In Spain, inheritance tax is paid by the person who inherits, not by the estate. It applies if you live in Spain, or if what you inherit is in Spain, and it applies even where tax has already been paid in London or New York. Spain has no inheritance tax treaty with either country, so relief has to be claimed unilaterally and is often narrower than families expect. We advise on all three sides of that picture from London, with counsel qualified both as a barrister in England and as an abogado in Spain.
You do, as the beneficiary. That single difference explains most of the trouble families run into.
In the United Kingdom and the United States, the tax is worked out on the estate and paid by the executors before anything is distributed. Spain does the opposite. Under Ley 29/1987, de 18 de diciembre, del Impuesto sobre Sucesiones y Donaciones (https://www.boe.es/buscar/act.php?id=BOE-A-1987-28141), each beneficiary is taxed personally on what they receive.
So two children inheriting equal shares of the same estate can end up with very different bills, depending on where each of them lives, how old they are and what they already own. Planning has to start from the position of the people inheriting, not from the shape of the estate. A structure that works beautifully in London can be worth nothing in Madrid.
In one of two situations, and sometimes both at once.
You live in Spain.
Spanish law calls this obligación personal, under article 6 of Ley 29/1987 (https://www.boe.es/buscar/act.php?id=BOE-A-1987-28141). You are taxed in Spain on everything you inherit anywhere in the world, including assets that never left Britain or America.
The assets are in Spain.
This is obligación real, under article 7 of the same statute. You are not resident in Spain, but the property or rights you receive are there, so only those assets are taxed.
If your family owns a house in Marbella, Ibiza or Sotogrande, you are in the second category. If one of your children has settled in Madrid or Barcelona, you are in both, and that is usually where the complications begin.
These are two separate questions, and they often have different answers.
Spain has a national law, but each autonomous community sets its own allowances, rates and credits. Which community’s rules apply depends on where the deceased lived, where you live and where the Spanish assets are.
The right to choose sits in the second additional provision of Ley 29/1987 (https://www.boe.es/buscar/act.php?id=BOE-A-1987-28141). It was originally limited to residents of the European Union and the European Economic Area, and the Spanish Supreme Court extended it to residents of the rest of the world on free movement of capital grounds. The Spanish Tax Agency now confirms in its own guidance that every non-resident may elect between the State and the regional regime (https://sede.agenciatributaria.gob.es/Sede/no-residentes/impuesto-sobre-sucesiones-donaciones/preguntas-frecuentes.html). After Brexit that matters a great deal to British families, and it matters equally to families in the United States and the Gulf.
One warning. The choice is not made for you. It has to be exercised in the return, on time, and the Spanish tribunals have refused to let people go back and correct it afterwards. It is the most expensive thing we see missed in estates handled from abroad.
There is no single rate. The figure is built up in four steps, and the last one often changes everything.
First, your relationship to the deceased.
Article 20.2(a) of Ley 29/1987 (https://www.boe.es/buscar/act.php?id=BOE-A-1987-28141) sorts beneficiaries into four groups. Group I is children and other descendants under twenty one. Group II is children and descendants of twenty one or over, spouses, parents and other ascendants. Group III covers brothers and sisters, nephews and nieces, uncles and aunts, and certain in-laws. Group IV is everyone else, including cousins and unrelated people. An unmarried partner is not treated as a spouse unless the regional rules say so.
Second, the allowances.
Under the national regime they are modest. Group II receives 15,956.87 euros. Group I receives the same, plus 3,990.72 euros for each year the beneficiary is under twenty one, capped at 47,858.59 euros. Group III receives 7,993.46 euros. Group IV receives nothing.
Two further reliefs matter more in practice. The family home carries a reduction of 95 per cent of its net value, capped at 122,606.47 euros for each beneficiary, and you have to keep the property for ten years after the death. It is available to a spouse, an ascendant or a descendant, or to a brother, sister, nephew, niece, uncle or aunt over sixty five who had lived with the deceased for the previous two years. The value on which the 95 per cent bites is net of charges and of a proportionate share of the debts and expenses of the estate, which the Spanish tax authorities confirmed in Resolución 2/1999, de 23 de marzo, de la Dirección General de Tributos (https://www.boe.es/buscar/act.php?id=BOE-A-1999-8180). The ten year rule is a genuine trap for foreign families who inherit a Spanish house and sell it once the market suits them, though most regions shorten it to five years under their own legislation. A family business or a qualifying shareholding carries a reduction of 95 per cent on similar terms, improved to 99 per cent in several regions.
