Since 2019, Andalusia applies a 99% reduction to inheritance tax for spouses, children and direct descendants — effectively removing most IHT for Group II beneficiaries. The change transformed the Costa del Sol estate position for expat families. The regional rules are generous but not unlimited: Group III and Group IV beneficiaries still pay, and the 99% reduction requires correct filing on Modelo 650.
Andalusia is the single most significant Spanish region for British expat estate planning. The Costa del Sol between Málaga and Estepona, the Costa de la Luz in Huelva and Cádiz, the inland pockets around Ronda, Mijas and Sotogrande, and the central cities of Seville, Granada and Córdoba together hold more British-owned property than any other Spanish region. For decades, inheritance tax in Andalusia was a serious concern: elderly expats faced the prospect of Spanish IHT biting hard on property that had already been subject to UK IHT at home. The 2019 reform largely removed that concern for most Group II families.
The mechanism is simple in principle: after the standard state allowance (currently €15,956.87 for Group II), a further 99% regional reduction applies to the remaining quota for spouses, descendants under 21 (Group I), adult descendants, parents and grandparents (Group II). The effective tax bill for a spouse or child inheriting from a parent in Andalusia is now usually a few hundred euros even on estates worth a million or more. Filing is still compulsory and the six-month deadline still bites — but the actual tax demand has collapsed.
This page explains how the Andalusia IHT system works in practice, who benefits from the 99% reduction, where it does not reach (Group III and Group IV beneficiaries, disinherited parties, cross-border complications), and how we file Modelo 650 for Costa del Sol and wider Andalusia estates. If you are dealing with an inheritance involving Andalusian property, open a file with us and we will have the valuation and deadline calendar in place within days.
Andalusia's IHT regime is built on top of the national framework in the Ley 29/1987. These six elements are the ones that matter in practice for most expat families.
Introduced January 2019 (Decreto-Ley 1/2019), applies to descendants, ascendants and spouses. Brings the effective IHT rate close to zero on most family-line inheritances.
Main allowanceFull 99% reduction for all Group I and II beneficiaries. Pareja de hecho registered in Andalusia treated as spouse for this purpose.
Core family coveredGroup III receives only modest regional reductions on top of the state allowance. Group IV (cousins, unrelated, unregistered partners) receives effectively nothing beyond the minimal state minimum.
Beware non-family transfersAdditional reduction for Group II beneficiaries who continue to hold the deceased's habitual residence for three years. Stacks with the main 99% reduction on remaining assets.
Primary residence protectedFamily business reduction available in Andalusia for qualifying SL shares meeting ownership and activity tests. Requires holding period post-inheritance.
Business successionModelo 650 filed with Agencia Tributaria de Andalucía (ATRIAN). Six-month deadline from date of death. Non-resident beneficiaries of Andalusian property can elect these rules.
Regional filingThe 2019 reform applies the 99% reduction to the tax quota after the state allowance. In practice this means the first approximately €16,000 of each Group II beneficiary's share is allowance-free (state allowance), and 99% of the remaining tax is then reduced by regional rule. On a €500,000 inheritance to an adult child, the Spanish IHT before reductions might have been €70,000+; after the state allowance and the 99% Andalusia reduction, the actual tax demand is typically under €1,500.
The reduction is not conditional on tax residency. A non-resident adult child inheriting Andalusian property from a parent who was Andalusian-resident can claim the same 99% reduction by electing the Andalusia regional rules on the Modelo 650 (post-2014 non-resident election). The same applies if the deceased was non-resident but the property is in Andalusia — the regional election is made at the filing stage.
Group III and Group IV beneficiaries are outside the 99% reduction entirely. If the deceased leaves the estate to a sibling, niece, nephew, friend, or unmarried partner without pareja de hecho registration, the IHT position reverts to the less favourable state/Group-III framework with significantly higher marginal rates and multipliers. This is the most common cause of shock-level IHT bills in Andalusia matters: a childless expat leaving property to a niece or an unregistered partner finds herself taxed at 40%+ effective rates on a property that would have passed essentially tax-free if the beneficiary had been a child or registered partner.
Planning around this is almost always a lifetime exercise, not a probate exercise. If you are leaving property to a Group III/IV beneficiary, options include: formalising a pareja de hecho registration (if applicable), restructuring property ownership during lifetime (usufructo with children as nuda propietarios rather than direct devise to a niece), or life insurance with named beneficiary to fund the eventual tax bill. We handle all of these in the succession planning stream.
Separate from the main 99% Group II reduction, Andalusia grants a further allowance on the deceased's habitual residence (main home). Group II beneficiaries who continue to hold the property for three years receive a very large reduction on its value. In combination with the main 99% reduction, this usually pushes the effective tax on the main home to zero even for high-value properties. The three-year holding condition is important: if the beneficiary sells within three years, the reduction can be clawed back.
We confirm the deceased's habitual residence in Andalusia (or the property's location for non-resident matters) and classify each beneficiary by group for allowance purposes.
Valor de referencia checked for Spanish property. We screen for the habitual-residence reduction, family-business reduction and region-specific allowances.
Filed with the Andalusia regional tax office (or AEAT with regional election for non-residents). UK IHT credit claimed where applicable.
Tax receipts delivered to the notary for inclusion in the escritura. Land Registry transfer lodged. Closing pack to the family in English.
Since 2014 (ECJ case C-127/12) and 2018 (Spanish Supreme Court extension), non-resident beneficiaries — whether EU/EEA or third-country — can elect the regional IHT rules of the region where the Spanish property is located. For Andalusian property, this means non-resident heirs can claim the Andalusian 99% reduction on Modelo 650 even if they live in the UK, Ireland, US, Germany or elsewhere. The election is made at filing time and must be stated on the form.
