Spain inheritance tax and succession tax in Spain: 2026 complete guide for expats and non-residents

Spain levies a national inheritance and gift tax – Impuesto sobre Sucesiones y Donaciones, or ISD – on heirs and beneficiaries, not on the estate itself.

Both residents and non-residents can be liable.

Quick answer box

• Who pays: each heir individually, based on the value received and their relationship to the deceased
• Form to file: Modelo 650 – the self-assessment inheritance tax return
• National rate range: 7.65%–34% before the patrimony multiplier, but most heirs in major regions pay far less after regional bonuses
• Filing deadline: six months from the date of death, with a possible six-month extension

What you'll learn in this guide:

• How Spain's national ISD scale works and how regional bonuses can reduce a five-figure bill to under €1,000
• Which Spanish and US forms apply when you inherit assets in Spain
• How US citizens can reduce double taxation using the IRC §2014 credit and the stepped-up basis rule

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Who must pay inheritance tax in Spain: residents vs. non-residents

Any individual who inherits assets located in Spain, or who is a Spanish tax resident inheriting assets anywhere in the world, is subject to ISD. The tax falls on the heir, not on the estate.

The rules for inheritance tax in Spain for non-residents turn on two connecting factors: where the heir lives and where the assets sit.

Residents

Spanish tax residents – those who spend 183 or more days per year in Spain, or whose center of economic interests is in Spain – pay ISD on the worldwide value of inherited assets.

Non-resident EU/EEA heirs

Non-resident EU/EEA heirs pay ISD only on assets located in Spain and can apply the autonomous community rules of the region where the assets sit or where the deceased lived.

Non-resident non-EU heirs, including Americans

Following the 2018 Spanish Supreme Court rulings and a 2021 legislative amendment, non-EU heirs can also apply the relevant regional rules – not just the national scale.

This is the single most valuable point for American readers: a US heir inheriting from a parent who lived in Madrid can use the 99% regional bonus. On a €400,000 inheritance, a national-scale bill of roughly €76,900 drops to about €770.

In Andalusia, the same €400,000 inheritance would owe €0, since Andalusia's €1,000,000 total kinship reduction for Group I and II heirs brings the taxable base to zero before the bonus is even needed.

The US applies its own residency tests – citizenship, green card status, and the substantial presence test – which operate independently of Spain's 183-day rule.

Spain inheritance tax rates: national scale and how brackets work

Spain's national ISD rate scale runs from 7.65% to 34% across 16 brackets under Ley 29/1987, art. 21. The effective rate is then multiplied by a coefficient based on the heir's pre-existing wealth and kinship group.

This national scale is a fallback. It applies only where an autonomous community has not legislated its own rates or where its rules do not cover the heir.

National ISD rate scale – Ley 29/1987, art. 21.2

 

The patrimony multiplier

After the base tax is calculated, it is multiplied by a coefficient – the coeficiente multiplicador – that ranges from 1.0000 for Group I and II heirs with modest pre-existing wealth up to 2.4000 for Group IV heirs – unrelated parties – with assets above €4,020,771.

At the top bracket, this means the effective marginal rate can reach 34% × 2.4 = 81.6% for distant heirs before any regional relief. For close relatives, the multiplier is typically 1.0, and regional bonuses reduce the final bill by 99% in most major communities.

Kinship groups and allowances: how family relationships reduce your bill

Spain divides heirs into four kinship groups, each with a different national personal allowance under Ley 29/1987, art. 20.2.a. Autonomous communities may increase these allowances or replace them entirely.

1. Group I – descendants and adoptees under 21: €15,956.87, plus €3,990.72 for each year under 21, capped at €47,858.59
2. Group II – descendants 21+, spouses, ascendants, and adopters: €15,956.87
3. Group III – second- and third-degree relatives – siblings, nephews/nieces, aunts/uncles, in-laws: €7,993.46
4. Group IV – more distant relatives and unrelated parties: no national allowance

Additional national reductions

Beyond the kinship allowances, national law provides reductions for specific circumstances:

• Disability: €47,858.59 at 33–65% disability; €150,253.03 above 65%
• Life insurance to close family: 100%, capped at €9,195.49
• Family business: 95%
• Main home: 95%, capped at €122,606.47 per heir, with a 10-year holding requirement

These figures apply only where a region has not set its own reductions. Most major regions have replaced them with significantly higher amounts.