Third, the scale.
Article 21 sets a progressive tariff of sixteen bands running from 7.65 per cent to 34 per cent.
Fourth, the multiplier.
Article 22 then multiplies the result by a coefficient of between 1.0 and 2.4, set by your group and by the wealth you already own. For a distant relative or a friend, this pushes the effective rate well above 34 per cent.
Some regions then apply a credit at the very end, and this is where the arithmetic can change entirely. Madrid gives 99 per cent to Groups I and II. Since 1 July 2025 it also gives 50 per cent to the whole of Group III, up from the 25 per cent introduced in 2022, under Ley 2/2025, de 25 de junio (https://www.boe.es/buscar/doc.php?id=BOE-A-2025-19345), published in the regional gazette at https://www.bocm.es/boletin/CM_Orden_BOCM/2025/06/27/BOCM-20250627-1.PDF. That makes a real difference to brothers, sisters, nephews and nieces inheriting there. Andalucía, Valencia, Murcia and the Canaries run their own versions, generous but not identical.
The practical result is that the same house, passing to the same child, can cost almost nothing in one region and a great deal in another. Working out which region governs, and whether you are entitled to choose it, is the first thing to get right.
Since 1 January 2022, Spanish property is valued for inheritance tax at the valor de referencia, a reference value published by the Dirección General del Catastro, unless you declare something higher. You can look up the figure for any property at the Catastro’s electronic office (https://www1.sedecatastro.gob.es/Accesos/SECAccvr.aspx), and the Catastro publishes its own explanation of how the value is built at https://www.catastro.hacienda.gob.es/es-ES/faqs.html.
The reference value is calculated from local sale statistics. It ignores the state of the individual house, so a run-down cottage and a fully renovated one on the same street can carry the same figure.
This matters more than it first appears. Whatever value you put in the inheritance tax return becomes your acquisition cost if you later sell. Where the regional rules mean a higher declared value costs you little or no inheritance tax, declaring above the reference value can save a lot of capital gains tax later. If you do that, get a proper valuation report and file it with the return, because the burden of justifying the figure falls on you.
There is also a separate local tax on the increase in urban land value, the plusvalía municipal, charged by the town hall. The method you choose to calculate it can make a real difference to the amount.
Six months from the date of death, under article 67 of the Regulation approved by Real Decreto 1629/1991, de 8 de noviembre (https://www.boe.es/buscar/act.php?id=BOE-A-1991-27678). You can ask for one extension of a further six months, but the request has to be in within the first five months. After that it is refused, whatever the reason.
This catches almost everyone, because the clock runs from the death and not from the grant of probate. English probate rarely finishes inside six months, and American probate almost never does. Surcharges and interest fall on you personally, and Spanish banks will not release money until they see the return has been filed.
The answer is to start the Spanish process alongside the domestic one rather than after it.
United Kingdom inheritance tax is charged at 40 per cent above the nil rate band of 325,000 pounds, with a further residence nil rate band of up to 175,000 pounds where a home passes to children or grandchildren. The second band tapers away once the estate passes 2 million pounds. Anything a spouse has not used can be transferred, so a couple can often shelter up to a million pounds between them. Current guidance is at https://www.gov.uk/inheritance-tax.
All three figures are frozen until April 2031, after the Autumn Budget of 26 November 2025 extended the freeze by a further year from the previous end date of April 2030. The main band has now stood at 325,000 pounds since 2009, so each year of rising property values quietly brings more estates into the charge.
What changed fundamentally is not the rate but who is caught. From 6 April 2025 domicile no longer decides the question. Section 44 of the Finance Act 2025 (https://www.legislation.gov.uk/ukpga/2025/8/section/44) replaced it with a residence test and inserted new sections 6A and 6B into the Inheritance Tax Act 1984 (https://www.legislation.gov.uk/ukpga/1984/51). You are now a long-term UK resident, and taxable on your worldwide estate, if you were UK resident for at least ten of the previous twenty tax years.
