10 Most Common Spanish Inheritance Tax Questions Answered

Carlos Rodriguez
October 9, 2025

Navigating Spanish inheritance tax, or Impuesto sobre Sucesiones y Donaciones (ISD), can feel overwhelming. You may have heard conflicting stories: that it’s cripplingly high, or that some people pay nothing at all. Both can be true.

The reality is that Spain’s inheritance tax system is a complex patchwork of state and regional rules. The amount your loved ones will pay depends entirely on where you live, where your assets are, and your relationship to them. For expatriates and holiday homeowners, this complexity is magnified by cross-border considerations.

But it doesn’t have to be a source of anxiety.

At Private Client Consultancy, we specialise in providing clarity.

This guide demystifies the rules for 2025, answering the ten most common questions we hear from our clients, with practical examples to show you what you can expect.

What You Will Learn From Our Spanish Inheritance Tax Questions Answered

By the end of this article, you will understand:

The crucial difference between how Spain taxes inheritance compared to countries like the UK.
Why the tax bill for the same inheritance can be almost zero in Madrid but tens of thousands in Catalonia.
The four key steps to calculating any potential inheritance tax liability.
How to strategically plan your estate to legally minimise the tax your heirs will face.
The critical deadlines and procedures every heir must follow—even if no tax is due.
The risks of double taxation for non-residents and how to mitigate them.

The 10 Most Common Spanish Inheritance Tax Questions: Answered

Here are the definitive answers to the questions our clients ask us every day.

What is inheritance tax in Spain?

Inheritance tax is a levy on the transfer of wealth after death. It applies to property, savings, investments, and other assets passed on to heirs.

The key difference with many other systems is that in Spain:

The heirs pay the tax, not the estate.
The tax varies by relationship (spouse, child, sibling, friend, etc.) and by region.

Example:

If Ana dies in Madrid and leaves €300,000 to her son, he will likely pay almost nothing due to Madrid’s 99% reduction.
If Ana dies in Asturias, leaving the same inheritance, her son could face a tax bill of tens of thousands of euros.

How much is inheritance tax in Spain?

At the national level, the tax rate is progressive, ranging from 7.65% to 34%. But this is only a starting point. The crucial factor is the reductions offered by each Autonomous Community.

Madrid: 99% reduction for close relatives.
Andalusia: Offers a 99% reduction for spouses and children. You can learn more in our detailed guide to inheritance tax in Andalusia.
Canary Islands: 99.9% reduction for close family.
Catalonia & Valencia: These regions have lower allowances, meaning heirs often pay more. For a complete breakdown, read our guides on IHT in Catalonia and the rules for the Valencian Community.

Example: A €200,000 inheritance from parent to child:

In Madrid → Tax payable: about €200 (after reductions).
In Catalonia → Tax payable: €12,000–€15,000.

How do you calculate inheritance tax in Spain?

Calculation follows four main steps sometimes presented as five:

Value the assets: Property, bank accounts, shares, cars, etc.
Apply allowances: Each heir gets a tax-free amount, higher for close relatives.
Apply the tax rate: Progressive rates on the net value.
Apply multipliers: Depending on the heir’s relationship and their pre-existing wealth.

You can find out more here.

Example:

A son inherits €150,000 in Andalusia. After applying the allowance and regional reduction, his final tax bill is close to €0.
A nephew inherits €150,000 in the same region. As a distant relative (Group III), his allowance is much smaller, and his bill could be €20,000+.

Who pays inheritance tax in Spain?

The heirs themselves. Each heir must:

Obtain a NIE number (Spanish tax ID). (link to PCC Legal article)
File their own Modelo 650 tax return.
Pay their share within six months of death.

Example: If a €600,000 property is left equally to three children:

Each child is taxed on €200,000.
Each child files their own declaration.

Does a spouse pay inheritance tax in Spain?

Yes — Spain does not automatically exempt spouses. But the effective tax varies hugely by region.

In Madrid, Andalusia, and the Canary Islands → A spouse typically pays nothing thanks to reductions.
In Catalonia or Asturias → A surviving spouse may still face a substantial bill.

Example: If John dies in Andalusia, leaving €500,000 to his wife, she pays virtually €0 tax. If he lived in Catalonia, the same inheritance might trigger a tax bill of around €25,000–€30,000.

