Inheritance tax in Spain: A complete guide

Living in Spain or plan to move there permanently? If you’re a UK expat and Spain is your new home, it’s important to understand the tax system there - and how it applies to you.

In this guide, we’ll be taking a close look at how inheritance tax works in Spain. This could be useful to know if you’ve retired in Spain, have property or older relatives living in the country.

We’ll run through everything you need to know as a UK expat, including inheritance tax rates, who pays it and how to calculate it.

We’ll also show you how to send large amounts of money securely between countries using the Wise Account. This can be extremely useful if you have inheritance tax to pay, or want to send money from an inheritance back to the UK.

Learn more about the Wise account

What is inheritance tax?

Inheritance tax, known as IHT in the UK, is a tax paid to the government on the estate of someone who has died. The ‘estate’ usually encompasses all property and possessions, as well as savings, investments and pensions.

Many countries have inheritance tax systems. Depending where in the world you are, the tax may be known as estate tax, inheritance tax or succession tax.

However, not all countries have this kind of tax in place. Australia, Singapore, Sweden and Norway are among a handful of countries which don’t charge inheritance tax at all.¹

Inheritance tax in Spain

In Spain, inheritance tax is called succession tax or impuesto de sucesiones y donaciones (ISD).

There are national laws, as well as rules which can vary (sometimes significantly) by region.

Nationally, the system is governed by the Agencia Tributaria, the Spanish General Directorate of Taxes. It uses a platform set up as part of the Spanish Inheritance and Gift Tax Act (IGTA) to regulate inheritance taxes.

But individual autonomous regions such as Catalonia, Galicia or the Basque Country (to name but a few examples) can also modify tax rates and other terms themselves.²

Who pays inheritance tax in Spain?

Spanish inheritance tax law applies to the beneficiary of the estate, rather than the estate itself (unlike how it works in the UK).

The law applies to both Spanish nationals and expats from the UK, EU or anywhere else, as long as they are living in Spain at the time of the death.³

It doesn’t matter whether or not the deceased person was a Spanish national or even living in Spain themselves. Interestingly, this law extends to all property whether it’s in Spain or not.³

It’s important to get professional tax advice to double check which country’s tax laws apply to you, especially if you live between countries or have property in multiple countries.

Inheritance tax rates in Spain

In the UK, a flat rate of tax is applied to estates valued over a certain sum, but it works differently in Spain.

The Spanish system uses progressive tax rates, which fall into bands based on the value of the inheritance each beneficiary receives. Here are the current rates:²

Value of inheritance	Inheritance tax rates
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%
€797,555+	34%

Each beneficiary also has a personal tax-free allowance or relief, based on their relationship to the deceased person. This means they can inherit a sum up to that allowance threshold without paying inheritance tax. Anything they receive above their allowance threshold is taxable according to the rates listed above.

Here are the current personal allowances for inheritance tax in Spain:²

Relationship to deceased	Personal allowance/relief
Children (inc. adopted) under 21 years old	€47,859
Children (inc. adopted) over 21 years old, spouses, grandchildren, parents and grandparents - Some autonomous regions also recognise unmarried partners in this category	€15,957
Siblings, aunts, uncles, nieces, nephews, in-laws and their ascendants/descendants	€7,993

Beneficiaries with disabilities also receive an allowance of between €47,859 to €50,253.²

It’s also important to remember though that Spain’s autonomous regions also have the power to adjust these rates and allowances. So, you’ll need to check which rates apply to you according to where you live in the country.

Taxable assets and exemptions

Under Spanish inheritance laws, all property and assets are included as taxable assets. The estimated value of real estate, valuables (including furniture, jewellery and artwork) and money will be added up, along with the person’s debts (if any). Debts will be subtracted from the assets to come up with the total value of the estate.

However, there are some reliefs and exemptions. For beneficiaries who are close relatives of the deceased (such as children, parents and spouses), there’s a 95% allowance against the value of the main family home. This relief extends up to €122,000 per beneficiary.²

Unlike in some other countries such as France, there are no inheritance tax exemptions for spouses of the deceased.² They get a personal tax-free allowance like other relatives, albeit a higher one compared to some other beneficiaries.