Leaving the country does not end the exposure at once. There is a tail, running from three to ten tax years after you cease to be resident. Three years if you were here for ten to thirteen of the previous twenty, then one more year for each additional year of residence, up to ten years for anyone who was here twenty years or more. The clock only resets after ten consecutive tax years of non-residence.
Three things follow for families with a Spanish connection.
If you have been in Spain long enough for the tail to expire, your Spanish house may sit outside the UK charge altogether while remaining fully taxable in Spain. That can be good news, but it also means there is no UK tax to credit against the Spanish bill, and families are sometimes surprised to find they have moved from one charge to another rather than out of both.
If you have moved to the United Kingdom and stayed ten years, your Spanish property is drawn into the UK charge in a way it was not before.
And if your will, your pension nominations or your life policies were drafted before April 2025 around the idea of domicile, they rest on an assumption that no longer holds. There is also an election under section 267ZA of the Inheritance Tax Act 1984 (https://www.legislation.gov.uk/ukpga/1984/51) allowing a non-long-term-resident spouse to be treated as one, which unlocks the unlimited spousal exemption but brings that spouse’s own worldwide estate into the UK charge, and it keeps working for ten years after they cease to qualify. It is a useful tool and an expensive mistake in equal measure, so it is worth taking advice before making it rather than after.
This one surprises people, so it is worth setting out plainly. The Internal Revenue Service sets out the basic framework at https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax.
If you are a United States citizen or green card holder, you are taxed on everything you own anywhere, with an exemption of 15 million dollars from January 2026 and a top rate of 40 per cent.
If you are neither, but you own American assets, the exemption is 60,000 dollars. Not 15 million. Sixty thousand, and it is not adjusted for inflation. American real estate and shares in American companies count. Cash in a US bank account and the proceeds of a life policy on your own life generally do not. The IRS explains the position for non-citizens at https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax-for-nonresidents-not-citizens-of-the-united-states, and confirms the 60,000 dollar filing threshold at https://www.irs.gov/individuals/international-taxpayers/some-nonresidents-with-us-assets-must-file-estate-tax-returns. A single apartment in Florida can therefore create a substantial American tax bill in an estate with no other connection to the country, and your executors will have to file Form 706-NA within nine months of the death. The instructions are at https://www.irs.gov/instructions/i706na.
Two treaty points matter to our clients.
Britain and the United States signed a dedicated estate, inheritance and gift tax convention in 1978, separate from the income tax treaty. For a UK domiciliary it can turn that 60,000 dollar exemption into a proportionate share of the full American one. The price is disclosing the whole worldwide estate to the IRS.
Spain and the United States have no such treaty. The Americans have sixteen of them, and Spain is not on the list, which the IRS maintains at https://www.irs.gov/businesses/small-businesses-self-employed/estate-gift-tax-treaties-international. The only Spain and United States instruments are on income tax, at https://www.irs.gov/businesses/international-businesses/spain-tax-treaty-documents. So if you are an American living in Spain, or a Spanish resident holding American investments, you are left with unilateral credits alone, and they are awkward to operate because one country taxes the estate and the other taxes the person inheriting.
One further trap. The unlimited spousal exemption in the United States is available only where the surviving spouse is a US citizen. If not, a qualified domestic trust may be needed, and that brings you straight back to the Spanish problem with trusts described below.
Yes in principle, but less often in practice than families hope.
Each country allows a unilateral credit for death duties paid in the other. On the Spanish side it is article 23 of Ley 29/1987 (https://www.boe.es/buscar/act.php?id=BOE-A-1987-28141), on the British side section 159 of the Inheritance Tax Act 1984 (https://www.legislation.gov.uk/ukpga/1984/51), and on the American side section 2014 of the Internal Revenue Code. There is no treaty between Spain and either country to smooth the edges, so three difficulties recur.
Tax has to have actually been paid abroad on the same asset. If a Spanish house passes to a surviving spouse and no UK tax arises, there is nothing to credit, and the Spanish bill stands on its own.
Where foreign tax has been paid on the estate as a whole, someone has to work out how much of it belongs to your share and prove it to the Spanish authorities. Neither the UK nor the US system produces that calculation for you. It has to be built, and sometimes it costs more to build than it saves.
And the values declared in each country have to match. Where they do not, neither HM Revenue and Customs nor the IRS can reconcile them, and the claim fails. In our experience that is the commonest reason for a refusal.
