Inheritance and Estate Tax in Spain

Spain levies its inheritance and gift tax -- the Impuesto sobre Sucesiones y Donaciones (ISD), governed by Ley 29/1987 -- on the beneficiary, not on the estate as a whole. Each heir or donee calculates and files independently. Three events trigger ISD: inheriting assets on death (mortis causa), receiving a lifetime gift (inter vivos donation), and collecting life-insurance proceeds where the policyholder and beneficiary differ. The taxable base is the net value received -- assets less deductible liabilities -- measured at the date of death or the date of the gift.

What does the state progressive scale look like?

The state tariff (Articulo 21 of Ley 29/1987) is progressive across eight brackets, ranging from 7.65% on the first EUR 7,993 up to 34% on amounts above EUR 797,555. After applying the relevant bracket rate, the result is multiplied by a coefficient that depends on the beneficiary's kinship group and pre-existing wealth (see table below). The effect of the multiplier is significant: a Group IV beneficiary (unrelated person) with substantial pre-existing assets faces a coefficient of up to 2.4, pushing the worst-case combined effective rate above 80%. In practice, autonomous-community reductions overlay this state calculation heavily, so the unadjusted state figure rarely represents the amount actually paid.

Source: Ley 29/1987, Articulo 21; table condensed for readability -- see AEAT for the full 16-band schedule.

How do kinship groups and pre-existing wealth multipliers work?

Every beneficiary is assigned to one of four groups (Grupos I-IV) based on their relationship to the deceased or donor. Groups determine both the personal allowance deducted from the taxable base and the multiplier coefficient applied to the initial tax figure.

Group I -- descendants and adoptees under 21 years of age. State personal allowance: EUR 15,957 plus EUR 3,991 for each year under 21, capped at EUR 47,859.

Group II -- descendants and adoptees aged 21 or over, spouses, and ascendants (parents, grandparents). State personal allowance: EUR 15,957.

Group III -- collateral relatives of the second and third degree: siblings, uncles and aunts, nephews and nieces, parents-in-law, and affinity relatives of equivalent degree. State allowance: EUR 7,993.

Group IV -- cousins, more distant relatives, and unrelated persons. No state personal allowance.

After calculating the initial tax using the bracket table, a pre-existing-wealth multiplier adjusts the result upward if the beneficiary already holds significant assets. At zero to EUR 402,678 of prior wealth, Groups I and II pay no uplift (multiplier 1.0000); Group III is multiplied by 1.5882; Group IV by 2.0000. At the highest wealth tier (above EUR 4,020,771 pre-existing), Groups I-II face a 1.2000 coefficient, Group III 1.9059, and Group IV 2.4000. The coefficients compound against the already-progressive bracket rate, which is why the theoretical ceiling exceeds 80% for a wealthy unrelated beneficiary applying the pure state scale -- a scenario that is rare because autonomous-community bonificaciones intervene before that ceiling is reached.

How much does the autonomous community where the decedent lived change the outcome?

This is the defining feature of Spanish ISD. Under Ley 22/2009, the 17 autonomous communities under the common fiscal regime each have full normative power to set their own allowances, rate scales, and bonificaciones (post-tax rebates). The Basque Country (Alava, Guipuzcoa, Biscay) and Navarre operate entirely separate foral regimes under economic agreements with the central state and are outside the common regime.

