Determination of the Competent Autonomous Community for Inheritance Tax

The determination of the applicable regulations for Inheritance and Gift Tax (ISD) is a critical aspect of inheritance processes, as tax reliefs and rates vary significantly between regions. The Dirección General de Tributos (DGT) has clarified the criteria for identifying the competent Autonomous Community based on the residence of the deceased.

What the DGT has resolved

The tax authority establishes that the Autonomous Community competent for the settlement of the tax is that where the deceased had their habitual residence on the date the tax liability arose. To determine this concept, one must analyze the place where the person remained for the greatest number of days during the five-year period immediately preceding the death.

A relevant point of the resolution is the interpretation of the continuity of residence. In the event of death, it is understood that the home maintains its character as a habitual residence, even if the three-year continuous residence period usually required in other regulatory contexts has not been met.

What it means for you

For heirs, this criterion is decisive in determining the tax burden of the succession. Ownership of a property or a tax domicile is not enough; what defines territorial competence and the applicable regulations is the center of vital interests and the physical presence of the deceased in a specific territory.

The application of Law 29/1987, Law 22/2009, and the Inheritance and Gift Tax Regulations requires a precise analysis of residence periods to avoid errors in submitting the tax settlement to the incorrect regional administration.

What should be done

In a succession process, it is necessary to:

• Gather documentation proving the deceased's presence at their home during the five years prior to death.
• Verify if the habitual residence coincides with the declared tax domicile.
• Assess each particular situation, as the determination of habitual residence can be subject to controversy if there are multiple homes or frequent travel.