We look at the wider arithmetic of moving between the two systems in Taxing income or taxing wealth, the real arithmetic of an Anglo-Spanish move (https://www.theinternationalprivateclient.com/2026/07/taxing-income-or-taxing-wealth-the-real-arithmetic-of-an-anglo-spanish-move/).
Usually yes, and the two need to be written together.
The normal arrangement is a Spanish will for the Spanish assets and a home will for everything else, each carefully limited so that neither cancels the other. The standard revocation clause in an English or American will is wide enough to destroy an earlier Spanish will, and we see it happen regularly.
A Spanish will is signed before a notary and recorded in the central register of wills, the Registro General de Actos de Última Voluntad, held by the Spanish Ministry of Justice. That entry is what lets the notary find the right document after a death, and it saves your family months.
Not if your will makes the right choice of law.
Under Regulation (EU) No 650/2012 (https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32012R0650), known as Brussels IV, your succession is governed by the law of where you habitually live under article 21, unless you choose the law of your nationality under article 22. Article 20 gives the Regulation universal application, so Spain applies it even though neither the United Kingdom nor the United States takes part in it. A British national can therefore choose English law and an American can choose the law of their State.
The choice has to be written into the will, and written properly. Both countries contain more than one legal system, so the will needs to say which one.
If you make no choice and the general Spanish rules apply, two thirds of your estate is reserved for your children under article 808 of the Código Civil. One third goes to them in equal shares, and the other third can be divided among them unevenly. Your spouse is not left out but takes a life interest, usually a usufruct over that second third under article 834. Where there are no children, your parents become the protected heirs.
Six regions apply their own succession law instead, and the difference is not marginal.
In Catalonia, article 451-5 of the fourth book of the Catalan Civil Code, approved by Ley 10/2008, de 10 de julio (https://www.boe.es/buscar/act.php?id=BOE-A-2008-13533), fixes the reserved share at a quarter of the estate, and it is a claim for money rather than a right to the assets themselves, so your children cannot insist on a share of the house. A surviving spouse or registered partner may also claim the quarta vidual, where the quarter operates as a ceiling rather than an entitlement.
In the Basque Country, article 49 of Ley 5/2015, de 25 de junio, de Derecho Civil Vasco (https://www.boe.es/buscar/act.php?id=BOE-A-2015-8273), fixes the reserved share for children at a third, and it is collective, which means you can leave the whole of it to one child and nothing to the others. Article 52 gives the surviving spouse or partner a usufruct over half the estate where there are children, and two thirds where there are not. Bizkaia and the Alava municipalities of Aramaio and Llodio add rules of troncalidad that override the reserved share for certain land.
Navarre, Aragon, the Balearics and Galicia each differ again, and Navarre comes close to complete freedom of disposition.
Which of these applies depends on the vecindad civil of the deceased, not on where the house is, and it has to be established before anyone advises you on what you can and cannot do with your estate.
Two things the choice of law will not do. It does not decide which country’s courts have jurisdiction, and it does not change the tax. Spanish inheritance tax applies to Spanish assets whichever law governs who inherits them, and there are estates where applying Spanish succession law actually costs the family less.
Spanish intestacy rules take over for the Spanish assets. Children come first, subject to the surviving spouse’s life interest, then parents, then the spouse, then wider family, and ultimately the State.
The estate can still be administered, but it needs a formal declaration of heirs before a notary, it adds months, and it removes any chance of having planned the tax.
For Spanish assets, they need a hard look, and many older structures now cause more difficulty than they prevent.
Spanish law does not recognise the trust, and Spain has never ratified the Hague Convention of 1 July 1985 on the Law Applicable to Trusts and on their Recognition. The Spanish tax authorities have dealt with trusts case by case, and a pattern has emerged. They tend to look through the trust where doing so produces more tax, and to respect it where that produces more tax. We call this selective transparency, and it makes the treatment of a trust holding Spanish assets very hard to predict.
