Spanish Inheritance Tax: Everything You Need to Know in 2025

If you’re living in Spain or planning to move there permanently, understanding the country’s inheritance tax system is essential.

Spain’s tax landscape, particularly inheritance tax, can be daunting, especially for those unfamiliar with its complexities. With its mix of national rules and regional variations, careful planning is vital to avoid unexpected tax burdens.

This guide will break down the essentials of Spanish inheritance tax, provide insights into the unique rules across its autonomous regions, and include a UK-centric section to clarify differences, common misconceptions, and the potential pitfalls for British expats.

Spanish Inheritance Tax - Main Image
Table of Contents
Spanish Inheritance Tax - Quote by Benjamin Franklin about taxes
Image By Joseph-Siffred Duplessis - ZgEyj5EEKdux-g at Google Cultural Institute maximum zoom level, Public Domain, Link

Introduction To Spanish Inheritance Tax

What is it?

In Spain, inheritance tax is known as “Impuesto de Sucesiones y Donaciones. Unlike the UK’s inheritance tax, which is levied on the estate as a whole, the Spanish system taxes the beneficiary receiving the inheritance. This difference creates a fundamentally different approach to inheritance planning.

Spanish inheritance tax applies to assets worldwide if the beneficiary is a Spanish resident. For non-residents, it applies to assets located within Spain. This scope often surprises expats who assume that only assets in Spain are taxable.

The History:

Inheritance Tax in Spain is frighteningly complex. This is so because of Spain’s historical evolution as a modern Kingdom of kingdoms. These historical kingdoms lost their autonomous powers to a large degree in the 1700’s when King Felipe V unified them all into the kingdom of Spain. Fast forward to 1978, on the death of General Franco and Spain decided to reintroduce multiculturalism and established the Autonomous Communities.

Spanish Inheritance Tax - Quote about inheritance tax by Roy Jenkins
Image By © European Communities, 1977, CC BY 4.0, Link

Today:

The central government kept control of national issues but devolved power in various matters to the communities. One of these was the issue of inheritance tax.

Spain has 17 different autonomous regions plus two autonomous cities, each with their own rules. In addition to this there is the central government stance (or template) for Spanish Inheritance Tax which actually means that there are 20 entirely different sets of legislation to consider when writing an article about Spanish Inheritance Tax.

Spanish Inheritance Tax – The National Law

Let’s start with the national law (the template) and then highlight a few examples of how autonomous communities have altered exemptions and tax rates.


It is worth highlighting that Spanish inheritance tax is based on civil law and UK IHT is based on common law, meaning that it can be like mixing water and electricity together where people can get a nasty shock if they don’t plan. We will provide a clear comparison further in the article.

Spanish Inheritance Tax Application 02
Application of Spanish Inheritance Tax depending on location of assets and your residency

Who Pays Inheritance Tax in Spain?

Spanish inheritance tax applies to anyone receiving an inheritance, regardless of nationality, as long as they reside in Spain or inherit assets located in the country.

Even if the deceased was not a Spanish resident, their property in Spain is still subject to the country’s inheritance tax laws.

The Concept of Forced Heirship

Spanish inheritance tax law includes strict forced heirship rules, also known as the Law of Obligatory Heirs or legítima.

These rules dictate how a portion of your estate must be distributed among close family members, limiting your ability to freely allocate assets. The specifics vary significantly across Spain’s autonomous regions, but the national framework provides a baseline.

If your estate is governed by Spanish inheritance law, the division of assets typically follows these principles:

1. Spouse’s Share:

If married at the time of death, the surviving spouse automatically retains 50% of all jointly-owned property. The remaining 50% forms part of the deceased’s estate.

2. Estate Division

The remaining estate is then divided into three portions:

  • One-third is divided equally among any surviving children.
  • One-third is reserved for the children, but the deceased may allocate it unequally in their will. The surviving spouse retains a life interest (usufruct) in this portion, meaning they can use it or derive income from it until their death, at which point it passes to the children.
  • One-third is freely disposable, allowing the deceased to allocate it to anyone of their choice in a will.