How to calculate inheritance tax in Spain

Here’s an overview of how Spanish inheritance tax can be calculated:

1. The taxable net asset is calculated, by minusing the liabilities (debts) from the value of the inventory of assets.
2. The taxable net asset is then distributed between heirs, according to Spanish succession laws and the will of the deceased person.
3. For each beneficiary, the taxable sum is the amount left after their personal allowance has been deducted.
4. On the remaining sum, tax rates will apply according to the value of the inheritance received.

How to pay inheritance tax in Spain

If you are a beneficiary who is liable for inheritance tax, you will need to pay it within six months of the estate being declared.²

This happens when a declaration of inheritance tax form is filed by each beneficiary. In some autonomous regions, you can do this online by filling in a self-assessment inheritance tax return on the local authority’s website. In other areas, you may need to complete a paper form.

You’ll also need to make sure you have a foreigner identity number (NIE).

The estate will not be released by the authorities until all inheritance tax due has been paid.

As for how to pay, you’ll need to find out the processes and procedures for the autonomous region of Spain you live in.

If you’re living in the UK or another country, a solution such as Wise could be ideal for sending a payment for inheritance tax to Spain. You can send money worldwide with Wise, for low fees* and mid-market exchange rates. There’s even a dedicated service for securely sending large amounts.

Wise - For big money transfers at life’s big moments

After reading this, you should have a better idea of how the Spanish inheritance tax system works - and how it applies to you and your family. We’ve looked at personal allowances, rates, exemptions and who has to pay the tax.

We’ve also covered how to pay inheritance tax in Spain. If you need a way to pay inheritance tax, send inherited money back to the UK or generally manage your finances between countries - Wise is the perfect solution.

With Wise, you can hold and convert between 40+ currencies in your online account. And you can send money worldwide for low, transparent fees* and mid-market exchange rates.

If you’re sending a large sum between countries, read our quick guide on what documents you’ll need. Whether you’re paying foreign bills or trying to get the best exchange rates when repatriating funds from overseas back to the UK, your Wise account can do it all.

FAQs about inheritance tax in Spain

Below are some of the most frequently asked questions:

What happens if I can’t pay inheritance tax in Spain?

If you can’t meet the six month deadline for paying the inheritance tax you owe, you can apply for a six month extension or agree to pay in instalments.²

If you miss these deadlines or don’t pay at all, the tax owed will have a levy of 5% added every three months, up to a maximum of 20%.²

How much can you inherit tax-free in Spain?

Spain gives each beneficiary of an estate a tax-free allowance, based on their relationship to the deceased. This ranges from €7,993 to €47,859.²If you inherit anything below your personal allowance, you won’t pay tax on it.

However, you will pay tax on anything you inherit above your personal allowance, with the rate varying depending on the sum.

Does Spain tax foreign inheritance?

Yes, if the beneficiary is considered a resident of Spain for tax purposes, they’ll need to pay inheritance tax on anything they inherit while living there. This includes property, assets and money held in other countries.³

Do the UK and Spain have a double taxation treaty for inheritance tax?

The UK and Spain do have a double taxation treaty (which ensures expats don’t pay tax on the same income twice) but it doesn’t apply to inheritance. It’s recommended to get expert tax advice on which country’s tax laws apply to you and what your obligations are.

Which EU countries have no inheritance tax?

Within the EU, the following countries have no inheritance taxes:⁴

• Austria
• Cyprus
• Estonia
• Latvia
• Malta
• Romania
• Slovakia
• Sweden.

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Sources used:

1. The Telegraph - The countries that abolished inheritance tax – and are now booming
2. Expatica - Inheritance tax in Spain: rules for estates
3. Successions in Spain - Inheritance Tax - How it Works
4. Euro News - Inheritance tax across Europe: How do the rules, rates and revenues vary?

Sources last checked on date: 20-Aug-2024