Australian expats in Spain plan around an Australian tax system with no estate or inheritance tax but material capital gains and superannuation death-benefit consequences. Spanish IHT applies under regional regimes. No Australia/Spain IHT treaty exists. Brussels IV allows election of Australian state law on Spanish wills. We coordinate Australian state probate and superannuation with Spanish notarial procedures.
The Australian expat community in Spain is smaller than the British or Irish populations but growing, particularly through the Digital Nomad Visa route into Barcelona, Valencia and Madrid, and through traditional retirement and investment migration to the Costa del Sol and the Balearics. The Australian estate position has specific features: no Federal or state estate or inheritance tax; CGT at death with rollover for beneficiaries (no immediate crystallisation for most assets); specific superannuation death-benefit rules; state-by-state probate variation.
Australian CGT at death works as a deferral mechanism: death itself does not trigger CGT on most capital assets; instead the beneficiary inherits the asset at the deceased's cost base (for pre-CGT assets acquired before 20 September 1985 the beneficiary steps up to market value). The CGT liability crystallises on the beneficiary's subsequent disposition. This contrasts with Canadian deemed disposition (which crystallises on death) and US step-up-to-FMV (which refreshes cost base to death value).
Superannuation death benefits are taxed separately under specific rules: tax-free to tax dependants (spouse, minor children, financial dependants), taxed to non-tax dependants at varying rates depending on fund components. For Australian expats Spanish-tax-resident, Spanish treatment of super death benefits depends on the characterisation — Spain may treat super as a pension and apply Spanish IHT or income tax depending on structure and flow.
Spain applies IHT under regional rules. No Australia/Spain inheritance tax treaty exists. The Australia/Spain income tax treaty (1992, amended) does not cover IHT. Unilateral credits may apply but the interaction is case-specific. This page covers Australian CGT at death for Spanish-situated assets, state-by-state probate variations, Brussels IV election, and the parallel workflow. If you are an Australian citizen with Spanish property or inheritance interests, open a file with us.
Six rules govern every Australian-connected Spanish estate.
Australia has no estate or inheritance tax. Capital assets transfer to beneficiaries at deceased's cost base; CGT crystallises on beneficiary's subsequent disposition.
CGT on disposalTax-free to tax dependants. Taxed to non-tax dependants at 15% (taxable component). Specific rules for lump sums vs income streams; beneficiary designation critical.
Super-specific regimeSpanish residents on worldwide; non-residents on Spanish-situated. Regional election for non-resident Australian beneficiaries captures regional bonificación.
Residence/situsIncome tax treaty does not cover IHT. No treaty-based credit. Unilateral credits may apply in specific cases.
No IHT coordinationAustralian testators elect the law of their state of nationality (NSW, Victoria, Queensland, etc.) on Spanish wills. Preserves testamentary freedom.
State law electionAustralian probate is state-based (Supreme Court of each state). Spanish probate through Spanish notary. Parallel procedure, six-month Spanish deadline.
Parallel procedureDivision 128 of the Income Tax Assessment Act 1997 governs CGT on death. Most assets pass to the legal personal representative (executor) with no CGT event, then to beneficiaries with the deceased's cost base transferred. No tax on death; tax on eventual sale. For pre-20 September 1985 assets (pre-CGT), the beneficiary acquires at market value on death — effectively a cost-base reset.
Non-resident beneficiaries inheriting Taxable Australian Property (TAP) — which includes Australian real property and certain Australian business assets — retain a CGT liability on eventual sale. Non-resident beneficiaries inheriting non-TAP assets (non-Australian real property, foreign shares) generally fall outside Australian CGT.
For an Australian expat owning a Spanish villa: the villa is non-TAP from an Australian perspective. Death does not trigger Australian CGT. The beneficiary inherits at the deceased's cost base. If the beneficiary is Australian tax resident on later sale, CGT applies on the accrued gain from original cost base to sale value. If the beneficiary is non-Australian resident, the property falls outside Australian CGT entirely.
Super balances on death pass under binding death benefit nominations or trustee discretion. Tax treatment turns on whether the beneficiary is a "tax dependant": spouse, minor child, financial dependant, interdependent. Tax dependants receive lump sums tax-free regardless of fund components. Non-tax dependants (including adult children who are not financially dependent) are taxed on the taxable component at 15% plus Medicare (effectively 17%).
