Spanish Inheritance Tax: A Comprehensive Guide for Non-Residents (Especially UK Residents)
Inheriting property or assets in Spain can be a complex process, especially for non-residents. This guide provides a clear explanation of Spanish inheritance tax, focusing on the needs of UK residents and other foreign nationals inheriting assets in Spain.
We’ll cover everything you need to know, including how much inheritance tax you might pay, the inheritance laws you need to follow, and how regional differences for Murcia, Alicante and Valencia and Almeria can impact your tax liability. We’ll use plain language and avoid technical jargon, so you can understand your obligations and plan effectively.
Index
Understanding Spanish Inheritance Tax (ISD)
What is Spanish Inheritance Tax?
Spanish Inheritance Tax, officially called Impuesto sobre Sucesiones y Donaciones (ISD), is a tax you pay when you receive assets as an inheritance (after someone dies) or as a gift (while the giver is still alive). It’s important to understand that, unlike the UK system, Spanish inheritance tax is paid by the recipient of the inheritance, not by the estate of the deceased. This means each beneficiary is responsible for their own tax bill.
Who Pays Spanish Inheritance Tax?
- Residents: If you are a resident in Spain (spending more than 183 days per year in the country), you are generally liable for inheritance tax on your worldwide
- Non-Residents: If you are a non-resident, you are typically only liable for inheritance tax on assets and rights located in Spain. This includes:
- Property (houses, apartments, land)
- Money in Spanish bank accounts
- Investments made through Spanish financial institutions
- Payouts from life insurance policies taken out with Spanish companies (or foreign companies operating in Spain).
- Vehicles and boats with Spanish plates
- Time-shares Rights with tourist companies
- Any credit you can have against Spanish companies or institutions 8Spanish Tax offices, Goverment, Insurance companies…)
Key Point for Non-Residents (Especially UK Residents): A crucial European Court of Justice ruling in 2015 ensures that non-residents receive the same tax treatment (rates and allowances) as residents. This was particularly important for UK citizens after Brexit, as it prevents discrimination.
Regional Variations in Spanish Inheritance Tax
Why Regional Differences Matter:
Spain is divided into autonomous regions, and each region has significant power to adjust inheritance tax rates and allowances. This means the amount of tax you pay can vary greatly depending on where the inherited property or assets are located.
Murcia, Alicante, Valencia, and Almeria
- Murcia: Offers a 99% reduction on the inheritance tax bill for spouses, children (including adopted children), and parents (Groups I and II beneficiaries).
- Example: If your calculated tax bill was €10,000, the 99% reduction would reduce it to just €100.
- Conditions: To qualify, the inheritance or gift must often be formalized in a public deed before a notary, and the origin of funds (for cash gifts) must be documented. It’s crucial to get up-to-date advice from a legal professional, as residency requirements can change.
- In the Region of Murcia (Spain), the multiplicative coefficients applicable to the Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) are regulated by Article 22 of Law 29/1987, of December 18, on the Inheritance and Gift Tax (ISD).
These coefficients depend on two main factors: The pre-existing wealth of the beneficiary, and the group of kinship between the beneficiary and the deceased or donor.
| Pre-existing Wealth (€) | Groups I & II | Group III | Group IV |
|---|---|---|---|
| Up to €402,678.11 | 1,0000 | 1,5882 | 2,0000 |
| €402,678.12 to €2,007,380.43 | 1,0500 | 1,6676 | 2,1000 |
| €2,007,380.44 to €4,020,770.98 | 1,1000 | 1,7471 | 2,2000 |
| Over €4,020,770.99 | 1,2000 | 1,9059 | 2,4000 |
Kinship Groups
- Group I: Children or adopted children under 21 years old.
- Group II: Children or adopted children 21 or older, spouses, parents, and adoptive parents.
- Group III: Siblings, nieces and nephews, aunts and uncles, and in-laws (ascendants/descendants by affinity).
- Group IV: More distant relatives (e.g., cousins) and unrelated individuals.
Consequently, the greater the estate of the heir or donee, and the more distant his or her kinship with the deecased and the donor, the greater the multiplier coefficient and therefore, the higher the amount of tax payable.
- Alicante & Valencia (Valencian Community): Also provides a 99% rebate on the taxable value for close family members (Groups I and II).
- Tax-Free Allowance: There’s also a generous tax-free allowance of €100,000 per beneficiary (spouses and children). For children under 21, this allowance can be even higher, up to €156,000.
- Example: If a child inherits €150,000, the first €100,000 is tax-free. The remaining €50,000 is subject to the 99% rebate, meaning tax is only paid on €500.
- Important for Non-Residents: You usually need to actively claim these regional exemptions when filing your tax return.