Regional variations: inheritance tax in Andalusia, Valencia, Catalonia, and beyond

Spain grants its 17 autonomous communities the power to modify ISD allowances, rates, and bonuses – meaning the effective tax burden can differ dramatically depending on where the deceased or the assets are located.

The variation in inheritance tax in Spain by region is the single biggest factor in what you actually pay. For Group I and II heirs – spouses, children, parents – the major regions offer the following:

• Andalusia: 99% bonus on ISD for Group I and II heirs, in effect since April 2019 under Decreto-ley 1/2019, now codified in Ley 5/2021. Group I and II heirs get a total kinship reduction of €1,000,000, replacing the smaller national allowance.
• Madrid: 99% bonus for Group I and II heirs. A 50% bonus for Group III – siblings, nephews/nieces – since July 2025 under Ley 2/2025.
• Valencia: €100,000 reduction for Group II; €100,000 plus €8,000 per year under 21 for Group I, capped at €156,000. A 99% bonus applies under Ley 6/2023.
• Catalonia: 99% bonus for spouses and registered partners. Other Group II heirs – adult children, ascendants – apply a declining bonus that shrinks as the taxable base grows, falling well short of the spouse's 99%. The exact bracket percentages change with each autonomic budget law, so confirm the current scale directly on the Agència Tributària de Catalunya's website before citing a specific figure to a reader.

Non-residents were historically limited to the national scale, but this changed through the 2014 CJEU ruling for EU/EEA heirs, the 2018 Supreme Court decisions for non-EU heirs, and a 2021 statutory amendment.

Spanish inheritance tax for foreigners and non-residents: the EU succession regulation

Following the EU Succession Regulation – 650/2012 – and subsequent court rulings, non-resident EU/EEA heirs can apply the autonomous community rules of the region where the assets are located. Since 2018, non-EU heirs, including Americans, can do the same.

The EU succession regulation in Spain governs which country's succession law applies to a cross-border inheritance. It does not directly set tax rates, but it had a major practical effect on tax treatment for non-residents.

How non-residents gained access to regional rules

Before 2014, non-resident heirs paid ISD under the less generous national scale regardless of where the Spanish assets sat. Three developments changed this:

1. 2014 CJEU ruling – Case C-127/12: the Court held Spain breached free movement of capital by denying regional benefits to non-residents. Spain responded by extending regional access to EU/EEA heirs from January 1, 2015.
2. 2018 Supreme Court rulings – STS 242/2018 and others: the Tribunal Supremo ruled that limiting regional access to EU/EEA heirs still discriminated against third-country residents. The tax administration accepted this in binding ruling V3151-18.
3. 2021 statutory amendment – Ley 11/2021: codified full regional access for all non-residents, regardless of nationality.

Which region's rules apply

For a non-EU heir, the connecting factor works like this: if the deceased was resident in a Spanish region, that region's rules apply. If the deceased was not a Spanish resident, the rules of the region where the highest-value Spanish assets are located apply.

Inheritance tax in Spain for Americans: what US expats and citizens need to know

US citizens inheriting assets in Spain face a dual-layer obligation – Spanish ISD on the Spanish assets and potential US reporting requirements – because the US taxes its citizens on worldwide income and transfers regardless of where they live.

No US-Spain estate tax treaty

The IRS estate and gift tax treaty list does not include Spain. There is no treaty-based credit mechanism, so relief comes only from US domestic law.

US federal estate tax

US estate tax applies to the worldwide estate of a US citizen above the $13,990,000 basic exclusion amount for 2025. Form 706 is the return. Given the high exclusion, most estates owe nothing.

Credit for Spanish ISD

If the US estate does owe tax, the executor can claim a credit for Spanish ISD paid under IRC §2014 on Form 706, Schedule P. This is not claimed on Form 1116 – that form is for foreign income tax credits, and ISD is not an income tax.

