Inheritance in favor of a non-profit foreign entity

The DGT declares that the inheritance in favor of a non-profit entity is not subject to ISD but to the AJD modality of the ITP and AJD.

A non-resident person, owner of a property, a vehicle and a bank account, all located in the Canary Islands, leaves as sole heir to a non-profit foreign entity. It is intended to carry out its elevation to the public of said accepted and adjudicated inheritance in order to proceed to its registration in the property registry, for which it is necessary to pay the corresponding tax.

In the first place, despite being an inheritance, in accordance with the provisions of art. 1 LISD, is not subject to ISD since this tax only taxes the capital gains obtained for lucrative purposes by natural persons, not legal, and in this case it is a foundation.

Secondly, in relation to the ITP and AJD, modality TPO, it is not subject either since it is taxed, in its case, the acquisition of goods but by inter vivos acts and for consideration and in this case, it is a transfer mortis cause in favor of a foundation. As for the AJD modality, the public deed in which the inheritance is formalized, in accordance with the provisions of art. 31.2 LITP, meets all the requirements for this purpose, since it is a first copy, whose object is a valuable quantity or thing, which is registered in the property registry and which is not subject to ISD or to the other ITP and AJD modalities.

Regarding the determination of which autonomous community is competent for the purposes of the liquidation of the ITP and AJD, taking into account that the deceased is a non-resident and that the heir is a foreign foundation, finding the assets object of the inheritance in Spain , in general, the following connection points are recognized:

– fixed fee of AJD: among others, in the case of public deeds, the performance corresponds to the autonomous community in which it is authorized or granted;

– AJD gradual fee: the performance corresponds to the autonomous community in whose circumscription is the register in which the registration or annotation of the goods or acts has to proceed.

Based on the foregoing, the competent body in this case for the purposes of the settlement of the gradual fee of the AJD modality will be the one in whose circumscription is the register in which the goods object of the inheritance are to be registered.

Finally, the settlement model that must be used, it must be taken into account that, in accordance with art. 44 Law 22/2009, the autonomous communities have the competence to approve the declaration models in their territorial scope.