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Inheritance tax in Spain for non-resident heirs: full 2026 guide
Spanish inheritance tax (Impuesto de Sucesiones y Donaciones, ISD) is one of the most complex and regionally-varied taxes in Spain. Until 2014, non-resident heirs paid the harsh state rate; a CJEU ruling forced Spain to grant non-residents the same regional bonificaciones (often near 0%) as residents. This guide explains how the regional system works, how to file Modelo 650, what reductions apply to direct heirs, and the practical steps after the death of a Spanish property owner. Critical for foreign property owners and their families.
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When Spanish ISD applies
Spanish ISD applies in two situations: (a) the deceased was Spanish fiscal resident — worldwide assets are taxed in Spain, (b) the deceased was non-resident but owned property in Spain — only the Spanish assets are taxed in Spain. For non-resident property owners, situation (b) is the relevant one.
The territorial law that applies depends on where the asset is located, not where the heir lives. A Madrid property inherited by a UK son triggers Madrid's regional rules; a Mallorca property inherited by the same UK son triggers Balearic rules. The same heir can face different rates for different properties.
After death, the heir must file Modelo 650 within 6 months. The 6-month clock starts on the date of death. A formal extension request (within the first 5 months) gives an extra 6 months. Interest accrues during the extension at the legal rate.
Regional variation — why it matters enormously
Spain's 17 autonomous regions have wide discretion over inheritance tax. The state law sets a baseline (Ley 29/1987) but each region can apply 'bonificaciones' (reductions) on the resulting tax. Direct heirs (spouses, children, grandchildren, parents) are often heavily favoured:
| Region | Direct heirs (Groups I/II) | Notes |
|---|---|---|
| Andalusia | 99% bonification of the tax | Group I/II heirs, since 2019 |
| Madrid | 99% bonification of the tax | Group I/II heirs |
| Galicia | Large regional reduction | Check the regional law for the amounts |
| Murcia | 99% bonification of the tax | Group I/II heirs |
| Canary Islands | Bonification for direct heirs | Check the regional law for the percentage |
| Catalonia | Own progressive scale | Regional reductions and partial bonifications |
| Valencia | ~0% (99% bonification) | Group I/II heirs, Ley 6/2023 (from 28 May 2023) |
| Balearic Islands | 0% (100% bonification) | Group I/II heirs, Decreto-ley 4/2023 (from 18 July 2023) |
| Aragón | Regional reductions | Check the regional law |
| Asturias | Regional reductions and bonifications | Check the regional law |
Andalusia
99% bonification of the tax
Group I/II heirs, since 2019
Madrid
99% bonification of the tax
Group I/II heirs
Galicia
Large regional reduction
Check the regional law for the amounts
Murcia
99% bonification of the tax
Group I/II heirs
Canary Islands
Bonification for direct heirs
Check the regional law for the percentage
Catalonia
Own progressive scale
Regional reductions and partial bonifications
Valencia
~0% (99% bonification)
Group I/II heirs, Ley 6/2023 (from 28 May 2023)
Balearic Islands
0% (100% bonification)
Group I/II heirs, Decreto-ley 4/2023 (from 18 July 2023)
Aragón
Regional reductions
Check the regional law
Asturias
Regional reductions and bonifications
Check the regional law
Kinship groups and reductions
Spanish ISD divides heirs into four kinship groups, with sliding allowances and reductions for closer relatives:
Group I: descendants under 21 — highest allowance (typically €15,956 + €3,990 per year under 21).
Group II: descendants 21+, spouses, ascendants — allowance €15,956 (modifiable by region).
Group III: collateral relatives (siblings, uncles/aunts, nephews) — allowance €7,993.
Group IV: distant relatives and unrelated — no kinship allowance.
On top of kinship allowances, common deductions: 95% reduction for family business / dwelling, primary-residence reduction (up to €122,606 with 10-year retention), disability reduction (€47,858-€150,253 depending on degree), life insurance reductions (€9,195).
The 2014 CJEU ruling — equal treatment for non-residents
Until 2014, Spain applied the STATE rules to non-resident heirs, without the regional bonifications. The CJEU ruled (case C-127/12, Sept 2014) that this discrimination breached EU free movement of capital.
Result: since Jan 2015, non-resident heirs from EU/EEA countries can elect the regional law of the deceased's habitual residence (or property location for the property-only situation). In 2018 the Spanish Supreme Court extended this to residents of non-EU countries (US, Switzerland, etc.) on the basis of the free movement of capital, and Ley 11/2021 wrote it into the law.
Practical impact: a US son inheriting his Spanish father's Madrid apartment can apply Madrid's 99% bonification, paying 1% of the tax instead of the full state tax.
If you inherited pre-2014 and overpaidYou may still be entitled to refund if you paid as a non-resident heir under the discriminatory state rate. The 4-year prescription has expired for most cases, but some have succeeded via 'responsabilidad patrimonial del Estado' (state liability) — consult a Spanish tax lawyer specialising in inheritance.
Practical filing steps
1. Death certificate — original from issuing country, apostilled and sworn-translated.
2. Will or declaration of heirs — Spanish will if exists; otherwise, declaración de herederos via notary (charged on the notary's fee scale).
3. Property valuation — sworn appraisal or cadastral value, whichever applies.
4. List of all Spanish assets — properties, bank accounts, securities, vehicles.
5. List of debts — mortgage outstanding, taxes due, funeral expenses (deductible).
6. File Modelo 650 with the regional tax authority where the property is located. Deadline: 6 months from death.
7. Pay the tax before the deadline. Insufficient funds? Some regions allow payment by instalments (fraccionamiento, requires guarantee).
8. Register the inheritance at the Property Registry — only after ISD paid.
9. Plusvalía municipal — separate filing at the city council within 6 months.
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Frequently asked questions
Do I need a Spanish will to inherit a Spanish property?
Not legally — a foreign will is generally valid in Spain as to form under the 1961 Hague Convention, and EU Succession Regulation 650/2012 decides which law governs its content, whatever your residence. However, a Spanish will simplifies and speeds up the process enormously. See our Spanish will guide.
What happens if I miss the 6-month deadline?
Late filing surcharges: 1% plus another 1% for each full month of delay if you file within 12 months late, and 15% plus late-payment interest beyond that. If the tax authority initiates inspection before you file, penalties can reach 50-150%. Always file within the deadline OR formally request the 6-month extension within the first 5 months.
Can I deduct the inherited Spanish mortgage from the tax base?
Yes. The outstanding mortgage principal at the date of death is deducted from the asset value. This significantly reduces the tax base, especially if you inherited recently-bought property with high mortgage outstanding.
What if I inherit in a region with higher tax (Catalonia, for example) but I'm a non-resident?
The regional law of the property's location applies — you don't get to choose Madrid's better rate because you're a non-resident living in the UK. The 2014 CJEU equality only means you get to apply the SAME regional rules as a resident in that region. If the property is in Catalonia, Catalan rules apply.
Are there agreements to avoid double inheritance taxation?
Spain has bilateral inheritance tax treaties only with France, Greece and Sweden — very limited. For most countries (UK, US, Germany, Netherlands, etc.) there is NO inheritance tax treaty. This means Spain taxes the Spanish property AND your home country may also tax the same inheritance (UK IHT, US estate tax, etc.). Some countries grant unilateral credit; check with a local tax advisor.
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About this content
Mortgage Content Editor
Published: October 2026
Last updated: October 2026
This page is informational and editorial in nature. It explains how the described mortgage conditions typically work and what to review, without guaranteeing results or replacing a lender’s assessment.