3. Parents and Other Relatives:

If the deceased leaves no children:

  • Surviving parents are entitled to one-third of the estate if there is a surviving spouse or 50% if there is no spouse.
  • In the absence of children, parents, or a spouse, the deceased can allocate their estate entirely as they wish.

Exceptions For Foreign Nationals

Foreigners residing in Spain can bypass forced heirship rules for both Spanish and worldwide assets if they explicitly state in their will that their home country’s inheritance laws apply.

This provision ensures that the laws of the individual’s nationality take precedence over Spanish inheritance law.

Without such a declaration, the estate is automatically subject to Spanish rules, restricting the freely disposable portion to just one-third. [EU LAW 2015]

The Kinship Group System

Spanish tax authorities have categorised the relationship between the taxpayer and the person making the gift/leaving the inheritance into 4 groups.

  • Group 1: Direct descendants under 21 years old.
  • Group 2: Children (natural and adopted) over the age of 21, grandchildren, spouses, and parents/grandparents (including adoptive)
  • Group 3: Siblings, aunts, uncles, nieces, nephews, in-laws, and their ascendants/descendants.
  • Group 4: Cousins, step-children, all other relatives, unmarried partners (unless the region allows it) and those who are unrelated.
Spansih Inheritance Tax - Kinship Group detailed

Spanish Inheritance Tax – How To Calculate in 5 Steps

Step 1: Establish the exact value of the inheritance Per Beneficiary

Spanish inheritance tax law considers all property and assets as taxable, creating a detailed and comprehensive valuation process for estates.

The total value is calculated by summing up real estate, valuables (including furniture, jewellery, and artwork), and financial assets, while also accounting for any outstanding debts.

Debts are subtracted from the total assets to determine the estate’s taxable value.

Step 2: Establish the relationship between the donor and the beneficiary, to calculate the correct allowance

This is where understanding the Kinship Groups is vital as each group has their own specific rules:

  • Group I: children (natural and adopted but NOT stepchildren) under 21 years receive an allowance of €47,859.
  • Group II: adult children, grandchildren, spouses, parents and grandparents receive an allowance of €15,957.
  • Group III: siblings, aunts , uncles, nieces, nephews, in-laws receive an allowance of €7,993.
  • Group IV: anyone else – including unmarried partners save for a recognised “pareja de hecho” in some communities receive no allowance.

Step 3: Apply relevant exemptions and allowances:

This is the part you really should plan around as Spain provides certain reliefs and exemptions aimed at easing the tax burden for close relatives of the deceased. These include:

  • Family Home Allowance:
    Beneficiaries who are direct relatives—such as children, parents, or spouses—are eligible for a 95% exemption on the value of the main family home, up to €122,000 per beneficiary. This can provide significant relief, particularly for heirs inheriting jointly-owned property.

  • Personal Tax-Free Allowances:
    While spouses do not receive blanket exemptions as in some other countries (e.g., France), they are entitled to a higher personal allowance compared to more distant relatives. These allowances vary based on the relationship to the deceased, offering more favourable terms for close family members.

See Government Website here

Step 4: Calculate the raw tax:

The tax rates are banded and Range from 7.65% on the first €7,993 up to 34% on amounts over €797,555

Inheritance Range Tax Rate
Up to €7,993 7.65%
€7,993 to €31,956 7.65% to 10.2%
€31,956 to €79,881 10.2% to 15.3%
€79,881 to €239,389 15.3% to 21.25%
€239,389 to €398,778 25.5%
€398,778 to €797,555 29.75%
Above €797,555 34%

Step 5: Apply the coefficient multiplier

The final national element to apply when considering inheritance tax in Spain is the ISD Multiplicator.

Pre-existing net wealth (Euro) Group I and II Group III Group IV
0 - 402,700 1.00 1.5882 2.0
402,700 - 2,007,400 1.05 1.6676 2.1
2,007,400 - 4,020,800 1.1 1.7471 2.2
4,020,800 + 1.2 1.9059 2.4

The raw tax is multiplied by a factor according to the family relationship and the pre-existing wealth of the beneficiary.