The result is dramatic regional variation:

• Madrid applies a 99% bonificacion on the full ISD liability for Group I and II beneficiaries (descendants and spouse), effectively reducing the tax to near zero for direct family on estates of any size. A EUR 5 million inheritance between parent and adult child in Madrid generates a few hundred euros of ISD in practice.
• Andalusia matches the 99% bonificacion for Groups I and II and raises the personal allowance to EUR 1,000,000 for those groups. Since 2023 it has extended a 99% bonificacion to Group III as well.
• Valencia (Comunitat Valenciana) grants a 99% bonificacion to Groups I and II plus a EUR 100,000 base allowance, and since June 2026 has introduced a 25% bonificacion for Group III (siblings, uncles, nephews) rising to 50% by June 2027.
• Canary Islands provides a 99.9% bonificacion for Groups I, II, and III -- the most generous treatment in Spain for collateral relatives.
• Galicia, La Rioja, Murcia, Cantabria, and Castilla-La Mancha each apply 99% bonificaciones for Groups I and II.
• Catalonia does not operate a blanket bonificacion. Instead it uses a sliding personal allowance: EUR 275,000 for children up to age 21 (with an additional EUR 33,000 per year under 21, capped at EUR 539,000), EUR 100,000 for adult children over 21, and EUR 500,000 for spouses and registered partners. The effective rate for Group II on mid-sized estates runs roughly 7-21%, substantially higher than the 99%-bonificacion regions.
• Asturias retains the state scale largely unmodified above a EUR 300,000 base allowance for Group I and II, producing the highest residual liability among common-regime regions for large estates.

For more information on how residence and tax obligations interact across Spain, see the Spain country overview.

What rules apply to non-residents inheriting Spanish assets?

Prior to 2015, non-residents were forced to apply the state scale without any access to autonomous-community bonificaciones -- a regime that created stark discrimination between, for example, a Spanish-resident child and a UK-resident child inheriting the same Madrid apartment. The European Court of Justice addressed this in Case C-127/12 (3 September 2014), ruling that Spain's approach constituted a restriction on the free movement of capital under Article 63 TFEU.

Ley 26/2014, effective 1 January 2015, implemented the judgment by allowing non-resident EU and EEA heirs to elect to apply the rules of the autonomous community where the highest-value Spanish asset is situated. If the deceased was a non-resident, the rules of the community where the highest-value Spanish immovable property is located apply. If both parties (deceased and heir) are non-residents, the community with the most valuable in-Spain assets governs.

The Spanish Supreme Court extended this entitlement to non-EU and non-EEA residents in its ruling of 19 February 2018 (Sentence 242/2018, reaffirmed in Sentences 488/2018 and 493/2018), finding that the free movement of capital principle under Article 63 TFEU applies vis-a-vis third countries as well as EU member states. A US-resident heir inheriting EUR 2 million of Madrid real estate therefore applies Madrid's 99% bonificacion, not the unmodified state scale.

Non-residents file using Modelo 650 (inheritances) or Modelo 651 (gifts), submitted to the Agencia Tributaria's National Tax Management Office (ONGT) or the delegation corresponding to the location of the Spanish assets. Non-EU/EEA residents are required to appoint a fiscal representative in Spain. Foreign documents must be apostilled and accompanied by a sworn translation.

What is the filing deadline and what happens if it is missed?

For inheritances, the deadline is six months from the date of death. An extension of a further six months (making twelve months total) may be requested in writing within the first five months -- the request itself does not automatically grant the extension, and AEAT approval is required. For lifetime gifts, the deadline is thirty working days from the date of the deed of gift.

Late filing without an extension produces a surcharge under Article 27 of Ley 58/2003 (Ley General Tributaria): 5% if filed within three months of the deadline, 10% if within six months, 15% if within twelve months, and 20% plus interest at the prevailing legal-tax rate (currently 4.0625% per annum) for filings more than twelve months late. These surcharges apply on top of the tax owed. The 6-month clock is one of the most commonly missed deadlines in Spanish cross-border inheritance matters, and a qualified tax professional familiar with ISD procedure should be engaged promptly on the death of a Spanish-asset holder.

The variation illustrated above underscores why location of the decedent's habitual residence -- or the location of the highest-value Spanish asset for non-resident cases -- is often the single most consequential factor in determining Spanish ISD exposure. A qualified tax professional with cross-regional ISD experience can help assess which community's rules govern and what documentation is required to support any election.