Form 3520 reporting

Form 3520 is required if you receive a bequest from a foreign person exceeding $100,000 in a tax year. It is an information return – no US tax is owed on the inheritance itself – but the penalty for missing it is 5% of the bequest value per month, up to 25%.

Stepped-up basis in both countries

Under IRC §1014, inherited property receives a basis equal to fair market value at the date of death. There is no US-situs requirement, so this covers Spanish property inherited from a non-US parent. Spain has a parallel rule under IRPF arts. 33.3.b and 36.

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Inheriting property in Spain: ISD, plusvalia, and capital gains considerations

Inheriting Spanish real estate triggers not only ISD but potentially the municipal plusvalia tax and future capital gains tax when the property is eventually sold – each with its own rules and deadlines.

ISD on the property value

The property is valued at the greater of the cadastral reference value – valor de referencia – or the value declared by the heir. This value feeds into the six-step ISD calculation.

Plusvalía municipal – IIVTNU

This is a separate municipal tax on the increase in urban land value since the last transfer.

Following the 2021 Constitutional Court ruling – STC 182/2021 – that struck down the previous calculation method, Royal Decree-Law 26/2021 gave heirs a choice between two methods:

• Objective method: cadastral land value × statutory coefficients based on years of ownership
• Real-gain method: actual increase in land value between acquisition and death

Choose whichever gives the lower base. If the land value has not increased, no plusvalia is owed.

Future capital gains tax on sale

Capital gains tax does not arise at the moment of inheriting – it applies only when the heir later sells the property. Non-resident sellers pay 19% on the net gain.

Spain gives inherited property a stepped-up basis equal to the ISD-declared value under IRPF art. 36. The US also provides a stepped-up basis under IRC §1014. A US heir who sells inherited Spanish property shortly after the death will generally have little or no gain in either country.

US expats who later sell inherited Spanish property report the gain on Form 8949 and Schedule D, with a possible Foreign Tax Credit on Form 1116 for any Spanish CGT paid on the same gain.

Modelo 650: filing the Spanish inheritance tax return

Heirs must file Modelo 650 – the official Spanish inheritance tax self-assessment form – within six months of the date of death, with a possible six-month extension available if requested within the first five months.

Each heir files individually. Joint filing is not permitted – each heir declares their own share of the inheritance on a separate return.

Where to file

The filing destination depends on whether the deceased was a Spanish resident:

• Deceased was a Spanish resident: file with the regional tax office – Agencia Tributaria autonómica – of the region where the deceased had habitual residence
• Deceased was not a Spanish resident, or the heir is non-resident: file with the AEAT – the national tax authority – at the Oficina Nacional de Gestión Tributaria in Madrid or via the online portal

Documents required

You will need the following to complete Modelo 650:

• Death certificate – certificado de defunción
• Last will – testamento – or intestacy declaration – declaración de herederos
• Asset valuations: property reference values, bank certificates, investment statements
• NIE – Número de Identificación de Extranjero – for each non-resident heir

Deadlines, penalties, and interest for late filing of ISD in Spain

The standard filing deadline is six months from the date of death, and late-filing surcharges under Spanish law increase progressively the longer the delay.

Since the 2021 amendment to Ley General Tributaria art. 27, the surcharge for voluntary late filing works as follows:

• Months 1–12: 1% base surcharge plus 1% for each full month of delay. Filing three months late means a 4% surcharge. No penalties apply if you file voluntarily before the tax authority contacts you.
• After 12 months: 15% surcharge plus late-payment interest from the day after the 12-month mark
• Enforcement surcharges – recargos de apremio under Ley General Tributaria art. 28: once the debt enters formal collection, you owe 5% if you pay the full debt before the enforcement notice, 10% if you pay the debt plus this surcharge within the deadline the notice sets, or 20% otherwise – only the 20% tier adds late-payment interest.
• Reduction: the Article 27 late-filing surcharges (the 1%-plus-1%-per-month tier and the 15% tier) are reduced by 25% if you pay the remaining surcharge within the period the General Tax Law sets once HMRC — Agencia Tributaria — notifies you of it. This 25% reduction does not apply to the Article 28 enforcement surcharges (5%, 10%, or 20%); once a debt is in enforcement, the surcharge itself is fixed.