For Australian expats Spanish-tax-resident with adult children as beneficiaries: super death benefit tax applies on the Australian side at the 17% rate, and Spanish IHT may apply on the Spanish-resident beneficiary's receipt. Spain's treatment of super lump sums is unsettled in practice — we coordinate with Australian tax advisers and Spanish tax counsel on specific flows.
Australian probate is through the Supreme Court of each state. NSW, Victoria, Queensland, South Australia, Western Australia, Tasmania, ACT, Northern Territory — each has its own procedural framework under common testamentary principles. Probate fees are modest and state-based. For Australian expat testators we elect the testator's state of nationality under Brussels IV on the Spanish will; the Spanish notary accepts, e.g., "New South Wales law" or "the law of Victoria".
Australian expats Spanish-tax-resident generally remain non-residents for Australian tax purposes. On death, residence is typically assessed at the date of death for final return purposes. For an Australian expat who has been in Spain for many years and died Spanish-resident, Australian tax applies only to Australian-sourced income/gains up to death and to Taxable Australian Property. Superannuation rules apply regardless.
We confirm Australian tax residency status, state connection, and screen Australian-side exposure (CGT on TAP, super death benefits, Australian real property). Spanish IHT profile mapped against regional regime.
Dual Australian/Spanish wills drafted. Australian state law elected on Spanish will. Coordinated with Australian solicitor. Spanish will executed before notary and registered.
Modelo 650 prepared with regional election. Australian terminal return and super death-benefit nominations coordinated with Australian adviser. Property cost base documentation preserved.
Spanish probate before notary. Australian state probate coordinated. Land Registry transfer. English closing pack delivered.
Consider an Australian-born expat, long-term Spanish-resident, owning a Barcelona apartment (Catalonia) plus Australian super balance, two Australian-resident adult children. On death: Australian CGT not triggered on Barcelona apartment (non-TAP, no immediate CGT). Super death benefit taxed at 17% on taxable component to adult children (not tax dependants). Spanish IHT: Barcelona apartment under Catalonia rules to non-resident Australian beneficiaries via regional election — Catalonia operates a less generous IHT regime than Madrid/Andalusia/Valencia and material Spanish tax may apply. No treaty credit.
On the apartment, the beneficiaries then hold at the deceased's cost base for Australian purposes. On subsequent sale by Australian-resident beneficiaries, Australian CGT applies on the gain. Double exposure of sorts: Spanish IHT on inheritance plus Australian CGT on eventual sale. The CGT 50% discount applies if held more than 12 months by the beneficiaries before sale.
Australian expats commonly retain Australian real estate (family home, investment properties). Main residence exemption: under current rules, non-resident sellers of Australian main residences generally cannot claim the main residence CGT exemption (foreign resident CGT rules since 2019). This is a material issue for long-term expats who may face CGT on the formerly exempt main home. Planning lead time matters — sale before becoming non-resident, or return to residency before sale, or structured timing around the move.
Non-resident sellers of Australian real property above $750,000 face 12.5% foreign resident CGT withholding at sale, refundable if net CGT is lower after assessment. Beneficiaries of Australian real property who then sell as non-residents engage the withholding. Not a tax in itself — a collection mechanism — but cash flow impact is real.
Spanish-tax-resident beneficiaries receiving Australian super lump sum: how does Spain tax this? The answer is unsettled. Arguments: (a) treat as a pension / retirement lump sum, potentially income tax on beneficiary in Spain at general rates; (b) treat as inherited money, subject to Spanish IHT under regional rules; (c) neither, if the super is paid out before Spanish resident acquires beneficial rights. In practice we take a conservative position and plan for potential Spanish IHT on the receipt, confirming with Spanish tax counsel on specific facts. Regional election may apply.
Australian government pensions (age pension, DVA pensions) paid to Australian expats in Spain are generally taxable in Spain under the 1992 income tax treaty (pensions article typically assigning tax to residence state). They are not assets that pass on death — they cease on death. Separate from super.
Australian family trusts holding Spanish property engage unfavourable Spanish tax treatment. Spain does not recognise Anglo-Australian trusts cleanly; trust-held Spanish property may be treated as held by trustee or settlor for Spanish tax purposes, with unhelpful results. We advise against Spanish property in Australian family trusts; hold direct with Brussels IV election instead.
