Personal Income Tax Return for a Deceased Person

Personal income tax return

The Personal Income Tax return for a deceased person is the tax return filed for an individual in the year of death. Generally, the surviving relative or the person appointed by the court to administer the deceased’s estate is responsible for filing the tax returns.

Filing a tax return is one of the many formalities and paperwork that must be dealt with when a family member dies.

Many of those doubts are about how to file the Personal Income Tax return of a deceased person or who pays the tax debt 

The truth is that the heirs are obliged to file the Personal Income Tax return of their deceased relative and also to assume his or her debts with the tax office. If heirs do not take care of it, the Tax Authorities may penalise them.

We at GM Tax Consultancy want to resolve the most frequent doubts of our clients and explain how to do this, whether you have to pay income tax or whether you are entitled to a refund. We answer all related questions in this guide about the income tax return of deceased persons.

Formalities following the death of a family member

There are many procedures following the death of a family member and they may vary, as it depends on the circumstances of the deceased and his heirs, the number of heirs, the agreement or lack of agreement between them, etc. 

In any case, the following procedures are the most common:

1. Issue of Medical death certificate (“Certificado de defunción”)

This is the official document that certifies the death of a person and is needed to register the death in the Civil Registry (Registro Civil). It is issued by the doctor who certifies the death and must be drawn up on the form published by the General Council of Official Medical Associations (Consejo General de Colegios Oficiales de Médicos).

The registration of the death is done at the Civil Registry Office of the  City Council where the death occurred, within 24 hours. This registration is necessary to obtain the burial permit. It can be carried out by relatives or by the funeral parlour, and the medical death certificate must be presented.

For obtaining the death certificate, one or two days after the registration in the corresponding court, the family of the deceased can go to the registry office of the  City Council where the death occurred to register the death and request a death certificate.

2. Obtaining the certificate of last will (“Certificado de últimas voluntades”)

Around 15 working days after the death, the last will certificate must be requested to find out if the deceased left a will, if he/she made more than one will (only the last one is valid) or if he/she died without making a will.

When a will is granted, the interested party receives a copy and the notary is responsible for notifying the Registry of Last Will and Testaments of the existence of the will. Therefore, when that person dies and the family requests this certificate, it is recorded whether he or she made a will and in which notary’s office it was made. Once there, the people who have any right to the inheritance can request a copy by presenting their DNI (National Identity Card).

The certificate of last will can be requested by filling in a Form 790, which can be downloaded from the electronic headquarters of the Ministry of Justice, and presenting the original literal death certificate. In addition, a small fee of 3.82 € must be paid.

3. Other procedures

  • Obtaining insurance certificate

To find out whether the deceased had any life or accident insurance, the general insurance register can be consulted 15 days after the death.

  • Cancellation of INSS pensions

It is processed at the National Social Security Institute (INSS) or any Social Security Service and Information Centre and requires the death certificate, the family record book with the deceased family member’s leave of absence and the ID card of the deceased and the family member requesting it.

  • Applying for widow’s or widower’s pension, orphan’s pension and death benefit

You can apply for a widow’s or widower’s pension at the Social Security Care and Information Centres. You must fill in the application form for survivor’s benefits and submit the documentation specified therein.

  • Request to the bank the certificate where you can see the value of all the accounts and investments of the deceased person by the time of the death.

4. Settlement of Inheritance tax and “Plusvalía Municipal” 

Once the inheritance has been accepted, it is time to pay the taxes. The Inheritance tax must be paid within six months in most Autonomous Regions, but some may take longer. To proceed with the settlement, the corresponding Forms 650 and 660  must be completed and submitted to the Tax Authorities. You can request to postpone filing the Inheritance Tax return up to 6 months more, and also you can request for extra time for the payment of the amount due, which would include paying interests. 

In addition to the Inheritance Tax, it is also necessary to pay the Tax on the Increase in the Value of Urban Land (“Plusvalía Municipal”),  for the real estate properties that have been inherited and in case the actual value of the real estate property at the time of the inheritance is higher than its value when this property was acquired by the person who now deceased. As this is a  local tax, it must be paid at the town hall corresponding to the place where the property is located.

Inheritance tax formalities

There are three main procedures in the tax field related to the deceased person:

  • Inheritance tax

It is levied when you receive an inheritance. The amount you have to pay depends in particular on the law approved in the  Autonomous Region where the deceased lived, the properties he or she had before dying, the value of the inherited property, rights and debts, and your degree of kinship.