This is the single most impactful point in cross-border Andalusia inheritance work. A UK-resident adult child inheriting a Marbella apartment from their UK-resident parent can, by filing Modelo 650 with the Andalusian regional election, reduce the Spanish tax bill to under €1,500 on a seven-figure property. Filing without the election means the state rules apply with substantially higher marginal rates and usually no meaningful reductions — a six-figure difference on the same estate.
For a UK-domiciled deceased, UK IHT applies to the worldwide estate including the Andalusian property. Spanish IHT (with the Andalusian 99% reduction) also applies. The UK IHT paid on the Spanish asset is creditable against the Spanish IHT under Article 23 of the Spanish IHT law — but because the Andalusian tax is usually already near zero, there is little Spanish IHT to credit against. The practical result: the UK bears most of the cross-border tax load on Andalusian property for UK-domiciled testators.
For Spanish-resident deceased who have retained UK property, the position reverses. Spanish IHT applies to worldwide assets with Andalusian rules; UK IHT applies to the UK-situated property; the UK side is usually the smaller number but still needs to be filed. We coordinate both sides on every cross-border Andalusia file.
Unmarried couples in Andalusia must register as pareja de hecho (at the Junta de Andalucía's Registro de Parejas de Hecho) to access Group II treatment. Without the registration, the survivor is treated as Group IV on death — effectively unrelated beneficiary — and the 99% reduction does not apply. The registration is straightforward and inexpensive, and we include it as an add-on to lifetime planning for any unmarried couple with Andalusian assets. It must be in place at the date of death; retrospective registration does not work.
Plusvalía is a town-hall tax, not a regional one, so its rules are set by individual municipalities within Andalusia. Málaga, Marbella, Estepona, Mijas, Benalmádena, Torremolinos and the inland municipalities each run their own plusvalía calculations. Post-2021 reform, taxpayers can elect between an objective method (coefficients) and a real-gain method (actual value difference); we file under the lower method on every Andalusian property matter. Plusvalía is separate from and additional to the Andalusian IHT; it can be significant even where Modelo 650 is near zero.
Andalusia has effectively abolished wealth tax for residents since 2022 through a 100% regional credit. This is a separate issue from IHT but is often raised by clients in the same conversation. Non-residents are now subject to a federal "Solidarity Tax on Large Fortunes" on net assets above €3 million located in Spain; the Andalusian wealth tax abolition does not shield against the federal solidarity tax.
Most Andalusia inheritance files we handle involve property in the Málaga province — Marbella, Estepona, Mijas, Benalmádena, Nerja, and inland. We work with local notaries in each major municipality and have established workflows with the Agencia Tributaria de Andalucía for both Sevilla (central) and Málaga (provincial) offices. Language is the single biggest friction point for most families: every document is Spanish, the tax office works in Spanish only, and notaries require sworn translation of any foreign documents. We handle all of this as part of the fixed-fee engagement.
99% reduction for Group I and II beneficiaries — but only if the election is made and the filing is correct. Most of our value on Costa del Sol matters is procedural, not advocacy.
Request a Andalusia CalculationParents resident in Andalusia with children abroad; non-resident owners of Andalusia property; surviving spouses, siblings, grandparents — the applicable rules vary with the family configuration.
€800,000 Marbella apartment, two UK-resident adult children, British-domiciled deceased. Spanish IHT after Andalusian reduction: ~€2,000 total. UK IHT position dominates the cross-border picture.
€1.2m Estepona villa, Spanish-resident surviving spouse. Andalusia 99% spouse reduction applied. Spanish IHT under €1,500. Mirror-will structure means everything passes cleanly to survivor.
€450,000 Mijas apartment, surviving unregistered partner in Group IV. No 99% reduction available. Effective IHT around 40% of value. Pareja de hecho registration before death would have prevented this.
€300,000 Málaga flat, Group III beneficiary (sister of deceased). Only modest regional reduction applies. Effective tax materially higher than Group II equivalent. Life insurance funding often used.
€180,000 finca, grandchild (Group II) inherits from grandparent. 99% reduction applies. Tax near zero. Habitual-residence reduction does not apply to rural/non-primary residence but main reduction sufficient.
€600,000 Fuengirola townhouse, three UK-resident adult children. Non-resident regional election on Modelo 650 accesses Andalusian 99% reduction. Spanish tax ~€1,500 total.
Non-resident beneficiaries defaulted to state rules by filing silent. Regional election must be explicit on the form. The difference is often six figures on a Costa del Sol property.
Only Groups I and II benefit. Siblings, nieces, unregistered partners and friends do not qualify. Planning around this is a lifetime exercise.
Unmarried couples who never register lose the Group II treatment entirely on first death. Registration is inexpensive and must be in place at date of death.
The habitual-residence reduction is clawed back if the property is sold inside the three-year holding period. Plan the sale timing around this or accept the clawback.
The Spanish clock does not wait for the UK grant. Andalusian tax penalties start to accrue at six months from death regardless of UK progress.
Automatic re-assessment with penalties. The Andalusia valor de referencia system applies the national Cadastre reference values with regional coefficients in some cases. Always declare at or above.
The core British expat market. Most of our Andalusia caseload. 99% reduction applied as standard.
Urban apartment inheritance, often from elderly parents to UK-based children. Clean regional election on Modelo 650.
Ayamonte, Tarifa, Chiclana, Conil — the quieter Atlantic coast. Same regional rules; fewer competitor lawyers to work against.
Rural fincas and small-town properties. Same rules as coastal; often more complex valuation work.
Pareja de hecho registration plus mirror wills as a package. Significant tax saving where planning is done in lifetime.
Family business reduction planning for the 95–99% reduction on qualifying SL shares.
Regional allowances applied, group classifications checked, habitual-residence and family-business reductions screened, deadline tracked.