- In the Valencian Community (Comunidad Valenciana), the multiplicative coefficients applicable to the Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) depend on the pre-existing wealth of the beneficiary, and the degree of kinship with the deceased (in case of inheritance) or donor (in case of donation).
| Pre-existing Wealth (€) | Groups I & II | Group III | Group IV |
|---|---|---|---|
| Up to €390,657.87 | 1,0000 | 1,5882 | 2,0000 |
| €390,657.88 – €1,965,309.58 | 1,0500 | 1,6676 | 2,1000 |
| €1,965,309.59 – €3,936,629.28 | 1,1000 | 1,7471 | 2,2000 |
| Over €3,936,629.28 | 1,2000 | 1,9059 | 2,4000 |
Kinship Groups
- Group I: Children or adopted children under 21 years old.
- Group II: Children or adopted children 21 or older, spouses, parents, and adoptive parents.
- Group III: Siblings, nieces and nephews, aunts and uncles, and in-laws (ascendants/descendants by affinity).
- Group IV: More distant relatives (e.g., cousins) and unrelated individuals.
- Almeria (Andalusia): Offers a very high tax-free allowance of €1,000,000 per beneficiary for spouses, children, parents, and grandparents.
- 99% Bonus: For assets exceeding €1,000,000, there’s a 99% bonus on the tax payable, minimizing the tax burden even on large inheritances.
- Applies to Non-EU Residents: This generous treatment also applies to non-EU residents, including UK nationals after Brexit.
- Filing Requirement: Even if no tax is due, you must still file an inheritance tax declaration.
In the Autonomous Community of Andalusia, the multiplicative coefficients applicable to the Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones) have been modified by Law 5/2021, of October 20, on Assigned Taxes of the Autonomous Community of Andalusia.
According to Article 38 of this law, the tax due is determined by applying a multiplicative coefficient to the gross tax amount, based solely on the degree of kinship of the beneficiary — regardless of their pre-existing wealth:
Multiplicative Coefficients in Andalusia
- Groups I & II: 1.0
- Group III: 1.5
- Group IV: 1.9
Kinship Groups Defined
- Group I: Descendants and adopted children under 21 years old
- Group II: Descendants and adopted children aged 21 or older, spouses, parents, and adoptive parents
- Group III: Siblings, nieces/nephews, uncles/aunts, and relatives by marriage (in-laws)
- Group IV: Cousins, more distant relatives, and unrelated individuals
Calculating Spanish Inheritance Tax (National Framework)
National Tax Rates:
Before regional adjustments, Spain has a progressive inheritance tax system. This means the tax rate increases as the value of the inheritance increases.
National Tax Rates (Before Regional Adjustments)
| Value of Inherited Estate | Tax Rate |
|---|---|
| €7,993 or less | 7.65% |
| €7,993 – €31,956 | 8.50% - 11.05% |
| €31,956 – €79,881 | 11.05% - 16.15% |
| €79,881 – €239,389 | 16.15% - 25.50% |
| €239,389 – €398,778 | 25.50% - 29.75% |
| €398,778 – €797,555 | 29.75% |
| €797,555 or higher | 34.00% |
Personal Allowances (National Level)
| Group | Relationship | Allowance |
|---|---|---|
| I | Descendants under 21 | Up to €47,859 |
| II | Descendants over 21, parents, spouses | Up to €15,957 |
| III | Siblings, aunts, uncles, nieces, nephews | Around €7,993 |
| IV | Distant relatives and non-relatives | Minimal or none |
Personal Allowances (National Level)
These allowances reduce the taxable amount. The allowance depends on your relationship to the deceased:
- Group I: Descendants under 21 (highest allowance, potentially up to €47,859).
- Group II: Descendants over 21, ascendants (parents, grandparents), and spouses (allowance up to around €15,957).
- Group III: Siblings, aunts, uncles, nieces, nephews, in-laws (lower allowance, around €7,993).
- Group IV: Distant relatives and non-relatives (minimal or no allowance).
Important: Remember, regions can modify these national rates and allowances.
The Spanish Inheritance Process (Step-by-Step)
- Obtain Death Certificate: This is the starting point.
- Certificate of Last Wills (Certificado de Últimas Voluntades): This confirms if a Spanish will exists and identifies the notary.
- NIE Number: You’ll need a Foreigner Identification Number (NIE) for any legal and tax procedures in Spain.
- Compilation of Information and Inventory.
- Formal Acceptance of Inheritance (Escritura de Aceptación de Herencia): This is a public deed before a Spanish Notary, where you formally accept the inheritance.
- Inheritance Tax Return (Modelo 650): This must be filed within six months of the date of death. Non-residents usually file with the National Tax Management Office in Madrid. Extensions are possible, but must be requested within the first five months.