How can you reduce or avoid inheritance tax in Spain?

While taxes cannot always be avoided, there are legitimate strategies to mitigate the amount you must pay:

Residency planning: Being resident (or owning assets) in a favourable region (e.g., Canary Islands).
Lifetime gifting: Some regions apply reductions for gifts made during life.
Double wills: Having a Spanish will aligned with your home country will avoid costly delays and misinterpretations.
Ownership structuring: Joint ownership or other vehicles can be efficient if done correctly.
Cross-border planning: Coordinating between Spanish law and your home country’s tax rules prevents double taxation.

Example: A UK couple with a €400,000 Spanish villa sets up a Spanish will and gifts part of the property to their children during their lifetime. This ensures that when the surviving spouse dies, the children face minimal tax exposure both in Spain and the UK.

Is inheritance tax in Spain paid upfront?

Yes. Heirs must pay within six months of the date of death (extensions are available for another six months).

Importantly, tax must be paid before assets can be accessed. This sometimes forces heirs to:

Use savings to pay the tax upfront.
Request a bank advance or loan secured against the property.

Example: If Maria inherits a villa worth €250,000 in Tenerife, she must settle inheritance tax and plusvalía municipal (local land tax) before she can register the property in her name.

Is my holiday home in Spain subject to inheritance tax?

Yes. Spanish property is always subject to Spanish inheritance tax, regardless of the owner’s residency. This is a critical point for international owners.

Non-residents → Only your Spanish assets are taxed in Spain. However, you must follow the correct procedures. Our guide for non-resident inheritance tax in Spain explains the process in detail.
Residents → Your worldwide assets are taxable in Spain.

Example:

German resident with a holiday home in Marbella dies → his heirs must pay Spanish inheritance tax on the Spanish villa.
A British retiree living full-time in Spain dies → his heirs may face Spanish inheritance tax on his global estate, not just the Spanish property

What percentage is the inheritance tax in Spain?

National rates range from 7.65% to 34%. But with reductions and allowances, the effective rate varies:

Spouses and children in favourable regions → 0–1%.
Nieces, nephews, or unrelated heirs → 15–30% (depending on value and region).

Example:

Daughter inherits €100,000 in Madrid → Pays about €100.
Unmarried partner (without registered civil status) inherits €100,000 in Madrid → Pays €15,000–€20,000.

Is inheritance tax in Spain avoidable with planning?

Not entirely, but planning can make the difference between paying almost nothing and tens of thousands.

The complexities of regional laws and international treaties mean that a one-size-fits-all approach does not work.

Key tools include:

Spanish wills to avoid probate complications.
Lifetime gifts in favourable regions.
Relocation of tax residency to regions with generous reductions.
International estate planning to avoid double taxation (especially for those from the UK, Germany, and France).

Example (double taxation risk): A British national living in Spain dies, leaving assets in both Spain and the UK. Without proper planning, heirs could be taxed in both countries. With the right strategy, such as tax credits, treaties, and careful structuring, the family can avoid paying twice.

Do You Still Have Spanish Inheritance Tax Questions Left Unanswered?

From the Wealth Manager's Desk: A Real-Life Case Study

The Situation: We were approached by a British couple, David and Sarah, who had been resident in Catalonia for 15 years. They owned a Spanish property worth €600,000 and had savings of €200,000 in Spain. Their two adult children lived in the UK. They had a simple UK will and assumed it would be sufficient.

The Challenge: Under Catalan rules, their children would have faced a significant inheritance tax bill (estimated at over €40,000 each). Furthermore, without a Spanish will, the probate process would have been slow and expensive, and their UK will could have been misinterpreted. They also faced a potential double-taxation scenario with HMRC in the UK.

Our Solution:

Spanish Wills: We worked with a notary to draft “mirror” Spanish wills for David and Sarah, specifically for their Spanish assets. This ensured immediate clarity and bypassed a lengthy, costly probate process.
Lifetime Gift Analysis: We analysed the possibility of lifetime gifting. In their specific case under Catalan law, it was more tax-efficient to pass the assets via inheritance due to the available allowances for direct descendants.
Cross-Border Structuring: We provided a report for their UK tax advisor, outlining the Spanish tax paid. This ensured that under the UK-Spain Double Taxation Treaty, any tax paid in Spain could be credited against their UK inheritance tax liability, preventing their children from paying tax twice on the same assets.