The extension mechanism adds six months to the original deadline – total 12 months from death – but interest accrues during the extension period. The extension must be requested within the first five months.

 

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US reporting obligations when inheriting from a Spanish estate

A US person who receives a foreign inheritance exceeding $100,000 must file Form 3520 with the IRS – failure to file can result in penalties even if no US tax is owed on the inheritance itself.

• Form 3520, Part IV: required if you receive bequests from a foreign person – including a foreign estate – exceeding $100,000 in the aggregate during the tax year. This threshold is statutory and not inflation-adjusted. The penalty for late filing is 5% of the bequest value per month, up to 25%.
• Form 3520 for gifts from foreign entities: separate $20,116 threshold for 2025, adjusted annually for inflation
• FBAR – FinCEN Form 114: required if the aggregate value of your foreign financial accounts – including any inherited Spanish bank accounts – exceeded $10,000 at any point during the calendar year. The deadline is April 15, 2026, with an automatic extension to October 15, 2026.
• Form 8938 – FATCA: required if total specified foreign financial assets exceed $200,000 at year-end or $300,000 at any time for a single filer living abroad. Thresholds are $400,000/$600,000 for married filing jointly.
• Credit for ISD paid: if the US estate owes estate tax above the $13,990,000 exclusion for 2025, the IRC §2014 credit for foreign death taxes can offset it on Form 706, Schedule P – not on Form 1116

If a foreign trust is involved, see our guide on relief from filing Forms 3520-A and 3520 for tax-favored foreign trusts.

FBAR and FATCA: reporting inherited Spanish bank accounts and assets

If you inherit a Spanish bank account and the aggregate value of all your foreign financial accounts exceeds $10,000 at any point during the calendar year, you must file FinCEN Form 114 – even if the account is later closed.

When the reporting obligation begins

You gain a financial interest in the inherited account from the date of the heir's legal acceptance – aceptación de herencia – or the date the account is transferred to your name. From that point, it counts toward the $10,000 aggregate FBAR threshold.

What triggers each form

Each US reporting obligation has its own threshold and scope:

• FBAR: the inherited Spanish bank account, plus any other foreign accounts you hold, exceeds $10,000 in aggregate at any point during the year
• Form 8938: the same inherited account counts toward the FATCA thresholds – $200,000 at year-end or $300,000 at any time for a single filer abroad
• Real estate is not an FBAR account. Direct ownership of Spanish property does not trigger an FBAR. The Spanish bank account used to pay property expenses, IBI, or community fees is what triggers it.

 

US persons with foreign accounts may need up to four separate filings – FBAR, Form 8938, Form 3520, and Form 5471 – depending on account type, entity ownership, and threshold amounts.

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Intestacy and forced heirship rules in Spain: what happens without a will

Under Spanish forced heirship – legítima – rules in the national Civil Code, at least two-thirds of the estate must pass to direct descendants regardless of what a will says, unless the deceased validly elected another country's succession law.

Under the national Civil Code, forced heirship divides the estate into three parts:

• Legítima estricta – strict forced share: one-third, divided equally among direct descendants
• Mejora – improvement third: one-third, which the testator can distribute among descendants but cannot give to outsiders
• Libre disposición – free disposal third: one-third, which the testator can leave to anyone

These shares apply under the national Civil Code, which governs forced heirship in most of Spain. Several regions have their own civil law with different rules. In Catalonia, for example, the reserved share is one-quarter of the estate, not two-thirds, and it works as a cash claim against the heirs rather than a right to specific property.

The Basque Country, Navarre, Aragón, the Balearic Islands, and Galicia also have their own forced-heirship regimes. Which one applies depends on the deceased's vecindad civil – civil-law residence – not their autonomous community for Spanish tax purposes. Confirm the applicable regime before relying on any specific fraction.

The EU election and non-EU heirs

The EU Succession Regulation – which applies to deaths on or after August 17, 2015 – lets any person elect the law of their nationality to govern their succession under Article 22. A French citizen living in Spain, for example, can elect French law, which has different forced heirship rules.

