Among the hereditary estate of the deceased, in addition to movable property, real estate, bank accounts and other financial products, vehicles, or shares, we find a concept that is unknown to many: the DOMESTIC HOUSEHOLD GOODS.
We can find the reference to household goods and its definition in the Common Civil Code in its article 1.321, and if the deceased person had Catalan civil neighborhood by reason of birth or continuous residence at the time of death, the provisions of Law 25/2010, of July 29, of the second book of the Civil Code of Catalonia, relating to the person and family, and in Law 10/2008, of July 10, of the fourth book of the Civil Code of Catalonia, relating to inheritances (hereinafter, CCCat) and specifically its article 231-30, will apply.
What are domestic household goods?
They are defined as the set of goods and belongings that a person acquires to equip their home and meet their basic housing and comfort needs. This can include furniture, appliances, kitchen utensils, bedding, towels, among other items necessary for daily life in a home.
That is, these are goods without extraordinary value that have been useful and form part of the memory of the deceased person. The difficulty lies in giving a value to these goods, a value that can be subjective and tied to attachment and affection.
The Law on Inheritance and Donation Tax (LISD) resolves doubts about their valuation by considering that the Household Goods have an impact on the calculation of the Inheritance and Donation Tax and, in its article 15, it indicates that household goods will be part of the hereditary mass and will be valued at 3% of the amount of the deceased’s remaining estate, unless the interested parties assign a higher value to these goods or prove their non-existence or that their value is lower than the result of applying the said percentage, proof that is “impossible”.
Therefore, the valuation of the goods that the deceased leaves at the time of death must add 3% relative to this set of goods that are household goods and the result, once debts and charges are deducted if any, will be the net hereditary estate and the basis for the calculation of the inheritance tax.
Until the year 2020, the jurisprudence of the Supreme Court included in the concept of household goods any of the assets that made up the inheritance, regardless of their nature, therefore this 3% was calculated and included even when the hereditary estate was composed solely and exclusively of bank accounts and financial products.
However, in judgments of March 10, May 19, 2020, and June 11, 2020, and September 21, 2021, the Supreme Court changed this criterion and established a new interpretation of article 15 of the LISD.
In these judgments, the Supreme Court established that the idea established by article 15 LISD that 3% of the remaining estate comprises the entirety of the inheritance is incorrect but should only be calculated on those that can be affected, by their identity, value, and function, for the particular or personal use of the deceased, excluding all others.
Therefore, according to the recent doctrine of the Supreme Court and according to the administrative criteria of July 21, 2021, of the Tax Agency of Catalunya, the following assets do not form part of the taxable base of household goods:
- Real estate that is not intended for the family home or the personal use of the deceased, therefore all real estate that is leased to third parties, i.e., rented or even given free of charge to relatives.
- Assets and rights related to professional or economic activities.
- Current accounts, securities, investment funds, and any financial asset.
- Shares and participations of companies.
Furthermore, in its Judgment of January 17, 2023 (appeal 5087/2023), the Supreme Court also ruled on another aspect of household goods. Until this judgment, if there was a surviving spouse, the value of the household goods could be reduced by 3% of the cadastral value of the marital home, but from this judgment, if the value of the home is higher than the cadastral value, the higher of the two should prevail and no proof is necessary if the taxpayer submits to the values established by the public administration, such as the reference value published by the Territorial Cadaster Offices.
At addwill, we are at your disposal if you wish to expand on the information and seek advice from our professional experts in the civil department. You can leave your query by clicking here.