- Property Registration: If you inherit property, register it in your name at the Land Registry.
- Communication to Banks, Investment funds, and Traffic Board
- Change of direct debits, if applicable.
Spanish Wills and Intestacy
Why a Spanish Will is Important:
A Spanish will, specifically covering your Spanish assets, simplifies the process and avoids potential complications with legalizing a foreign will, but also minimises costs and expenses.
EU Succession Regulation (Brussels IV):
This regulation allows you to choose between the law of your nationality or the law of your place of reseidence when you pass away to govern the inheritance of your Spanish assets. The option chosen must be explicitly stated in your will. This is important because of Spanish “forced heirship” rules (legítima), which reserve a portion of the estate for close relatives (descendants, spouse and ascendants if no descendants). Choosing your national law (e.g., UK law) might allow you to bypass these rules if your national law allows for free disposition of assets. Get expert legal advice on this.
Intestacy (Dying Without a Will):
If you die without a valid will in Spain or in your home country, your national law regarding intestacy will apply.
This is not an advisable situation, as the inheritance process in Spain becomes considerably more complex, costly, and time-consuming when a non-resident foreigner dies without a will. The process requires obtaining certification of the applicable law from your country of origin, sworn translations, powers of attorney, apostilles, and delivery costs.
Additional complications arise when legal instruments or concepts from your country do not exist in Spanish law, creating further challenges if the Spanish Land Registry or Notary is unfamiliar with the foreign applicable law.
Donations and Gift Tax (Impuesto sobre Donaciones)
Spain also taxes lifetime gifts. For non-residents, this applies to gifts of assets located in Spain. Rates and allowances are progressive and vary by region, similar to inheritance tax.
Gifts to close relatives generally have lower tax rates and higher allowances.
Double Taxation Relief (UK and Spain)
There is no specific double taxation treaty for inheritance tax between the UK and Spain. However, the UK offers “unilateral relief.” This means tax paid in Spain on an asset can be offset against any UK inheritance tax liability on the same asset.
You must declare your worldwide assets to the UK tax authorities.
Key Recommendations
- Seek Professional Advice: Consult with a specialist in Spanish inheritance tax, like ABAD Abogados. This is crucial due to the complexity and regional variations.
- Draft a Spanish Will: This simplifies the process and allows you to potentially choose your national law.
- Consider Lifetime Gifts: Explore this option, but be aware of Spanish gift tax rules.
- Regularly Review Your Estate Plan: Keep your plan updated with changes in law and your circumstances.
Why ABAD Abogados? Your Spanish Inheritance Tax Experts
With offices strategically located in Murcia, Alicante, Valencia, and Almería, ABAD Abogados has unparalleled local knowledge of Spanish inheritance tax regulations. We don’t just understand the law; we understand the nuances of each region’s tax allowances and exemptions, ensuring your inheritance process is handled efficiently, and your tax liability is minimized.
Our multilingual team specialises in guiding non-residents through the complexities of Spanish inheritance procedures, from drafting region-specific wills to navigating the formal acceptance process. With our expertise, you can avoid costly mistakes and unnecessary complications during what is already a difficult time.
Contact ABAD Abogados today for personalized inheritance planning that protects your assets and provides peace of mind for you and your loved ones.
Conclusion: Spanish Inheritance Tax
Understanding Spanish inheritance tax is essential for non-residents, especially UK residents, with assets in Spain. This guide provides a comprehensive overview, but professional advice is strongly recommended to ensure you navigate the complexities effectively and minimize your tax liability.
The regional variations, particularly in Murcia, Alicante, Valencia, and Almeria, can offer significant advantages, but careful planning is key.
About Mr Isaac Abad Garrido
Mr Isaac Abad Garrido is the Senior Partner at ABAD & ASOCIADOS Lawyers & Accountants, with over 25 years of experience specialising in Real Estate Law, Tax Law, Corporate Law, Bankruptcy Law, Business Restructuring, and Community Administration.
He has been consistently recognised among The Best Lawyers in Spain™ from 2020 to 2025 for excellence in Tax Law, and in 2022, he was named “Lawyer of the Year” in Tax Law (Murcia, Spain).
A member of the International Bar Association, he is also an Associate Partner of the Spanish Royal Academy of Jurisprudence and Law. Additionally, he serves as a Professor at the University of Murcia, teaching Tax Law, and is a regular contributor to leading international tax law publications, including Newsweek.
Mr Abad Garrido holds degrees in Law, Business Administration, and Accounting, complemented by postgraduate studies at IE Business School. He is a Certified Auditor registered with the Official Registry of Auditors (ROAC).
For legal enquiries, visit abadabogados.com or connect with Mr Abad Garrido on LinkedIn.