The election is not limited to EU nationals. The Court of Justice of the European Union confirmed that third-country nationals can use it in Case C-21/22, decided on October 12, 2023. A US citizen can therefore elect the law of their US state of domicile for their Spanish estate, and most US states have no forced heirship rules at all. The election generally has to be made expressly, in a will or similar disposition.

Because inheritance law in Spain for foreigners allows this election, US citizens can avoid Spanish forced heirship on their Spanish estate in most US states. Making the election in a Spanish will and coordinating it with a separate US will or trust that covers non-Spanish assets is standard practice for Americans who own property in Spain.

Cross-border estate planning for US expats in Spain

US expats living in Spain need an estate plan that addresses both Spanish forced heirship and ISD rules and the US federal estate and gift tax system – including the US estate tax basic exclusion of $13,990,000 for 2025.

The core challenge is that no bilateral estate tax treaty exists between the US and Spain. Both countries can tax the same assets, and relief comes only from domestic-law mechanisms.

• Spanish ISD taxes the heir on Spanish-sited assets – or worldwide assets if the heir is a Spanish resident
• US federal estate tax taxes the worldwide estate of a US citizen above the basic exclusion – $13,990,000 per individual for 2025, or $27,980,000 for a married couple using portability
• Credit for foreign death taxes – IRC §2014: if the US estate owes tax, the executor can credit ISD paid against the US estate tax liability on Form 706, Schedule P
• Stepped-up basis in both countries: in Spain, the heir's basis is the ISD-declared value under IRPF art. 36. In the US, it is fair market value at the date of death under IRC §1014.

Coordinating a Spanish notarial will with a US will or revocable trust is essential. A Spanish will should cover Spanish assets only, and a US will or trust should cover non-Spanish assets. The Spanish will is also where a US citizen can elect US law to govern the Spanish estate.

The reverse scenario – a non-US person with US assets – faces the $60,000 estate tax filing threshold on Form 706-NA, far lower than the $13,990,000 exclusion available to US citizens.

Let us handle the US side of your Spanish inheritance, from reporting to the §2014 credit.

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Inherited retirement accounts and pensions in Spain: special rules

Inherited Spanish pension plans – planes de pensiones – are subject to income tax under IRPF rather than ISD when the beneficiary draws the funds.

This distinction affects both the tax rate and the timing of the liability.

• Spanish pension plans: inherited funds are taxed as earned income – rendimientos del trabajo – under IRPF when the beneficiary takes a distribution, not as an inheritance under ISD. The timing of withdrawal determines the tax year.
• US-based retirement accounts inherited by Spanish residents: IRAs and 401k plans inherited while living in Spain are subject to US distribution rules and may also trigger Spanish income tax. The US–Spain income tax treaty – signed in 1990, with the 2013 protocol in force since November 2019 – may affect the treatment.
• SECURE Act 10-year rule: most non-spouse beneficiaries of US retirement accounts inherited after 2019 must distribute the entire account within 10 years of the owner's death. The IRS finalized regulations in July 2024 confirming that annual RMDs are required in years 1–9 when the original owner died on or after the required beginning date.

Foreign gift and inheritance penalty changes: IRS compliance updates

The IRS ended its practice of automatically assessing penalties for late-filed Form 3520 foreign gift and inheritance reports in October 2024 – making timely filing and a reasonable cause statement more important than ever.

Key changes announced by IRS Commissioner Werfel at the October 2024 UCLA Tax Controversy Conference:

• Form 3520, Part IV – foreign gifts and bequests: the IRS stopped automatically assessing the 5%-per-month penalty at the time of filing. Instead, the IRS now reviews any reasonable cause statement attached to a late return before assessing a penalty.
• Forms 3520 and 3520-A – trust portions: by the end of 2024, the IRS extended the same pre-assessment review to the trust-reporting sections.
• Penalty amounts unchanged: 5% per month, up to 25%, for Part IV. For trust violations under IRC §6677, the greater of $10,000 or 35% of the gross reportable amount applies to unreported transfers to, or distributions from, a foreign trust (Form 3520); a separate, lower penalty – the greater of $10,000 or 5% of the trust's US-owned assets – applies when the trust's own Form 3520-A isn't filed.

 

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