Taxes in Spain for non-residents and foreigners: Inheritance Taxes

This article is part of our guide Taxes in Spain for non-residents and foreigners which you will find in our Taxes in Spain for foreigners section.

As in most countries, in Spain the State likes to keep a part of your estate when you die. How much they will receive depends largely on how well you plan your affairs.

The whole system of death taxation is very different from those in other countries, so it poses a real danger to non-residents and foreigners, who unconsciously assume that similar provisions will apply and organise their affairs accordingly. Some differences are: In Spain there is no automatic inheritance by a spouse or other co-owner of the deceased co-owner’s share in any property. If left by will or intestate succession to the other co-owner, the gift will be subject to tax.

The amount of tax payable is not determined by the size of the entire estate – as in England, for example – but by the size of the individual inheritance. The tax is progressive: the more you inherit, the higher the tax rate you pay.

Close relatives pay a lower rate of tax than more distant relatives, who in turn pay less tax than strangers.

Close relatives are also entitled to receive a tax-free amount. More distant relatives and strangers are not.

Those who are already wealthy when they inherit pay more tax than beneficiaries who are poor, although, as in the case of foreigners the only assets taken into account are Spanish assets, this rarely causes difficulties in practice.

Penalties are imposed if the tax due is not paid within 6 months of the date of death.

In many cases where the payment of substantial taxes will be a problem, it is possible to dispose of the assets during the owner’s lifetime much more cheaply than on death.

In many regions, substantial tax relief is available when both the deceased and the beneficiaries are resident in the region. When the beneficiaries are close relatives, there may even be no inheritance tax payable.

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