Wills & Inheritance · Tax

Inheritance Tax in Spain — A Complete Guide for Expats & Foreign Heirs

Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones) applies to anyone inheriting assets in Spain — residents and non-residents alike. Rates, allowances and rules vary dramatically by region. We help expats and foreign heirs navigate Spanish inheritance tax efficiently.

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What is Spanish inheritance tax?

Spanish inheritance tax — known as Impuesto sobre Sucesiones y Donaciones (ISD) — is a tax payable by the inheritor (not the estate) on assets received by gift or inheritance. Unlike inheritance tax in the UK, US or Ireland, the heir pays Spanish ISD personally, on the value they individually inherit.

ISD applies to anyone resident in Spain inheriting assets anywhere in the world; non-residents inheriting Spanish-situated assets (property, bank accounts, vehicles); and lifetime gifts received in Spain.

The complexity for foreign heirs comes from the interaction between Spanish national law and 17 autonomous communities, each with their own allowances and rates. The same inheritance can result in very different tax bills depending on which Spanish region the deceased was resident in.

Who pays Spanish inheritance tax?

Residents in Spain

If you live in Spain and inherit from anywhere in the world, you pay Spanish ISD on the worldwide inheritance. Tax credit may be available for foreign inheritance tax already paid (double-taxation relief).

Non-residents inheriting Spanish assets

Non-residents pay ISD only on Spanish-situated assets: property, Spanish bank balances, Spanish-registered vehicles. Foreign assets are taxed under the heir’s home country rules.

EU vs non-EU heirs

Following 2014 EU rulings and 2018 updates, EU and EEA heirs can choose to be taxed under the autonomous community rules of the deceased’s last Spanish residence — often dramatically lower than national rates. Non-EU heirs (including UK post-Brexit and US heirs) historically had this option restricted, though recent court rulings have extended it in many cases.

Regional variations — why where the deceased lived matters

Spanish inheritance tax has both a state framework and autonomous community rules. The autonomous community of the deceased’s last legal residence controls allowances, reductions and effective tax rates. Differences between regions are dramatic:

Andalucía & Madrid — generous reductions (99% in many cases) for direct family. Effective tax often near zero on standard inheritances.
Murcia — strong reductions for spouses, children and parents — often 99% in eligible cases.
Valencia & Balearic Islands — moderate reductions, higher effective tax than Murcia or Madrid.
Catalonia — lower reductions, higher effective tax in standard scenarios.
Asturias, Cantabria, Castilla y León — varies significantly by family relationship and inheritance value.

For expats inheriting Spanish property, the autonomous community of the property’s location applies. Understanding regional rules can be the difference between a 0% effective tax and a 30%+ tax bill.

Spanish inheritance tax rates and allowances

The Spanish national framework applies progressive rates from 7.65% to 34% of the taxable inheritance, then multipliers based on the heir’s relationship to the deceased and their existing wealth. Direct family (spouse, children, parents) pay the base rate. Distant relatives and unrelated heirs face significantly higher effective rates.

National allowances are modest — around €15,000 to €47,000 depending on heir group — but autonomous community reductions often dwarf these. For example: Madrid 99% reduction for direct family; Andalucía €1m allowance per heir; Murcia 99% reduction; Valencia 50% reduction capped.

Additional reductions apply for inherited family businesses, main residences (95% reduction subject to retention conditions) and life insurance proceeds.

Common scenarios we help with

Inheriting Spanish property as a non-resident

You inherit a Spanish villa from a parent. We handle valuation, Spanish death certificate apostille, foreign will recognition, ISD calculation, Modelo 650 filing and Land Registry transfer.

Cross-border inheritance with assets in multiple countries

The deceased had property in Spain, the UK and France. We coordinate with foreign solicitors, apply EU Succession Regulation where relevant, and minimise double taxation.

Co-heir disputes

Multiple heirs disagree on valuation or distribution. We advise on Spanish forced-heirship rules, accepting vs renouncing inheritance, and Spanish court procedures.

Renouncing or accepting under inventory

Spanish inheritance can be accepted, renounced or accepted under inventory — the choice affects your liability for debts. See accepting vs renouncing.

Planning ahead to minimise Spanish inheritance tax

If you own Spanish assets or live in Spain, planning ahead can reduce your heirs’ future ISD liability significantly:

Draft a Spanish will that interacts properly with foreign wills and your home country’s succession law.
Use EU Succession Regulation (Brussels IV) to elect the succession law of your nationality — useful for British, Irish and other expats.
Structure ownership of Spanish property to benefit from spousal and family allowances.
Lifetime gifts can sometimes reduce overall tax exposure, but require careful timing under Spanish gift tax rules.
Life insurance in favour of heirs may qualify for ISD reductions in some autonomous communities.

Book an inheritance tax consultation

Inheriting Spanish assets? Planning your Spanish estate? Our English-speaking team explains Spanish inheritance tax clearly and helps you minimise the bill legally.

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This page provides general information about Spanish inheritance tax and does not constitute legal or tax advice. Rules and rates vary by autonomous community and change over time. For advice on your inheritance, please book a consultation.