Property Inheritance & Gift Tax in Spain for Foreigners: What You Need to Know

If you’re a foreigner inheriting or receiving property as a gift in Spain, you’re subject to Impuesto sobre Sucesiones y Donaciones (ISD) — Spain’s inheritance and gift tax.

This article breaks down:

• 🧾 Who pays

• 💶 How rates are calculated

• 📍 Key regional tax benefits

• 🧑‍⚖️ Legal options to reduce your tax burden

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❓ Who Pays Inheritance & Gift Tax in Spain?

If you’re non-resident and:

• Inherit Spanish property or assets, OR

• Receive real estate as a gift or donation

You are liable to pay Spanish ISD. Tax is based on:

• Recipient’s residency status

• Location of the property (Autonomous Community)

• Value of the assets received

• Your relationship to the deceased/donor

🔍 Spanish inheritance tax is paid by the beneficiary, not the estate.

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📊 Inheritance & Gift Tax Rates for Foreigners

Tax rates are progressive, based on the value of the inheritance/gift and your family relationship.

🚨 Multiplication coefficients apply depending on your kinship and net wealth.

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👪 Relationship Groups & Multipliers

Spain classifies heirs/donees into 4 groups:

💡 If you are a non-relative, your effective tax rate could be as high as 81.6% in some cases.

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📍 Regional Tax Benefits (Key for Foreigners)

Spain’s 17 Autonomous Communities offer significant reductions or exemptions — but only if:

• The deceased/donor or the recipient was resident in that region, OR

• The property is located there (for real estate)

Examples:

• Madrid: 99% deduction for Group I & II heirs

• Andalucía: 100% exemption up to €1 million

• Valencia: Tax credits vary by age and disability

• Catalonia: Lower rates for close family; higher for others

📌 These regional rules now apply to EU and non-EU foreigners alike after EU court rulings.

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🧾 What If You Inherit as a Non-Resident?

You’re taxed only on assets located in Spain (e.g., property, bank accounts).

Steps include:

1. File tax form Modelo 650 (inheritance) or Modelo 651 (gift)

2. Submit within 6 months of the date of death or gift

3. Pay tax in the region where the property is located

4. Provide notarized and apostilled documentation (will, deed, etc.)

✍️ If needed, request a 6-month extension for inheritance tax filing.

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💡 Can You Avoid or Reduce Inheritance & Gift Tax?

Yes — with legal structuring and planning. Examples include:

✅ 1. Spouse-to-Spouse Transfers

Often qualify for high deductions or full exemptions, depending on the region.

✅ 2. Early Gifts Instead of Inheritance

Some regions offer lower rates for inter vivos gifts, especially of main residences.

✅ 3. Using Holding Companies or Trusts (Careful!)

Can avoid direct asset transfer — but must comply with Spanish anti-abuse rules.

✅ 4. Power of Attorney to Handle Filings

Useful for heirs or recipients abroad. Your lawyer can file and pay on your behalf.

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📑 Required Documents (Typical)

Your lawyer must translate and legalize foreign documents for use in Spain.

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⚖️ Why You Need Legal Help

Inheritance and gift tax in Spain involves:

• Multi-jurisdictional issues

• Regional vs. national rules

• Strict filing deadlines

• Risk of large penalties for delays or incorrect filings

👩‍⚖️ At Borderless Lawyers, we specialize in helping foreigners:

✅ Navigate complex inheritance law
✅ Minimize tax exposure across borders
✅ Handle all paperwork and notarial processes
✅ Sell inherited property with full legal clearance

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📞 Inheriting or Receiving Property in Spain?

Don’t risk fines, overpayment, or losing your rights due to missed deadlines.