Spanish succession tax reforms in many regions have made this tax less of a concern than it used to be a few years ago. Andalucía, Balearic Islands, Canary Islands, Madrid, Murcia and Valenciana have all virtually eliminated inheritance tax for spouses and children.
There are many benefits to living in Spain, but, as with anywhere, there are both pros and cons. Many people find Spain’s succession regime to be complex and costly, and expatriates need to understand how Spanish succession tax and law works and affects their family.
The good news is that over recent years many Spanish regions have reformed their succession tax rates and allowances to protect spouse (including civil partners in some regions), children, grandchildren and parents from this tax on inheritance. Lifetime gifts may still be liable. Ensure you understand how the rules in your autonomous region will affect each of your beneficiaries. Where necessary, take specialist, personalised advice on how you may be able to mitigate Spanish succession tax for your heirs.
Spanish succession and gift tax (SSGT) key facts:
1. Spanish succession and gift tax applies to both inheritances and lifetime gifts.
2. It is charged on each recipient, including spouses.
3. It is due when:
a) the beneficiary is resident in Spain, or
b) the asset being gifted or inherited is a Spanish asset (Spanish property, bank account etc).
4. Beneficiaries are divided into groups:
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- Group I – children and other descendants under 21
- Group II – descendants over 21, parents and other ascendants, spouses
- Group III – siblings, cousins, aunts/uncles, nieces/nephews, in-laws, stepchildren
- Group IV – everyone else, including stepchildren and unmarried partners even if registered as a pareja de hecho, unless the region grants them the same rights as spouses (Andalucía, Balearics, Canaries, Madrid, Murcia and Valenciana all do)
5. The tax rates and allowances are determined by the state each year, but the regions can make them more beneficial for local residents.
6. UK nationals can be liable to both Spanish and UK inheritance tax, but a credit is given in Spain for tax paid in the UK to avoid double taxation.
State succession tax reductions and tax rates
Under the state rules, Groups I and II beneficiaries receive a personal reduction of €15,957 (increasing per year for those under 21), while Group III get €7, 993. These allowances are for inheritances only.
The main home can benefit from a 95% reduction up to €122,606 per inheritor. This is only where the recipient is a spouse, ascendant or descendant who retains the property for 10 years.
Tax rates range from 7.65% to 34%, but the liability is then subject to multipliers between 1 and 2.4 based on the recipient’s existing wealth and their relationship with the donor.
The latest regional reforms for immediate family
Andalucía succession tax
Since January 2022, in Andalucía descendants, ascendants and spouses benefit from both a 99% tax relief and a €1 million tax free allowance for inheritances. The allowance for group III beneficiaries increases to €10,000 and the highest tax rate applied is 26%. The multipliers only depend on kinship. A 99% tax relief is also available for Groups I and II beneficiaries for lifetime gifts.
Balearics succession tax
In Mallorca, Menorca and Ibiza, the succession tax liability has been reduced by 100% for inheritances received by group I and II beneficiaries since May 2023 and for gifts from July 2025. In other words, children, parents and spouses of the deceased will not pay any tax. Where there are no children or grandchildren, the succession tax liability is reduced by 60% for siblings, uncles, aunts, nephews and nieces, and by 35% for the rest of group III beneficiaries.
Canary Islands succession tax
Since September 2023, Group I, II and III beneficiaries benefit from a 99.9% reduction in succession tax in Tenerife, Lanzarote and the other Canary Isles. In effect, no tax will arise for spouses, children, grandchildren, parents, siblings, nieces, nephews etc. The same 99.9% reduction applies for lifetimes gifts, but in this case only for Groups I and II.
Madrid succession tax
Comunidad de Madrid has applied a 99% relief in the tax payable for both inheritances and lifetime gifts received by group I and II beneficiaries for some time. In 2023 a tax relief of 25% was introduced for inheritances and gifts between brothers/sisters, uncles/aunts and nephews/nieces, and this was extended to 50% in 2024.
Murcia succession tax
The Murcia region was one of the first to apply a 99% relief for inheritances and gifts received by spouses, descendants and ascendants, having introduced it in 2018.
Valenciana succession tax
Spouses, descendants and ascendants receive a 99% tax reduction for both inheritances and gifts in Comunidad Valenciana region (Valencia, Alicante and Castellón provinces). This dates back to May 2023 and is in addition to the €100,000 tax-free allowance for group I and II beneficiaries. As announced on 31 May 2025, siblings, uncles/aunts and nieces/nephews will benefit from a 25% reduction from June 2026, increasing to 50% a year later.
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Estate planning in Spain
The 2022-2023 succession tax reforms have significantly improved the inheritance tax situation for spouses and children in many popular regions of Spain. Nonetheless, changes such as these reinforce the need for specialist advice from experienced advisers, to not only take advantage of these changes but also other aspects of the regional Spanish tax system.
If you plan to leave assets to beneficiaries besides your spouse, children, grandchildren or parents, take advice early on. Calculate how much succession tax they’ll have to pay on their inheritance and establish if you can improve the situation for them. Be particularly careful if you have children from a previous relationship. If you leave assets to your current spouse, who later passes them back to your children, your children will be taxed as stepchildren.
You also need to be aware of how Spain’s succession law imposes ‘forced heirship’. In general terms, children are entitled to receive two thirds of an estate’s assets, so under Spanish law you cannot, for example, leave everything to your spouse. This applies to foreign nationals living in Spain by default.
You can however use the European Succession Regulation ‘Brussels IV’ to opt for the succession law of your country of nationality to apply on your death. You need to specifically state this in your will. This applies to all foreign nationals living in the EU, it is not restricted to EU citizens.
Every family is different. Take personalised advice, based on your situation and objectives, to help ensure your estate is divided as you wish and with as little tax and bureaucracy as possible. You can take steps now to make life easier for your family and heirs when you’re gone.
Contact Blevins Franks for an objective estate planning review.
