22 January 2025
Receiving inheritance can be an emotional process, and if what you are inheriting comes from Spain, there are lots of other things to consider. Spanish inheritance tax laws can be difficult to negotiate, especially for non-residents inheriting assets from Spain or planning to pass on wealth to loved ones. If you’re a UK citizen who falls into this bracket, it’s essential to understand how Spanish inheritance tax might apply to your situation.
To set you on the right path, we’ve gathered some essential information and provided helpful insights about Spanish inheritance tax rules and how they may impact your estate as a non-resident. However, tax laws can be intricate and frequently change, so take the time to consult a qualified tax professional to ensure you can make an informed decision tailored to your circumstances.
What is inheritance tax?
Inheritance tax—known as IHT in the UK and sometimes called “death tax”—is a tax paid to the state on the property, possessions, savings, investments, and pensions a person inherits from a deceased relative. Most countries, including Spain, have their own inheritance tax system with different rules, rates, and reliefs.
In Spain, inheritance taxes are referred to as succession tax (impuesto de sucesiones y donaciones or ISD) – and are governed by The Spanish General Directorate of Taxes (Agencia Tributaria).
While the Spanish Government follows the rules established by Spain’s Inheritance and Gift Tax Act, each region has the autonomy to modify the tax rates and reliefs that apply to their territory.
Who needs to pay Spanish inheritance tax?
Inheritance tax in Spain applies to residents and non-residents who inherit assets there. The tax liability depends on the residency status of the deceased and their beneficiaries, as well as the location of the asset.
Three key considerations:1
- Non-residents are obliged to pay Spanish inheritance tax only on assets located within Spain.
- In contrast to the UK, the obligation to pay inheritance tax in Spain lies with the person receiving the inheritance, not the estate itself.
- The law applies to both Spanish nationals and expats, including those from the UK, provided they are residing in Spain at the time of death.
The variations in inheritance tax laws mean you must consult a professional to understand which rules apply to you, especially if you reside in or have property in multiple countries.
What is the rate of inheritance tax in Spain?
Inheritance tax rates
In 2015, the European Court of Justice ruled that both residents and non-residents receive the same treatment for tax purposes regarding rates and allowances.
The Spanish government sets progressive inheritance tax rates, which fall within seven brackets, depending on the inheritance amount:2
Value of inherited estate | Inheritance tax rate |
€7,993 or less | 7.65% |
€7,993 to €31,956 | 8.50% to 11.05% |
€31,956 to €79,881 | 11.05% to 16.15% |
€79,881 to €239,389 | 16.15% to 25.50% |
€239,389 to €398,778 | 25.5% to 29.75% |
€398,778 to €797,555 | 29.75% |
€797,555 or higher | 34.00% |
Calculating your Spanish inheritance tax liability
Here’s an overview of how to calculate your inheritance tax liability in Spain:
- Taxable Base: Minus applicable allowances from the value of the inherited assets.
- Initial Tax Amount: Apply the national tax rate to the taxable base.
- Adjusted Tax Amount: Multiply the initial tax amount by the appropriate sum based on the beneficiary’s group and pre-existing wealth.
Paying your inheritance tax in Spain
If you’re liable for Spanish inheritance tax, you must pay it within six months of the estate declaration, regardless of your status as a resident or non-resident – you can apply for an extension if required.3
Each beneficiary must complete a declaration of inheritance tax form and provide a foreigner identity number (NIE). Once the outstanding inheritance tax is paid, the estate will be released by the relevant authority. The payment process depends on the provisions of the autonomous region of Spain the estate resides in.
Lumon: Providing peace of mind for you and your loved ones
Receiving an overseas inheritance can feel overwhelming. At Lumon, we’re here to make transferring your funds as straightforward as possible, allowing you to focus on what matters most, whether you’re receiving or sending money abroad.
Our service is designed around your needs, offering a tailored approach and competitive exchange rates. Your dedicated currency specialist to guide you through your options and provide market insights, helping you get great value from your transfer.
- E-wallet: This allows you to “hold” funds in the currency the inheritance is received in, so you can wait for the rate to improve.
- Experienced personal account manager: Your experienced personal account manager will help you develop a currency strategy that empowers you to transact your inheritance at an optimal time.
- Forward contracts: Our forward contract options allow you to fix an exchange rate before the inheritance is released or secure the price of a foreign property sale as part of an inheritance. This gives you the certainty of knowing what the value will be in your desired currency when the time comes to transact.
- Lumon EU bank accounts: Our EU bank accounts facilitate the direct receipt of funds from foreign solicitors. Therefore, we can receive your foreign currency inheritance without you holding a bank account in that country or currency.
- Dedicated Lumon staff in Spain: Our dedicated Lumon staff in Spain can support and streamline your international payment arrangements with solicitors, lawyers and notary offices.
FAQs about Spanish inheritance tax
Does inheritance tax apply to non-residents in Spain?
Inheritance tax must be paid if the assets being transferred are in Spanish territory, meaning non-residents are subject to this tax.
Do you pay capital gains tax on inherited property in Spain?
If you decide to sell the inherited property, capital gains tax applies to the difference between the property’s acquisition value (value declared in the inheritance tax) and the transfer (sale) value. The tax rate is 24% for non-EU residents.4
Is there a double tax treaty between the UK and Spain for inheritance tax?
The UK and Spain have a double taxation treaty that ensures expats don’t pay tax on the same income twice; however, it doesn’t apply to inheritance. To avoid confusion, seek professional tax advice to confirm which country’s tax laws apply to you and your tax obligations.
How much can you inherit without paying inheritance tax in Spain?
Spanish law provides each beneficiary of your estate a tax-free allowance. This ranges from €7,993 to €47,859 depending on their relationship with you. If the value of your inheritance is below your personal allowance, you won’t pay tax on it.
Sources used:
1 Agencia Tributaria – Inheritance and Gift Tax (non-residents) – Acquisitions ‘Mortis Causa’
2 PWC, Worldwide Tax Summaries – Spanish Gift and Inheritance tax
3 Gobierno De Espana – Inheritance and Gifts: Tax rules
4 PWC Worldwide tax summaries – Spanish Capital gains tax
Sources last checked on date: 08/01/2025
The information provided in this material is accurate to the best of our knowledge at the time of writing (08/01/2025), but it is subject to change. The content is for informational purposes only and does not constitute tax advice. It is essential that individuals seek advice from professional services regarding tax matters. We do not accept liability for any errors or outdated information, and individuals should not rely on the information presented without consulting an expert.