Spanish inheritance tax for non-residents: complete 2026 guide (Andalusia, Valencia, Madrid, Balearics, Canaries)

Inheriting a Spanish property as a non-resident is one of the most misunderstood tax situations in the Spanish system. Many heirs — British, German, French, Dutch, Belgian, Italian or American — arrive at the notary convinced they will pay the top state rate of 34%, when in reality, after the 2014 CJEU ruling and Law 11/2021, the effective tax in most coastal regions (Andalusia, Valencia, Balearics, