritance and Donations Tax SELF-ASSESSMENT INHERITANCE TAX RETURN INSTRUCTIONS GENERAL ISSUES Governing regulations Law 29/1987, of 18 November, on Inheritance and Donations Tax, (BOE 19 December) Royal Decree 1629/1991, of 8 November, approving the Regulations on Inheritance and Donations Tax, (BOE 16 November) HAP Order/2488/2014, of 29 December, approving self-assessment Inheritance and Donations Tax forms 650, 651 and 655 and establishing the place, manner and deadline for submission, (BOE 31 December) Purpose of the self-assessment The tax return must include assets and rights acquired by inheritance, bequest or any other succession document, and the amounts received by the beneficiaries of life insurance contracts when the contracting party is a person other than the beneficiary, except for the circumstances expressly regulated by Article 17.2a) of Law 35/2006, of 28 November, on Personal Income Tax and other tax regulations. Field of application The approved form shall apply to Inheritance and Donations Tax self-assessment tax returns when the taxpayers must meet their obligations for this Tax with the State Tax Administration, and therefore the income has not been transferred to the Autonomous Communities, pursuant to the provisions of Law 22/2009, of 18 December, regulating the financing system of the Autonomous Communities under joint government and Cities with a Statute of Autonomy, and amending certain tax regulations. Obligation to file A) Personal obligation Individuals with their usual place of residence in Spanish territory, as well as Spanish state representatives and civil servants abroad, are obliged to file a this tax return or selfassessment tax return for assets and rights acquired by inheritance, bequest or any other succession document. Furthermore, any quantities received by the beneficiaries of life insurance contracts, in the case of death of the insured party, are subject to the tax when the contracting party is a person other than the beneficiary, except for the circumstances expressly regulated by Article 17.2.a) of Law 35/2006, of 28 November, on Personal Income Tax and other tax regulations. 1

2 B) Limited liability tax obligation Individuals who do not have their usual place of residence in Spanish territory are obliged to file a tax return or self-assessment for this tax for assets and rights acquired by inheritance, bequest or any other succession document, whatever their nature, that were located, could be exercised or had to be fulfilled in Spanish territory. The amounts received by beneficiaries of life insurance contracts are also subject when, if the recipient is a non-resident, the contract was signed in Spain with any insurance company, or when the insurance company is Spanish, regardless of the place the contract is signed. Limited liability taxpayers must assign a resident in Spain to represent them before the Tax Administration regarding their obligations under this tax. Usual place of residence The usual place of residence is determined in accordance with the Income Tax regulations. For the purposes of this tax, it shall be understood that an individual with their usual place of residence in Spanish territory has their usual place of residence in an Autonomous Community when they remain in that territory a greater number of days during the period of five previous years, counted from date to date, ending the day before accrual (death). Temporary absences shall be counted to determine the period of stay. Unless proven otherwise, it shall be considered that an individual stays in the territory of an Autonomous Community when their main residence is located in this territory, defined pursuant to the provisions of Article 54 of Royal Decree 439/2007, of 30 March, approving the Personal Income Tax Regulation. When it is not possible to determine that an individual stays in a territory as indicated above, the Autonomous Community where the taxpayer has their main centre of interest shall apply, understood as the territory where they obtain the majority of the taxable base for Income Tax, determined by the components of their income related to Article 28 of Law 22/2009, of 18 December, regulating the financing system of Autonomous Communities under joint government and Cities with a Statute of Autonomy, and amending certain tax regulations. Filing period The filing period is six months from the death of the deceased, or from the date the declaration of death becomes official. Where to file the return (Paseo de la Castellna, nº 147, bajo CP: MADRID) Once the form has been completed, you must deposit the self-assessment total in any deposit entity in Spanish territory that collaborates with the Tax Agency in tax collection management (Banks, Savings Banks or Credit Co-operatives). Once the amount has been deposited, the tax return shall be filed at the National Tax Management Office, together with the document or declaration containing or indicating the taxable event, as well as the documentation listed in the following section. When a self-assessment does not result in a tax payable, it must be filed, together with the documentation that must be attached to the form and the other self-assessments filed in relation to the same inheritance or donation, directly at the National Tax Management Office, after filing, where appropriate, a request to defer or pay in instalments the compensation or payment by furnishing Spanish Historic Heritage assets. When the tax income corresponds to the autonomous cities of Ceuta or Melilla, the location for filing the return referred to in sections 2 and 3 of this article shall be the respective Tax Agency Delegation. 2

3 DOCUMENTATION TO ATTACH TO THE FORM The documentation referred to in Article 66 of RD 1629/1991, approving the Regulations for Inheritance and Donations Tax, must be attached. Compulsory documentation: The original and a certified copy of the Deeds of Acceptance of the Inheritance. In the absence of this, the Estate and Heirs Inventory, in duplicate, showing the identifying details of the person making the bequest and the heirs, an address for correspondence, a detailed list of the assets and rights included in the inheritance with the value of each at the date of death, together with any charges, debts or costs, the deduction of which is being sought. A copy of the Death Certificate. A copy of the Certificate from the General Registry of Wills and Testaments. A copy of the Will or the Declaration of Heirs. Power of attorney (compulsory in the case of non-resident taxpayers, Art. 47 of Law 58/2003, the General Tax Act, and Art of RD 1629/1991, Regulations for Inheritance and Donations Tax). You can use the representation form available on the Tax Agency website: Representation Form for procedures initiated by taxpayers. Copy of the Tax Identification Number (NIF) of the heirs. Other documentation to provide, if relevant: A copy of the IBI (Property Tax) bill and of the deeds of acquisition of the property, or in the absence of this the Property Register Certificate. A bank certificate showing the balances in all accounts and deposits and/or securities deposited at the date of death. Documentary evidence of the costs, debts, taxes and charges that might be deductible, together with the age of the heirs. Copy of the documentation of the vehicles that are the object of the inheritance (technical specifications, driving licence). Justification of the theoretical value of shares in the capital of legal entities not listed on the stock exchange. Certificate accrediting the degree of disability of the taxpayer(s). A copy of the insurance contract or a certificate from the insurance agency. THIS SELF-ASSESSMENT FORM INCLUDES: SHEETS TO INDICATE GENERAL DETAILS AND THE LIST OF DOCUMENTS ATTACHED, AS WELL AS THE LIST OF TAXPAYERS (pages 1 and 2) AND THE LIST OF ASSETS INCLUDED IN THE ESTATE (pages 3 to 8). SELF-ASSESSMENT FOR EACH TAXPAYER (pages 1 and 2). The General Details, List of Documents and Taxpayers, and the List of Assets shall be filled in on a single sheet or List per inheritance. One self-assessment shall be filled in for each taxpayer signing the return, on their own behalf or through a representative. INSTRUCTIONS FOR FILLING IN THE GENERAL DETAILS, LIST OF DOCUMENTS AND LIST OF ASSETS INCLUDED IN THE ESTATE. 3

4 PAGE 1 General details. Form 650 Return no. To be completed by the Tax Agency. Ceuta or Melilla. Check this box only if the return corresponds to Ceuta or Melilla. Documentation identification register number. To be completed by the Tax Agency. DOCUMENT DETAILS Mark the type of document with an X whether the attached document is private or public. If submitting a public notary document, indicate the full name of the Notary, the protocol number and date. Only fill in the Notary code when the Notary has indicated this on the document, together with their identification details. . Optional. DECEASED Enter the identification details of the deceased: NIF (only if assigned), full name and usual place of residence. Mark with an X whether they are a resident or not. Accrual date. Indicate the accrual date (DD/MM/AAAA). For assets acquired because of death and life insurance, the Tax accrues on the date of death of the deceased or insured party, or when the declaration of death is made official pursuant to Article 196 of the Civil Code. For assets acquired while the deceased was alive as a result of inheritance contracts or agreements, on the date this agreement is signed. FILER The person appointed by the taxpayers to file the return and attached documentation. Fill in the required details. Must include the date and filer s signature. List of documents attached Of the listed documents, indicate those submitted pursuant to the provisions of Art. 66 of the Regulation. PAGE 2 List of taxpayers Fill in the identification details of each taxpayer signing the self-assessment, indicating whether they are residents in Spanish territory or not. PAGE 3 1 List of assets included in the estate 4

5 List the assets belonging to the deceased in each section under List of goods included in the estate, indicating the details required. Fill in a single list of assets per inheritance. A. Property Box 01. Enter the real value of the property owned by the deceased and included in the estate. In the Nature column, enter a number from 1 to 8 depending on the type of property: 1- Housing 2- Commercial Premises 3- Garage 4- Storage Room 5- Industrial Unit 6- Plot 7- Rural Property 8- Others In Main residence mark the main residence of the deceased with an X, if appropriate. In Percentage of ownership note the percentage of the property owned by the deceased. In Ownership code: (Common for all types of property) use the following codes: P: Full ownership N: Bare ownership T: Right of use by turn (timeshare), part-time property or similar partial ownership of the property. In Property register reference enter the Property Register Reference Number of the property. In Location indicate the location of the property (province, town, street, number, floor) In the Value column enter the real value attributed to the assets and rights on the date of death. When the only part of the asset or right belongs to the deceased, indicate the value of their stake in the asset or right. B. Assets or rights related to business and professional activities Box 02. List all the assets and rights related to the activity In the Percentage of ownership column note the percentage of the asset owned by the deceased. In Section note the I.A.E. section of the business or professional activity. Mark Property with an X if the associated asset is a property. Only fill in the Nature column in the case of a property, according to the options listed in section A. In Property register reference enter the Property Register Reference Number of the property. 5

6 In Description of the asset or right briefly describe the associated asset or right. In Value enter the real value of the assets or rights on the date of death. PAGE 4 C. Deposits in current or savings accounts, call or term deposits, financial accounts and other account deposits Box 03. Enter the percentage of ownership, the code, account or deposit number, Tax ID (NIF) and name of the entity and value on the date of death for each account or deposit held by the deceased. D. Securities from the assignment of equity capital to third parties Box 04. List all the securities from the assignment of equity capital to third parties held by the deceased; assign the number of each type of security in the Description column. E. Securities from the assignment of equity capital to any type of entity Box 05. Include the shares and stakes in the corporate capital or equity of Companies, Investment Funds or other legal entities; assign the number of each type of security in the Description column. PAGE 5 F. Jewellery, vehicles, works or art and antiques Box 06. Include the real value of jewellery, cars, two or three-wheel vehicles, leisure and water sport vessels, sail boats, aeroplanes, light aircraft and other aircraft. G. Other economic assets and rights Box 07. Enter the assets and rights not included above in this section, such as accrued and unpaid assets, contractual options, rights from intellectual or industrial property not related to economic activities, loans granted or others. Specifically, enter the right to receive amounts which, regardless of their nature, companies provide to family members of deceased employees, provided their taxation is not expressly set forth in Income Tax. H. Deductible charges and encumbrances Box 08. Only perpetual, temporary or redeemable charges or encumbrances that apply directly to the assets and reduce their capital or value, such as tax registers or pensions, shall be deductible. Those involving a personal obligation to the acquiring party and those, such as mortgages and pledges, which do not reduce the value of the assets transferred shall not be 6

7 considered; notwithstanding that the debts they guarantee can be deducted if they meet the requirements set forth for deducible debts. When the term of deductible pensions, charges or encumbrances is not indicated, they shall be considered unlimited. The value of the tax register shall be considered that of the capital that must be provided for redemption according to Civil Code regulations or regional legislation. The value of pensions shall be obtained by capitalising them at the legal interest rate set forth in the General State Budget Act, and taking the capital from the part that, according to regulations established for assessing usufructs, correspond to the age of the pensioner, if the pension is lifelong, or the term of the pension is temporary. I. Household goods Box 09. Household goods are part of the estate and shall be valued at 3 per cent of the remnant estate of the deceased (calculated value) unless the interested parties assign a higher value to these goods, or reliably prove they do not exist, or that their value is lower than the result of applying said percentage (estimated value). The calculated value of household goods shall be reduced by that of the assets that must be delivered to the surviving spouse pursuant to the provisions of Article 1,321 of the Civil Code or the provisions of civil, regional or special law; they shall be valued at 3 per cent of the rateable value of the main residence of the spouses. In Estimated value, enter the value of the household goods as estimated by the interested parties. In Calculated value, enter the result of applying 3 per cent to the remnant estate (see box 16) In Rateable value, indicate the value for the year of death. In Reduction for main residence of the spouses, indicate the result of applying 3 per cent to the rateable value of the home where the spouses live. J. Deductible debts Box 10. In this section, enter the value of deductible debts and briefly describe their origin. Generally, debts incurred by the deceased may be deducted provided they are accredited by a public or private deed that meets the requirements of Article 1227 of the Civil Code, or are otherwise justified, except those equally shared in favour of heirs or legatees and their spouses, ancestors, descendants or siblings, even if they disclaim the inheritance. The Administration may require the heirs to ratify the debt in a public deed in the presence of the creditor. Any tax due by the deceased to the State, Autonomous Communities or Local Councils, or Social Security debts, paid by the heirs, executors or administrators of the estate shall be deductible even if they are settled after death. PAGE 6 K. Deductible expenses Box 11. In this section, enter the value and a brief description of deductible expenses. The following are deductible from the estate: a) When the will or intestate proceedings become litigious, expenses incurred during litigation in the common interest of all heirs for the legitimate representation of such wills or intestate 7

8 heirs, provided they are duly proven in the records; and arbitration expenses, under the same conditions, accredited in the proceedings. b) Expenses incurred during the last illness paid by the heirs, as soon as they are justified. c) Burial and funeral expenses once they are justified and when they are proportionate to the estate, pursuant to the customs and traditions of each town or city. Expenses incurred to administer the remnant estate may not be deducted. L. Assets or rights added to the estate Box 12. Section reserved for assets that are not owned by the deceased on the date of death but could be added to the estate. Addition code column. Enter any of the following codes: A1. Assets or rights added as they belonged to the deceased up to the year prior to death, unless proven otherwise. This addition shall affect all successors equally, unless transfer to a specific person is irrefutably accredited, in which case it shall only affect this person, who shall gain the status of heir for tax purposes. A2. Assets or rights added as they were acquired in usufruct or for consideration by the deceased, and in bare ownership by the heir, legatee, relative to the third degree or spouse of any of these or the deceased, during the three years prior to death. This addition shall only affect the bare owner, who shall settle the transfer mortis causa of full ownership. A3. Assets and rights added as they were transferred by the deceased for consideration during the five years prior to death, maintaining usufruct or another life interest, except in the case of a life annuity contract signed with an entity legally dedicated to this type of transactions. This addition shall only affect the bare owner, who shall settle the transfer mortis causa of full ownership. A4. Deposited securities and bills whose receipts have been endorsed if, prior to death, the endorser has not withdrawn them or recorded the endorsement in the books of the trustee, and any registered securities likewise endorsed, if the transfer has not been recorded in the books of the issuing entity prior to the death of the deceased, unless proven otherwise. This addition shall only affect the endorser of the securities. Exclusion from additions: no additions shall be completed when the amount paid for Property Transfer Tax and Stamp Duty is higher than would be payable for Inheritance Tax. If lower, the addition may be completed but the taxpayer is entitled to deduct the amount paid for Property Transfer Tax and Stamp Duty from the Inheritance Tax settlement. M. Exemptions common to all heirs Box 13. Only applicable in the case of cash bonds from industrial or business banks that have not been attributed to a specific person by the testator. The bond acquisition date, entered in the Description column, must be before PAGE 7 N. List of assets and rights bequeathed by the deceased to certain rightful claimants 8

9 Box 14. The purpose of this section is to list the assets and rights specifically attributed to certain individuals by the testator. These must normally be deducted from the net estate to determine the estate to be distributed although this may entail the distribution of the entire estate. Enter the NIF, name and surnames of the beneficiary. In Type of bequest indicate the letter from the list of assets that includes the asset bequeathed. (e.g.: A if the asset is a property). In Description of the bequest, describe the assets bequeathed as they were described in the corresponding list of assets. In Ownership code enter one of the following codes: P: If full ownership of the asset is bequeathed. N: If bare ownership of the asset is bequeathed. U: If usufruct of the asset is bequeathed. In Percentage bequeathed note the percentage of ownership bequeathed. In Value, enter the value of the asset with fewer charges or the debts guaranteed with the asset and assumed by the legatee. O. Earnings from life insurance contracts Enter amounts received by insurance contract beneficiaries, which shall later be added to the inheritance and/or bequest should the beneficiary also be an heir and/or legatee. In addition to the amounts to be received by the beneficiary, fill in the other details required regarding the insurance agency, the policy signed and the beneficiary. Value of the deceased s assets and rights. Box 15. The sum of boxes 01 to 07. PAGE 8 Remnant estate. Box 16. Result of subtracting box 15 from box 08. (Value of the deceased s assets and rights- Deductible charges and encumbrances). Net estate. Box 17. As the net estate, enter the result of reducing the remnant estate (box 16) by the amount of debts and expenses (boxes 10 and 11) and exemptions (box 13), and adding the sum of the household goods (box 09) and the sum of the assets added to the estate (box 12). I.e., 17 = Net estate to be distributed. Box 18. Result of subtracting the amount entered in box 17, Net estate minus the amount entered in box 14, List of assets and rights bequeathed. 9

10 INSTRUCTIONS FOR FILLING IN THE SELF-ASSESSMENT PAGE 1 Space reserved for identification label Affix the taxpayer s label. Self-assessment code To be completed by the Tax Agency. Documentation identification register no. To be completed by the Tax Agency. Accrual Enter the date of death. Must be expressed using two digits for the day, two for the month, and four for the year. Expired Only check this box if expiration applies pursuant to the provisions of the General Tax Act, and Article 25 of the Inheritance and Donations Tax Act. Taxpayer Fill in the identification details of the taxpayer and their usual place of residence. Remember to fill in the country of residence for non-residents. In the Group box, enter the taxpayer s group number, as listed below: Group I. Descendants and adopted children under twenty-one. Group II. Descendants and adopted children aged twenty-one or over, spouses, ascendants and adoptive parents. Group III. Second degree (siblings) and third degree (nieces/nephews, aunts/uncles) collateral relatives, and ascendants and descendants by marriage. Group IV. Fourth degree (cousins) collateral relatives, more distant relatives and nonrelatives. In the Pre-existing assets box, enter the band of the taxpayer s assets on the date of tax accrual. The bands in force for inheritances accrued as of 1 January 2000 are: Band 1. From 0 to 402, Band 2. From over 402, to 2,007, Band 3. From over 2,007, to 4,020, Band 4. Over 4,020, In Succession document mark the type of document with an X: inheritance, bequest or others. Others may include: donation mortis causa; succession contracts or agreements; amounts assigned by testators to executors if they exceed the amount established by custom or tradition, or 10 per cent of the estate value; receipt of amounts paid to the relatives of deceased employees, except those from life insurance in the case of death or amounts subject to Income Tax. Deceased Enter the required identification details of the deceased person. 10

11 Applicable regulations When the taxpayer is entitled to apply regulations approved by an Autonomous Community and opts to do so, pursuant to the provisions of Additional Provision Two of Law 29/1987, of 18 December, on Inheritance and Donations Tax, which adapts Tax regulations to the provisions of the Court of Justice of the European Union Judgement, of 3 September 2014 (case C-127/12), indicate which Autonomous Community. In this case, you must apply the reductions, rate, multiplier coefficients, and deductions and rebates established by this legislation. If you are not entitled to apply the regulations of an Autonomous Community, or you chose not to, mark State and the only applicable regulations shall be those of the state. Document details Mark the type of document with an X whether the attached document is private or public. If submitting a public notary document, indicate the full name of the Notary, the protocol number and date. Only fill in the Notary code when the Notary has indicated this on the document, together with their identification details. Partial or complementary settlement Mark with an X if it is a partial or complementary settlement. Taxpayers may file a partial self-assessment in order to collect life insurance, credits, accrued and unpaid assets, and withdraw assets, securities, bills or cash deposited, or any similar circumstances regulated by law. The rate and multiplier coefficients shall apply directly to the value of the assets without any reduction, except in the case of partial settlements filed to collect any type of life insurance. In this case the reductions set forth in Article 20 of the Tax Act shall be taken into account with the requirements and limits established. Taxpayers may also file complementary settlements both within and after the regulation deadline. In Supporting document no., enter the number of the original tax return. In Tax paid, enter the amount paid for prior settlements, if any. Calculation details General case. Mark an X when the inheritance is a general case, i.e., it does not include any of the specific cases detailed below. Bare ownership acquisition. Mark X when the taxpayer acquires bare ownership of any or all inherited assets. Accumulation of donations. Mark X when previous donations by the deceased must be accumulated to the assets acquired by the taxpayer. Upon the death of the donor, the value of donations made by the deceased in the four years prior to death is accumulated to the base of the inheritance. This value is only accumulated to calculate the average rate, and only for the heirs affected. Extension Request. Mark X in the relevant box to notify if a filing deadline extension request was submitted or not. If yes, enter the submission date. Estate portion value. 11

12 Box 19. List your stake in the estate, transferring its value to box 19 pursuant to the regulations defined in Article 27 of the Tax Act, i.e., regardless of the stakes and awards of the interested parties, for tax purposes it shall be assumed that the estate is distributed equally and pursuant to inheritance regulations. Furthermore, take into account the assets that, according to the instructions in Section L. ASSETS ADDED TO THE ESTATE. Box 14, may be added to the individual inheritance. Bequest value. Box 20. Enter the value of the assets listed in Section N that the deceased specifically assigns to the taxpayer. Life insurance value. Box 21. Enter the amounts to be received by the beneficiary according to the information in Section O. Taxable base. Box 22. The figure in box 22 shall be the sum of the amounts entered in boxes 19, 20 and 21 NOTE: The amounts and coefficients of the reductions in boxes 23 to 30 are as indicated below unless the taxpayer is entitled to apply regulations approved by an Autonomous Community and opts to do so, pursuant to the provisions of Additional Provision Two of Law 29/1987, of 18 December, on Inheritance and Donations Tax; and these reductions have been amended by regional laws by those Autonomous Communities which assumed the tax transfer system set forth in Law 22/2009, of 18 December, regulating the financing system of the Autonomous Communities under joint government and Cities with a Statute of Autonomy, and amending certain tax regulations. If the Autonomous Community regulation applied to settle the tax contemplates any reduction with the same title as boxes 23 to 30 use the relevant box for that title with the figures resulting from applying this regulation. Otherwise, use boxes 31 to 35, the latter of which, box 35. The last box, number 35, shall be used if there is not box with the specific title of the reduction. Reduction due to relationship with the deceased. Box 23. Enter the reductions applicable based on the group Group I. Acquisitions by descendants and adopted children under twenty-one: 15,956.87, plus 3, for every year under twenty-one of the successor; this reduction may not exceed 47, Group II. Acquisitions by descendants and adopted children aged twenty-one or over, spouses, ascendants and adoptive parents: 15, Group III. Acquisitions by second and third degree collateral relatives, and ascendants and descendants by marriage: 7, Group IV. Acquisitions by fourth degree (cousins) collateral relatives, more distant relatives and non-relatives; no reduction. 12

13 Reduction due to disability. Box 24. Enter the reduction of 47, when the taxpayer is legally considered disabled, with a degree of disability equal to or greater than 33 per cent and lower than 65 per cent, pursuant to the scale referred to in Article 148 of the Consolidated Text of the General Social Security Act, approved by Legislative Royal Decree 1/1994, of 20 June; the reduction shall be 150, for individuals who accredit a degree of disability equal to or greater than 65 per cent pursuant to the regulations mentioned above. Reduction for life insurance. Box 25. Contracted before 19 January 1987 (temporary provision 4 of the Law). Reduction to amounts exceeding 3,005.06: 90% for the spouse, ascendant or descendant of the contracting party. 50% for second degree collateral relatives. 25% for third or fourth degree collateral relatives. 10% for more distant relatives or non-relatives. Reduction of up to 4, if accrued between and , and 9, if accrued after or 9, after , for beneficiaries who are the spouse, ascendant, descendant, adopted child or adoptive parent of the deceased contracting party. For collective insurance, the relationship shall refer to the deceased insured party. This reduction is unique to each taxpayer, regardless of the number of contracts they are beneficiaries of, and is not applicable when the taxpayer is entitled to the reduction in the previous section. Reduction for acquisition of companies and stakes. Box 26. This reduction of 95 per cent of the part attributable to the taxpayer is applicable to the acquisition of sole ownership companies or professional businesses and stakes in entities or usufruct rights to the same to which the exemption right in section 8, Article 4 of the Wealth Tax Act applies when they are transferred in favour of spouses, ascendants, descendants or adoptive children or, if there are none, in favour of ascendants, adoptive parents or up to third degree collateral relatives of the deceased. The acquisition must be maintained for ten years following the death of the deceased, unless the acquirer should die during this period. If this requirement is not met, the part of the tax not paid as a result of the reduction and interest for late payment must be paid by filing a complementary tax return. Pursuant to Article 4.8 of the Wealth Tax Act, the following are exempt: One. The assets and rights of individuals necessary to develop their business or professional activity, provided this activity is conducted regularly, personally and directly by the taxpayer and it is their main source of income. Remuneration from executive duties in the entities referred to in number two of this section, or any other remuneration from stakes in these entities, shall not be used to calculate the main source of income. Assets and rights common to both spouses shall also be exempt when they are used to develop the business or professional activity of either spouse, provided they meet the requirements of the above paragraph. Two. Stakes in entities, listed on organised markets or not, provided they meet the following conditions: a) That the main activity of the entity is not movable or immovable property management. The entity shall be considered not to manage movable or immovable property and that, therefore, it conducts a business activity when, pursuant to the provisions of Article 75 of Law 13

14 43/1995, of 27 December, on Corporation Tax, this entity does not meet the conditions to consider that over half of its assets are securities or it merely holds assets. b) That, when the company is a corporation, it does not meet the conditions set forth in Article 75 of Law 43/1995, of 27 December, on Corporation Tax, except the condition set forth in section 1 b) of this article. c) That the taxpayer s take in the entity s capital is at least 15 per cent, calculated individually, or 20 per cent together with their spouse, ascendants, descendants or second degree collateral relatives, whether they are related by blood, marriage or adoption. d) That the taxpayer effectively conducts executive duties at the entity, receiving remuneration of over 50 per cent of all their business, professional and work income. For the above calculation, business, professional and work income shall not include income from the business activity referred to in number 1 of this section. When the take in the entity is held jointly with one or various of the individuals referred to in the above section, the executive duties and remuneration therefrom must apply to at least one of the relatives, notwithstanding that they are all entitled to the exemption. The exemption may only amount to the value of the stakes, established pursuant to the regulations set forth in Article 16.1 of this Law, in the part relevant to the ratio between the assets necessary to conduct the business or professional activity, minus the sum of debts, and the value of the entity s net equity. Three. The following shall be determined by regulations: a) The requirements to be met for the exemption to be applicable regarding the assets, rights and debts necessary to develop a business or professional activity. b) The conditions to be met by stakes in entities. In addition to the above reduction, when the taxable base of an acquisition mortis causa of the spouse, descendants or adoptive children of the deceased person includes assets established in sections one, two and three of Article 4 of Law 19/1991, of 6 June, on Wealth Tax, regarding Spanish Historic Heritage or the Historic or Cultural Heritage of the Autonomous Communities, a further reduction of 95 per cent of their value shall also apply with the same requirements for maintaining the assets set forth above. Reduction for acquisition of the usual place of residence of the deceased. Box 27. In acquisition of the usual place of residence of the deceased, enter a 95 per cent reduction of the portion of the value of the home included in the taxable base, with a limit of 122, per taxpayer when the acquirers are the spouse, ascendants or descendants of the deceased, or a collateral relative over sixty-five years old living with the deceased during the two years prior to death. Applying this reduction requires the acquisition to be maintained for ten years following the death of the deceased, unless the acquirer should die during this period. If this requirement is not met, the part of the tax not paid and interest for late payment must be paid. Reduction for acquisition of agricultural holdings. Box 28. The reduction explained below is incompatible with the reduction for acquisition of a sole ownership company. One or the other shall be applied, as chosen by the interested parties. Enter the result of applying the percentages indicated below to the asset or right transferred in question: 90%. Full transfer of the holding in favour of or by the owner of another Priority Agricultural Holding (100 per cent if the acquirer is a young farmer or farm worker). 75%. Partial transfer of holdings and rural property in favour of the owner of a Priority Agricultural Holding (85 per cent if the acquirer is a young farmer or farm worker). 50%. Transfer of land to complete, under a single boundary, 50 per cent or more of the surface area of a holding. The reductions for transfer mortis causa of rural forestry land regulated in Additional Provision 4 of Law 19/1995, of 4 July, on Modernising Agricultural Holdings, are also applicable. 14

15 Reduction for acquisition of Historical or Cultural Heritage assets. Box 29. When the taxable base of an acquisition mortis causa of the spouse, descendants or adoptive children of the deceased includes assets exempt from Wealth Tax, regarding Spanish Historic Heritage or the Historic or Cultural Heritage of the Autonomous Communities, a reduction of 95 per cent of their value shall also apply with the same requirements for the reduction in box 27. Reduction for consecutive transfer mortis causa. Box 30. Enter the amount paid previously as tax payable for transfers mortis causa when one of the same assets was object of two or more transfers mortis causa in favour of descendants or adopted children in a maximum period of ten years, and the second or subsequent transfers are settled. According to the provisions of section 4 of Article 20 of the Tax Act, this reduction shall not apply when the taxpayer or deceased were not resident in Spanish territory and therefore, if state regulations are applied, they shall not be entitled to this reduction. Reductions approved by the Autonomous Community whose regulations the taxpayer is entitled to apply. Boxes 31 to 35. When the taxpayer is entitled to apply the regulations approved by an Autonomous Community and opts to do so, pursuant to the provisions of Additional Provision Two of Law 29/1987, of 18 December, on Inheritance and Donations Tax, they may enter the reductions approved by the relevant Autonomous Community in force at the time of accrual; if these reductions are included in the title of the previous boxes, 23 to 30, use these, and if not, use boxes 31 to 35. The last box, number 35, shall be used if there is not box with the specific title of the reduction. Total reductions. Box 36. Add the amounts entered in boxes 23 to 35. Tax base. Box 37. box 22 minus box 36 GENERAL CASE IMPORTANT: Boxes 38 to 40 shall only be filled in if you do not meet any of the cases that require the application of an average effective tax rate. Rate Application. Apply the rate in the following table to the amount in box 37, and enter the result of the amounts obtained (rate for inheritances accrued after ): Net tax base Remaining tax base up Rate applicable Full amount due Up to to Percent , % 7, , % 15, , , % 15

16 23, , , % 31, , , % 39, , , % 47, , , % 55, , , % 63, , , % 71, , , % 79, , , % 119, , , % 159, , , % 239, , , % 398, , , % 797, , upwards 34.00% Entered in boxes a and b to facilitate calculation. Full amount due. Box 38. Add box a and box b Multiplier coefficient. Box 39. Indicate the relevant multiplier coefficient according to the following table, depending on the taxpayer s pre-existing assets and their relationship with the deceased: PRE-EXISTING ASSETS ARTICLE 20 GROUPS I & II III IV From 0 to 402, From over 402, to 2,007, From over 2,007, to 4,020, More than 4,020, Tax payable. Box 40. Multiply boxes 38 and 39 AVERAGE RATE APPLICATION IMPORTANT: Boxes 41 to 46 shall only be filled in if you do meet any of the cases that require the application of an average effective tax rate to calculate the tax payable, these are the acquisition of assets in bare ownership and donations that must be accumulated to the tax base of the acquisition mortis causa. Theoretical tax base. Box 41. Calculation based on different applications: A. Acquisition mortis causa of assets in bare ownership 1. Calculation of the value of full ownership of the assets acquired in bare ownership: Sum of the value of usufruct and bare ownership of the assets acquired, or the percentage of the assets acquired. 2. Add the value of assets acquired in full ownership. 16

17 3. Deduct the reduction entitlements from the total. Note that for the calculation of reductions of assets acquired fully or partially in bare ownership, the reduction percentages shall be applied to the full ownership of these assets or the part received. B. Accumulation of donations Add the value of donations that may accumulated according to the provisions of Article 61 of the Inheritance Tax Regulations to the amount in box 37. C. Simultaneous application of the average rate When both cases apply, acquisition of assets in bare ownership and accumulated donations, a prior theoretical tax base shall be calculated and, as described in the case of acquisition in bare ownership, you must add the amount of donations that may be accumulated to this to thus obtain the valid theoretical tax base to calculate the average rate. Theoretical amount due (a) + (b). Box 42. Apply the tax rate to the amount in box 41 to obtain the theoretical amount due. For more information on the rate, see the instructions in the section GENERAL CASE Multiplier coefficient. Box 43. See instruction for box 39. Theoretical tax payable. Box 44. Result of the product of boxes 42 and 43. Effective average tax rate. Box 45. Result of dividing box 44 by box 41 and multiplying by 100; include up to two decimal points in the result. Tax payable. Box 46. Result of multiplying box 37 by box 45. TAX DEBT Tax Payable. Box 47. For general cases, equal to the amount in box 40. For cases that apply the average rate, the value entered in box 46. Reduction for excess tax. Box 48. When the difference between the tax payable obtained by applying the relevant multiplier coefficient and the amount that would be obtained by applying the immediately lower multiplier coefficient to the same full amount due is greater than the difference between the value of pre-existing assets considered for the settlement and the maximum amount of the pre-existing assets that would lead to applying this lower multiplier coefficient, it shall be reduced by the excess amount. Adapted tax payable. Box 49. Deduct from box 47 the amount in box 48. Ceuta and Melilla Rebate. 17

18 Box 50. A 50% rebate shall be applied to the adapted tax payable when the deceased had their residence in Ceuta or Melilla during the five years prior to accrual. This reduction shall be increased to 99% if the taxpayer is also included in tax groups I or II given their relationship with the deceased. Rebates approved in Autonomous Community regulations. Boxes 51 to 54. When the taxpayer is entitled to apply regulations approved by an Autonomous Community and opts to do so, pursuant to the provisions of Additional Provision Two of Law 29/1987, of 18 December, on Inheritance and Donations Tax, you may enter the rebates approved by the relevant Autonomous Community in force at the time of accrual. Use boxes 51 to 54, for this or, if the nature of the rebate is not related to the relationship or degree of disability, use box 59. Deduction due to international double taxation. Box 55. When the taxpayer has a personal obligation to pay this tax, they may deduct the lower of the following two amounts: a) The effective amount paid abroad for a similar tax that affects the capital gains taxed in Spain. b) The result of applying the average effective rate of this tax to the capital gains corresponding to assets located or rights exercised outside Spain, when they have been taxed abroad for a similar tax. Deductions approved in Autonomous Community regulations. Boxes 56 to 58. When the taxpayer is entitled to apply regulations approved by an Autonomous Community and opts to do so, pursuant to the provisions of Additional Provision Two of Law 29/1987, of 18 December, on Inheritance and Donations Tax, you may enter the deductions approved by the relevant Autonomous Community in force at the time of accrual. If the nature of the deduction you are entitled to does not adapt to the title of these boxes use box 59. Other deductions and rebates. Box 59. Enter the amount of rebates and deductions you are entitled to apply and that do not adapt to the title of other boxes here. Deductions of previous tax paid. Box 60. Enter the tax paid by the taxpayer for previous settlements, these include: Partial settlements or return-settlements. In the case of complementary tax returns, the amount paid for the settlements that replace them. Total deductions and rebates. Box 61. Add the amounts entered in boxes 50 to 60. Late payment interest. Box

19 Interest on late tax payment is the legal interest rate in force throughout the period accrued increased by 25 per cent, unless otherwise established in the General State Budget Act. This rate shall apply from the end of the legal deadline for filing returns until the date the selfsettled tax debt is paid, applicable to the amount in box 49 minus box 61. Total to deposit. Box 63. Subtract from the amount in box 49 the amount in box 61 and add box 62. NOTE: When the taxpayer is entitled to apply the regulations of an Autonomous Community, which are different from State regulations, and opts to do so, all figures must be calculated according to these regulations.. THESE INSTRUCTIONS ARE FOR INFORMATION PURPOSES ONLY AND THE PROVISIONS OF CURRENT REGULATIONS SHALL APPLY. 19