We set the problem out in Anglo-Saxon trusts in Spain, the problem of selective transparency (https://www.theinternationalprivateclient.com/2026/06/anglo-saxon-trusts-in-spain-the-problem-of-selective-transparency/), and look at how another civil law country solved the same puzzle in Common law and continental law on trusts, the Dutch example (https://www.theinternationalprivateclient.com/2026/06/common-and-continental-law-on-trusts/). Families with Latin American connections should know that the Colombian fiducia mercantil and the fideicomiso are not trusts and will not fill the gap, which we explain in Neither fiducia nor fideicomiso is a trust (https://www.theinternationalprivateclient.com/2026/08/neither-fiducia-nor-fideicomiso-is-a-trust-a-colombian-and-spanish-perspective/).
Holding a Spanish property through a company brings its own problems, including a special annual charge where the company is resident in a listed jurisdiction, and it does not take the asset out of Spanish inheritance tax in the hands of whoever inherits. We look at where that leaves British, Irish, American and Gulf owners in Rethinking the Spanish property corporate shield (https://www.theinternationalprivateclient.com/2026/06/the-spanish-holiday-home-for-the-usa-irish-and-uk-property-owner/).
One idea that appeals to English advisers is to treat a life interest trust as the Spanish usufructo vitalicio. It is a tempting comparison, and it is not safe to rely on.
If you are tax resident in Spain and you inherit assets abroad, you enter Spain’s foreign asset reporting regime. Modelo 720 covers foreign accounts, investments, insurance and property above the thresholds, and Modelo 721 covers cryptocurrency held abroad. These are separate from the inheritance tax return and carry their own penalties, which were substantially reformed after the Court of Justice of the European Union ruled against Spain in Case C-788/19 on 27 January 2022.
Inheriting a share of a British bank account, an ISA, an American brokerage account or the family house will bring you within these rules in the year you receive it.
Spain.
Ley 29/1987, consolidated, at https://www.boe.es/buscar/act.php?id=BOE-A-1987-28141. The Regulation, Real Decreto 1629/1991, at https://www.boe.es/buscar/act.php?id=BOE-A-1991-27678. The Spanish Tax Agency pages for non-residents at https://sede.agenciatributaria.gob.es/Sede/no-residentes/impuesto-sobre-sucesiones-donaciones/preguntas-frecuentes.html. Reference values at https://www1.sedecatastro.gob.es/Accesos/SECAccvr.aspx.
United Kingdom.
HMRC guidance at https://www.gov.uk/inheritance-tax. The Inheritance Tax Act 1984 at https://www.legislation.gov.uk/ukpga/1984/51. The long-term residence reform at https://www.legislation.gov.uk/ukpga/2025/8/section/44.
United States.
Estate tax generally at https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax. Non-citizens at https://www.irs.gov/businesses/small-businesses-self-employed/estate-tax-for-nonresidents-not-citizens-of-the-united-states. Form 706-NA instructions at https://www.irs.gov/instructions/i706na. Estate and gift tax treaties at https://www.irs.gov/businesses/small-businesses-self-employed/estate-gift-tax-treaties-international.
European Union.
Regulation (EU) No 650/2012 at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex%3A32012R0650.
We are a London practice working across the United Kingdom, Spain, Ireland, Latin America and the Gulf. The Spanish work is done here, by lawyers qualified in Spain and by counsel qualified in both countries. We do not send it out to a correspondent firm and wait.
León Fernando Del Canto is a barrister of England and Wales, called by Lincoln's Inn in 2006 and an Ad Eundem member of Middle Temple, and an abogado of the Madrid Bar. Solicitors instruct him as an expert on Anglo-Spanish tax, and he has given opinions of counsel for use in court.
We draft Spanish, English and American wills that work together, advise on which regional regime to elect, recover overpaid Spanish inheritance tax, act in contested estates, and work through how the new UK residence rules, US estate tax and the Spanish ISD interact for your family. We take instructions from solicitors and other advisers, and directly from clients under the Public Access scheme.
Del Canto Chambers has a specialised team ready and eager to support you to apply for Spanish nationality. If you are interested in applying and would like to know if you are eligible, we would be delighted to help you.
This page describes the general position in Spanish, English and United States federal law as at August 2026 and is not legal advice. Spanish inheritance tax turns on the facts, and the regional rules change often.
Del Canto Chambers specialists are constantly up to date with new legislative changes and aware of any Spanish tax and legal implications. Contact our Spanish legal and tax specialists to find out the best tax planning and corporate structures in your circumstances.
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