  • Urban land value increase tax (“Plusvalía municipal”)

This tax is levied on the increase in the value of urban land from the time the deceased acquired it until he or she inherited it, not exceeding 20 years. Since the recent judicial decision of the Constitutional Court in October 2021 there are two different methods for calculating this tax i.e. a) the objective method which is calculated based on the cadastral value, and b) the real value method which considers whether the market value of the property has increased from the time the property was acquired by the now-deceased person and the time this person died. In case there was not an increase in the real value, this tax does not have to be paid. 

  • Personal Income Tax

This tax is levied on income earned by the deceased in the last tax year of his life from the 1st of January of the year in which he died until the date of his death.

  • Wealth Tax

In case the deceased person had wealth such as he/she was obliged to submit the Wealth Tax in previous years, there is no obligation to submit and pay for the Wealth Tax in the year of death.

How do I know if a deceased relative was obliged to declare?

According to the Tax Authorities, the declaration of a deceased taxpayer is required to be filed “if they have received income and it exceeds the limits set in the declaration obligation”.

In addition, “the amounts determining the existence of a declaration obligation apply in full, irrespective of the number of days of the tax period of the deceased and without the need to increase them for the year”.

Thus, currently, the limit is €22,000 if the deceased had a single-payer, or €14,000 if the deceased had two payers (for example, the deceased was in an ERTE situation for part of the year).

When and by whom is the declaration made?

If a deceased taxpayer is required to file a tax return, his or her heirs must do so If they don’t do so, the Tax Authorities may require the heirs to pay the deceased person’s tax, which will be deducted as an additional obligation when distributing the inheritance.

The Personal Income Tax return of the deceased must be filed individually. This means that family members cannot file a joint tax return with the deceased, 

In other words: in the case of a married couple with minor children, the remaining family members can choose to file individual or joint tax returns, but NOT together with the deceased. Thus it would look as follows:

Individual taxation
  • A deceased spouse whose tax period is less than one calendar year.
  • A widowed spouse whose tax period is one calendar year.
  • A minor child whose tax period is equal to one calendar year.
Individual and joint assessment
  • The widowed spouse and minor child can choose a joint assessment but cannot include the income of the deceased, so a single assessment must be filed for a tax period of less than one calendar year.

 

The deadline for filing the tax return is the one corresponding to the tax year in which the death occurred, so for the Spanish Personal Income Tax the deadline is June the 30th of the following year of death

How do I file a deceased person’s tax return?

The obligation to file a Personal Income Tax return lies with the heirs, who must file it individually

In the case of a deceased person, mechanisms such as a digital certificate or the Cl@ve system cannot be used, so the RENO (“Número de Referencia”) system has to be used, i.e. by filing a notice showing the deceased person’s identity card, effective date and the previous year’s income in cell 505 of the previous Personal Income Tax return submitted for the deceased person.

Their heirs can also come in person and register the admission in the name of the deceased, in which case only heirs who can prove their status can participate.

The dates for personal attention by the Tax Authorities:

3 May The start of the deadline for requesting an appointment for the telephone service.
5 May Start of telephone appointments.
26 May Start of the deadline for requesting face-to-face appointments in offices.
1 June In-person service at Tax Agency offices.

 

Do tax debts of deceased persons pass to their heirs?

Article 39 of the Ley General Tributaria (onwards, “LGT”) states that when a taxpayer dies, outstanding tax debts pass to the heir.

In this regard, the Tax Authorities point out that “the taxpayer’s debts pass in the same situation as they were at the time of the taxpayer’s death, and this is governed by Article 177 LGT, which states that after the taxpayer’s death the collection procedure continues with the heirs and, if necessary, the legatees, without any other requirement than accrediting the taxpayer’s death and notifying the heirs demanding payment of the tax debt of the taxpayer and the unpaid expenses”. However, penalties pending to be resolved/paid by the deceased are not transferred to their heirs. 

Similarly, if the tax return results in a tax refund, the heirs may apply for it on Form 00 (downloadable from the AEAT website), enclosing the death certificate, family register, certificate of will or, if this has not been done, the declaration of heirs, the identity card of all heirs and the certificate of ownership of the account of one of the heirs to which the money has been paid, with the appropriate authorisation for the other heirs to deposit it in the account. 

If the amount of the refund exceeds EUR 2,000, it must also be proved that inheritance tax has been declared (and paid).
If you need expert legal advice, contact our tax advisors in Barcelona by email or phone. Our lawyers will answer all your questions about the tax returns of a relative who died during the last year.

Solicitar consulta:

I have read and accept the Data Protection Policy.