The Result: While the tax could not be eliminated entirely due to Catalan regulations, the family avoided the costly probate process. More importantly, the clear cross-border planning ensured there was no threat of double taxation, saving the estate an estimated £60,000 in UK tax. The children received their inheritance smoothly and without any legal or financial surprises.

This case study uses fictitious names and has modified the conditions of the case for the purposes of publishing online. Any resemblance to a real life scenario are coincidental.

Practical Checklist: What to Do When Dealing with Inheritance in Spain

Even if the inheritance tax in Spain is reduced or even close to zero in some regions, the legal and administrative steps are unavoidable.

Missing a deadline or filing incorrectly can cause penalties or delays.

Here’s a clear roadmap for heirs and families:

Step 1. Obtain the Death Certificate

From the Spanish Civil Registry if the death occurred in Spain.
If abroad, request it in the home country, then ensure it is apostilled and officially translated into Spanish.

Step 2. Request the Certificate of Last Wills (Certificado de Últimas Voluntades)

Confirms if the deceased had a Spanish will.
Issued by the Ministry of Justice in Spain. Without it, the inheritance cannot proceed.

Step 3. Locate the Will(s)

Spanish will: Registered with a Spanish notary, usually straightforward.
Foreign will only: Must be legalized and translated. Extra procedures may apply.
No will: Spanish intestacy rules apply — these may not match your expectations.

Step 4. Collect All Required Documentation Each heir will need:

Passport or DNI and NIE number (Spanish tax ID).
Bank account details.
Proof of relationship (e.g., marriage or birth certificates).
List of assets: property deeds, bank balances, investments, vehicles, and debts.

Step 5. Draft the Inheritance Deed (Escritura de Aceptación de Herencia)

Prepared by a Spanish notary.
Details all assets and how they are divided among heirs.
All heirs (or their legal representatives) must sign it.

Step 6. File the Inheritance Tax Return (Modelo 650)

Must be filed within 6 months of the death.
Extensions of another 6 months may be requested, but interest may apply.
Even if no tax is due (thanks to regional reductions), the form must still be submitted.

Step 7. Pay Other Taxes and Fees

Plusvalía Municipal: A local tax on land value increase, payable to the town hall.
Notary and Land Registry fees: For formalizing and registering inherited property.

Step 8. Register Assets in the Heirs’ Names

Property: Must be updated at the Land Registry (Registro de la Propiedad).
Bank accounts: Require the inheritance deed and tax clearance before heirs can access funds.
Vehicles/shares: Updated with the relevant authorities.

Step 9. Consider Cross-Border Tax Obligations

Heirs who live abroad may need to declare the inheritance in their country of residence.
Coordination is essential to avoid double taxation.

Step 10. Review Long-Term Implications

Annual property tax (IBI) and community charges may now apply to heirs.
Families should decide whether to keep, rent, or sell inherited assets — each option has tax consequences.

Key Reminders

✔ Deadlines matter: 6 months for inheritance tax.

✔ Each heir must file separately.

✔ Even if tax is “zero,” paperwork is mandatory.

✔ Cross-border planning avoids costly mistakes.

From Confusion to Clarity: Securing Your Legacy With Your Spanish Inheritance Tax Questions Answered

As we’ve shown, Spanish inheritance tax is not one single system, but many. For close family in regions like Andalusia or Madrid, the liability can be negligible. For others, particularly distant relatives or those with assets in less generous regions, the bill can be substantial.

The most costly mistake is assuming the rules from your home country apply here, or failing to plan altogether. Without proper guidance, families risk facing unexpected tax bills, administrative delays, and even paying tax in two different countries.

The good news is that with professional, forward-thinking advice, these challenges are entirely manageable. By structuring your assets thoughtfully and creating a clear legal framework, you can ensure your wealth passes to the next generation efficiently and with minimal tax erosion.

Your next step is to get advice tailored to your unique situation.

Schedule a no-obligation consultation with our cross-border specialists at Private Client Consultancy today to protect your assets and secure your family’s legacy.

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10 Most Common Spanish Inheritance Tax Questions Answered

What You Will Learn From Our Spanish Inheritance Tax Questions Answered