For those mathematicians you will have already calculated that a person who is unrelated to the donor, who is resident in Spain, and has existing assets in excess of €4,020,800 and receives an inheritance above €797,555 could pay an eye-watering rate of 81.6% on the amount above €797,555.

The Role of Spain’s Autonomous Regions in Inheritance Tax Planning

Its not all bad news though, since as I mentioned earlier the autonomous regions may raise the allowances and exemptions at will.

By way of example:

  • In Ceuta and Melilla: groups I and II benefit from a 99% reduction of the tax calculated and others receive a 50% reduction.
  • In the Balearics: it is a similar rule as it is in Madrid.
  • In Andalucía: Groups I and II receive an allowance of €1,000,000 tax free before tax is calculated.

There are certain conditions to be met to qualify for these allowances and increased exemptions such as the deceased must have been resident for a period of 5 years for the exemption to apply, amongst other variations of different circumstances.

It is worth noting also that Autonomous Communities can vastly improve allowances and exemptions but by the same token can vastly reduce them at will.

Andalucía by way of example adopted the state laws for nigh on 25 years with a socialist regional government in power and then with a right of centre party elected the exemptions have continued to improve. This could easily be reversed as several regions did after the financial crisis in 2008.

Key Differences and Misconceptions Between UK Inheritance Tax and Spanish Inheritance Tax

We often receive a lot of questions from UK expats who struggle to navigate the rules of Spanish inheritance tax due to the stark differences between the two systems. Let’s address some key distinctions, common misconceptions, and pitfalls:

  1. Who Pays the Tax:
    Firstly, in the UK it is a person’s worldwide estate that is taxed at a flat rate of 40% after the nil rate band (NRB) of £325,000 is used. I have chosen to ignore the main residence relief for the purpose of simplicity. In Spain it is the beneficiary who is taxed after an individual allowance of just €15,957  and the tax rates which are applied are on a sliding scale depending on how much is inherited and also the relationship with the donor.
  2. Spouses Are Not Exempt in Spain:
    Secondly, in the UK spouses are exempt whilst in Spain spouses pay tax – I’ll repeat that….spouses are subject to inheritance tax.
  3. Unmarried Partners:
    Thirdly…unmarried partners in the UK do not receive the spousal exemption.  Spain has a provision in some communities where unmarried partners receive the same allowances as a spouse as long as the relationship is registered.
  4. No Double Taxation Agreement:
    Fourth is that there is no Double Tax Agreement between the UK and Spain for IHT, although there is a “unilateral credit by way of similar taxes paid abroad”.
  5. Misconceptions About “Automatic Exemptions”:
    Many UK expats mistakenly believe that their assets in the UK are exempt from Spanish inheritance tax. This is untrue if the beneficiary resides in Spain. Professional advice can clarify such misconceptions and prevent costly errors.
Spanish Inheritance Tax - UK IHT Planning Table
UK Inheritance Tax Planning Table

Other Considerations Regarding Spanish Inheritance Tax

Inheritance tax must be paid within six months of the date of death, though extensions may be granted in very specific and justified circumstances.

The assets will not be released to beneficiaries until the tax has been paid.

Protect Your Legacy From Spanish Inheritance Tax with Expert Guidance

Navigating Spanish inheritance tax is no small task, especially with its complex interplay of national and regional laws. Whether you’re an expat already living in Spain or planning to move, understanding these rules is crucial to protecting your wealth and ensuring your loved ones are not left with an unexpected tax burden.

Clearly – the best course of action is to plan ahead and remove risk and uncertainty.

Private Client Consultancy specialises in helping expats optimise their inheritance planning and minimise tax liabilities. With our expertise, you can gain peace of mind knowing that your estate will be managed in line with both Spanish laws and your personal wishes.

Contact us today to schedule a consultation and take the first step towards securing your financial legacy in Spain.

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