Is there inheritance tax in Spain?

This guide is general information, not tax advice. We handle a Spanish estate on both sides — who inherits and how the assets transfer, and the Spanish inheritance tax itself: we compute it, prepare the return and file it as part of the work. Tax back home is not ours, and we will tell you plainly and early where an adviser there is needed. (Tax figures are illustrative and current as at the date below.)

How does Spanish inheritance tax work?

Inheritance tax in Spain is the Impuesto sobre Sucesiones y Donaciones (ISD), governed at state level by Ley 29/1987. It is a tax on each heir’s inheritance (not on the estate as a whole), and the rate rises with the amount inherited and with how distant the relationship is — and it can be increased further by a coeficiente multiplicador for distant heirs. The heir files the return (commonly Modelo 650).

Who pays what

Spanish inheritance tax is built in two layers. The state sets a baseline: who you were to the person who died puts you in one of four groups, and each group has its own tax-free allowance before anything is due.

• Children and grandchildren under 21 — €15,956.87 each, plus €3,990.72 for every year under 21, up to a maximum of €47,858.59.
• Spouse · children and grandchildren over 21 · parents and grandparents — €15,956.87 each.
• Brothers and sisters, nephews and nieces, uncles and aunts — €7,993.46 each.
• Everyone else — cousins, unmarried partners, friends: no allowance at all.

Above the allowance the state scale climbs from 7.65% to 34% across sixteen bands — and for the more distant heirs in the last two groups the resulting figure is then multiplied up again, which is where the eye-watering Spanish numbers come from. Two further allowances often matter more than the headline: an heir with a disability receives a large additional reduction, and the deceased’s main home can carry a 95% reduction, capped at €122,606.47 per heir, where the heirs keep it for the required period.

That baseline, though, is only what you fall back on where the region gives nothing — and most regions give a great deal.

Why does it matter which region applies?

Because the comunidades autónomas have wide power to set their own reductions and rebates, the same inheritance can be taxed very differently depending on the region. Several regions — for example Madrid and Andalucía — give spouses, children and parents bonificaciones of up to 99%, so close family pay little or nothing; other regions are markedly less generous. This regional variation, not the headline state rate, is usually what decides the bill.

Andalucía is the clearest illustration, and the region where most of the families we act for have inherited. There, a spouse, child, grandchild or parent takes the first €1,000,000 free of tax — each, not between them — and anything above that carries a 99% rebate. A brother, sister, nephew or niece is treated far less kindly: a personal allowance of €10,000, a further €250,000 reduction where their own wealth is modest, and no rebate at all. The gap between those two positions, in the same house, on the same death, is the whole point of getting the region right.

Do non-residents pay more?

Historically non-residents were forced onto the harsher state rules. That was struck down: following the Court of Justice of the EU in C-127/12 (2014) and later Spanish Supreme Court rulings, non-residents — including those resident outside the EU — can now apply the rules of the relevant autonomous community. For a UK family inheriting a Spanish home, applying the right region’s reductions can make a very large difference.

What is the deadline?

The inheritance-tax return must normally be filed within six months of the date of death. A further six-month extension can be requested within the first five months. Late filing attracts surcharges and interest, so the tax clock is one of the first things to diarise.

And if the deadline is missed? Spain adds a surcharge that grows with the delay: 1% of the tax, plus a further 1% for each complete month late, through the first twelve months. Past twelve months it becomes a flat 15%, with interest running from the twelve-month point — currently 4.0625% a year. Those surcharges are cut by a quarter if the bill is paid promptly once it arrives. All of that is for coming forward late of your own accord; if the tax office writes to you first, it stops being a surcharge and becomes a penalty, on a far heavier scale. And the relief valve has to be used in time: the extra six months must be asked for within the first five — after that the door is shut.

Is there a tax-free transfer between spouses?

Not automatically, and not nationwide. Unlike the UK there is no blanket spouse exemption — what a surviving spouse pays depends entirely on the applicable region’s reductions and rebates. In a generous region the effective tax may be near zero; in another it may be real. This is exactly the kind of point to check, region by region, with a Spanish tax adviser before assuming the position.

The same question in our other countries: Portugal · Italy · France.