Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones) applies to all Spanish-based assets, including Madrid property — even if the heirs are abroad.
But Madrid offers some of the most favorable tax reductions in Spain — especially for close family members.
🏡 Who Pays Inheritance or Gift Tax in Madrid?
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The recipient (heir or donee) pays the tax, not the estate
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Applies to both inheritance (death) and inter vivos gifts
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Foreign heirs must declare Spanish property received from non-residents
💡 The rules vary between autonomous regions — and Madrid is very favorable.
💶 Madrid’s Inheritance Tax Rates & Deductions
Standard State Rates (Before Reductions):
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Progressive: 7.65% to 34% depending on the amount inherited
Madrid Region Reductions (Highly Beneficial):
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99% reduction for:
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Spouses
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Children (biological/adopted)
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Parents
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👉 This means you pay just 1% of the calculated inheritance tax.
🎁 Madrid Gift Tax Benefits
Madrid also applies a 99% reduction to gifts between:
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Parents and children
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Spouses
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Grandparents and grandchildren
⚠️ Gifts must be:
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Properly documented by notary
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Declared to Madrid tax authorities
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Paid via Spanish bank account
🧾 What Is Taxable?
The tax is calculated on the net value of the property received:
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Current market value
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Less allowable deductions (e.g. debts or mortgage)
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Cadastral value may be used as a reference
📌 If the property has increased in value since purchase, capital gains taxes may also apply separately for gifts.
🌍 What If the Heir or Recipient Lives Abroad?
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Heirs must still file and pay tax in Spain
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Deadlines:
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Inheritance: 6 months from date of death
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Gift: 30 days from notarization
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Payment must be in euros through Spanish channels
We assist foreign heirs with full compliance, filings, and declarations.
🧑⚖️ How We Help Foreign Clients With Inheritance & Gifts
✔️ Draft Spanish-compatible wills
✔️ Coordinate with Madrid notaries
✔️ Calculate tax based on Madrid rates
✔️ Ensure timely filings and exemptions
✔️ Avoid double taxation issues (we advise on treaties)
📌 We also help heirs sell or register inherited properties in Madrid.
⚖️ What Happens Without a Spanish Will?
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Spanish intestacy laws apply (may differ from your home country)
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Heirs may face delays or disputes
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No automatic tax exemptions
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Probate becomes more complex
💡 We strongly recommend preparing a Spanish will that covers Madrid property.
💬 Example: Inheritance of Madrid Flat by UK Son
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€450,000 market value
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Heir: direct descendant (son)
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Madrid tax after 99% reduction: ~€450 total
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Without Madrid reduction: ~€30,000
✅ Huge savings with proper planning.
📞 Need Help With Madrid Inheritance or Gifting?
If you own property in Madrid or plan to pass it on, early planning avoids tax risks and delays. Our lawyers guide you through every step — remotely and in English.