Do you own property, savings, or have family in Spain and wonder how much inheritance tax you’d have to pay? Here’s some good news: in many cases you can inherit tax-free, or at least reduce the tax bill significantly. This guide explains how Spain’s inheritance tax exemptions work, the key regional differences, and how you can make the most of them.
What Is Inheritance Tax in Spain?
Inheritance tax (Impuesto de Sucesiones) is a levy heirs must pay on what they inherit in Spain. The amount depends on two factors: the value of the inheritance and your relationship to the deceased.
Spain applies a progressive tax rate from 7.65% to 34%. But this is before exemptions, and these are often far more generous than people expect, especially in regions popular with foreign residents, such as Andalusia, Valencia, or Madrid.
Tax-Free Allowances and Exemptions
Every heir is entitled to a basic allowance. At the national level, this is only about €15.957 for a spouse or child. But the real difference comes from regional rules.
Spouses and Children
In Andalusia, Valencia, and Madrid, exemptions can reach €100.000 or even €1.000.000, with a 99% reduction above that. On the Balearic Islands, spouses and children benefit from a full 100% exemption. In practice, this means that in many regions they inherit almost entirely tax-free.
Minors
Children under 21 benefit from higher allowances, often up to €47.000, and in Valencia even as much as €156.000. For them too, inheritance tax is usually negligible.
Other Relatives and Non-Relatives
Siblings, cousins, and friends don’t enjoy the same generous treatment. Their exemptions are usually only around €8.000, meaning they can face a much higher tax bill. Some regions, such as Madrid, now grant a 50% reduction for this group, but a full exemption is rare.
Regional Differences
Spain’s inheritance tax rules vary widely by region. In Andalusia, Madrid, Valencia, Murcia, the Balearic Islands, and the Canary Islands, the tax has been all but eliminated for close family.
But in Catalonia and Navarre, allowances are lower and rates higher. For example, if the deceased lived in Barcelona, heirs can still face a tax bill of several thousand euros.
How to Maximize Your Tax Savings
A few practical strategies:
- Claim your exemption: You’re entitled to it, but you must actively apply and provide proof (e.g., family relationship, age).
- Distribute wisely: If there are several heirs, splitting the estate in line with allowances can minimize the overall tax burden.
- Plan ahead: A well-drafted will allows you to direct assets strategically, for example leaving more to the surviving spouse who benefits from a higher exemption.
- Get professional advice: Work with an expert familiar with both Spanish and your home country’s inheritance laws.
Practical Ways to Reduce or Avoid Inheritance Tax
- Make lifetime gifts: In many regions, the same 99% reduction applies to gifts as to inheritances.
- Consider your residency: Relocating to a region with more favorable tax rules can make a big difference.
- Avoid double taxation: Spain and the Netherlands don’t have a treaty, but careful planning and deduction options can prevent you from being taxed twice.
- Have a solid will: Ideally, bilingual and structured to fit the laws of both countries.
FAQs
Do non-residents pay inheritance tax?
Yes. If you inherit assets located in Spain, or from someone resident there, you must pay Spanish inheritance tax. But as an EU citizen, you’re entitled to the same regional exemptions as residents.
How much can spouses and children inherit tax-free?
In many regions, virtually unlimited amounts. For example, €1.000.000 plus a 99% reduction in Andalusia, or a full exemption in the Balearic Islands.
Can I avoid double taxation?
In most cases, yes. With proper tax planning, wills, and deduction strategies, you can prevent paying inheritance tax twice.
What’s the deadline?
Inheritance tax must be filed within six months of the death. An extension to 12 months is possible, but you need to apply for it within five months.
Conclusion
Inheritance tax in Spain is no longer as heavy as it once was. In many regions, spouses and children can now inherit tax-free, provided you prepare in advance.
Want to be certain about your own situation? Speak to a legal expert who understands both Spanish and international inheritance law. That way, you’ll keep as much of your inheritance as possible, without paying unnecessary tax.