Spanish notaries accept election of the law of the Australian testator's state. For Australian Commonwealth purposes, there is no "federal law" of succession — it is state law. We confirm the testator's state connection (typically state of domicile/residence before emigration or state of habitual return) and elect that state's law. In practice this is straightforward.
Dual wills: Australian will under Australian state law covering Australian-situated assets; Spanish will under Spanish procedural law with Brussels IV election of Australian state law covering Spanish-situated assets. Each preserves the other. Spanish will executed before Spanish notary, registered with Registro Central. Australian will drafted by Australian solicitor under state rules.
Australian side: probate through the Supreme Court of the relevant state. Uncontested probate typically 4 to 12 weeks depending on state. Spanish side: aceptación de herencia before Spanish notary; Modelo 650 within 6 months of death; Land Registry transfer. We coordinate with the Australian solicitor on the Australian side.
Australian citizens on the Spanish DNV can elect Beckham Law for up to six years: non-resident income tax treatment on Spanish-sourced only at 24% flat. Beckham does not modify Spanish IHT — death during the Spanish residency period engages worldwide IHT at regional rates. Planning around the six-year horizon matters for DNV Australians with substantial Australian or global assets.
Australian CGT deferral, Spanish IHT, super death benefits, state-by-state probate — coordinated end to end across both jurisdictions.
Request a Australian Estate ConsultationParents resident in Spain with children in Australia; non-resident property owners leaving Spanish assets to heirs abroad; surviving spouses, siblings, aunts and uncles, grandparents — every cross-border configuration follows a different rulebook.
€600,000 Marbella villa (cost €250,000), Australian tax-resident at death, two Australian-resident adult children. No Australian CGT at death. Andalusian 99% reduction on Spanish side. Children acquire at cost base for future CGT.
€450,000 Valencia apartment, Australian DNV holder Beckham-electing, Australian wife and adult children. Spanish-tax-resident status — Spanish IHT applies on worldwide estate at Valencian post-2023 99% reduction. Australian-side super and CGT complex.
Barcelona apartment, long-term Spanish-resident Australian, super balance of AUD 1.2m, adult children non-tax-dependants. Super taxed 17% in Australia. Catalan IHT on apartment material. Dual-system coordination required.
€280,000 Costa Adeje apartment, Australian age pension drawn in Spain, adult children abroad. Pension taxed in Spain under treaty. Canary 99.9% bonificación near-zero Spanish IHT. Minimal combined cost.
Australian-resident child inheriting €400,000 Spanish property from Spanish-resident parent. Spanish IHT applies on non-resident Australian (regional election). Australia: tax-free receipt; cost base at acquisition for future CGT on sale.
One Australian, one British, joint Mallorca villa. Each makes own Brussels IV election (Australian state law / UK law); each faces own home-country regime. Coordinated Spanish will captures both.
No estate tax, but CGT on disposal (beneficiary) and superannuation death benefit tax (17% non-tax-dependant) are real costs. Plan accordingly.
Binding death benefit nominations direct super to tax dependants where possible. Without proper nominations, trustee discretion may deliver tax-inefficient outcomes.
Since 2019, non-resident sellers generally lose the main residence CGT exemption on Australian former home. Plan timing around residence status and sale.
Without election, Spanish habitual residence triggers Spanish succession law on Spanish estate, including forced heirship.
Default state rules cost substantially more than regional rules for non-resident heirs. Explicit election captures the regional bonificación.
Spain does not recognise Anglo-Australian trusts cleanly. Creates Spanish tax issues. Hold Spanish property directly with Brussels IV election.
Tech workers and professionals under the Digital Nomad Visa. Beckham Law election, coordinated planning around the six-year horizon.
Long-term Spanish residents, Marbella and surrounding. Andalusian 99% reduction applies; super and Australian property planning key.
Retirement and second-home owners. Post-2023 Valencian reform near-zero Spanish IHT; Australian-side CGT and super the focus.
Post-departure, Spanish-tax-resident. Limited Australian tax profile; Spanish IHT primary. Super death benefits require separate planning.
Mixed households. Brussels IV choices coordinated; tax analysis across multiple systems.
Australian-resident children or relatives inheriting Spanish property. Spanish regional election; no Australian inheritance tax; cost base acquired for future disposition.
Brussels IV applied, wills drafted, Australia and Spanish tax positions coordinated, deadlines tracked.