Moreover, if you own assets in Spain, or you are due to inherit from someone who did. Furthermore, spanish inheritance tax will apply regardless of where you live. Spain taxes the beneficiary, not the estate. In addition, it does so on any asset located in Spanish territory even when both the deceased and the heirs are non-residents.
Furthermore, this article explains how Spanish inheritance tax works for non-residents: who is liable. This regional rules apply, what reliefs are available. Moreover, the deadlines and the practical steps required to complete an estate in Spain.
Who is liable: personal versus real liability
Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones) distinguishes two types of liability:
- Personal liability: Spanish tax residents are taxed on everything they inherit, wherever the assets are located.
- Real liability: non-residents are taxed only on assets located in, or rights exercisable in, Spanish territory.
In addition, the key point is that liability attaches to each individual beneficiary, not to the estate as a whole. In fact, each heir files a separate return for their own share.
Spanish inheritance tax: which rules apply: state or regional
Spain is divided into autonomous regions with wide powers over this tax, and the differences between them are substantial. In particular, for many years non-residents could only apply the less favourable state rules. Similarly, that changed following the Court of Justice of the European Union judgment of 3 September 2014 and subsequent Spanish Supreme Court case law. This extended the principle to residents of non-EU countries. Legislation passed in 2021 incorporated this into the statute.
Moreover, in broad terms, a non-resident heir inheriting real estate located in Spain may apply the rules of the autonomous region where the property is situated. Furthermore, for movable assets, the connecting factor is the region where those assets were located for the greatest number of days over the previous five years.
In addition, this matters enormously: applying the correct regional rules instead of the state rules can reduce the tax bill very significantly.
Rates, kinship groups and reliefs
In fact, the tax is progressive and depends on two variables: the value received and the relationship between the deceased and the beneficiary. Beneficiaries are classified into four groups, and reliefs are concentrated on spouses, children and parents.
In particular, the most relevant reliefs in practice are:
- Kinship allowances, considerably increased by most regions.
- Main residence relief, where the property was the habitual home of the deceased, subject to a holding period.
- Family business relief, applicable to business assets and qualifying shareholdings.
- Regional credits against the final tax liability, which in some regions reduce it almost to zero for close relatives.
Unrelated beneficiaries and distant relatives, by contrast, face high effective rates in virtually every region.
Deadlines and payment
- Similarly, the return must be filed within six months of the date of death.
- Moreover, a six-month extension may be requested, but only within the first five months.
- Late filing triggers surcharges and interest and, in many regions, the loss of regional reliefs. This is usually far more costly than the surcharge itself.
- Deferral and instalment arrangements exist where the estate lacks liquidity, but must be applied for before the deadline expires.
Where there is no regional connecting factor. In addition, filing is handled centrally by the Spanish tax authority through its national office for non-residents.
Double taxation
Spain has very few bilateral treaties dealing specifically with inheritance tax. Outside those cases, relief is unilateral: a Spanish resident beneficiary may credit the lower of the tax actually paid abroad or the amount resulting from applying the Spanish average effective rate to the foreign assets.
Where the foreign tax is levied on the estate rather than on the beneficiary — as with UK inheritance tax or US federal estate tax — the credit may be difficult or impossible to apply. We examine the most common scenarios in our article on double taxation in Spanish inheritance tax.
Practical steps to settle an estate in Spain
- Obtain the death certificate and, where relevant, a Spanish certificate of last wills (Certificado de Últimas Voluntades).
- Obtain the Spanish will or, if there is none, the foreign will duly apostilled and translated.
- Apply for a Spanish tax number (NIE) for each beneficiary. Furthermore, without it, no return can be filed.
- Prepare an inventory and valuation of the Spanish assets, taking into account the cadastral reference value for real estate.
- Execute the deed of acceptance and division of the estate before a Spanish notary, usually through a power of attorney.
- File and pay the inheritance tax return within the deadline.
- Register the property transfer at the Land Registry and settle municipal capital gains tax.
Where assets are spread across several countries, see our article on estates with assets in several countries.
Common mistakes
Moreover, the three most frequent and most expensive are: applying state rules when regional rules would have been available. missing the six-month deadline and losing regional reliefs. and undervaluing Spanish real estate below the cadastral reference value, which almost invariably triggers an assessment.
Frequently asked questions about Spanish inheritance tax
When should Spanish inheritance tax be reviewed?
As early as possible. In practice, decisions about Spanish inheritance tax are taken at the start of the process and are difficult to reverse later. Moreover, an early review allows you to compare options with real figures.
Do I need professional advice?
Furthermore, Spanish inheritance tax combines civil, procedural and tax issues. In fact, most of the problems we see come from cases handled without prior review.
Planning ahead for Spanish inheritance tax
Non-resident heirs often discover the Spanish inheritance tax rules only after the death. Moreover, the Spanish inheritance tax return has a strict six-month filing deadline.
Conclusion on Spanish inheritance tax
In addition, spanish inheritance tax for non-residents is manageable, but it is unforgiving on deadlines and documentation. In fact, the difference between a well-prepared estate and a rushed one is usually measured in tens of thousands of euros.
In particular, at DiG Abogados we act for non-resident families and executors in Spanish estates. Furthermore, from the initial inventory to registration. See our Spanish inheritance tax service and our international inheritance practice. Similarly, you can check the official rules at the Spanish Tax Agency.
The Spanish inheritance tax is governed by Act 29/1987 on Inheritance and Gift Tax.
Article reviewed by Inés Gros, tax adviser at DiG Abogados.
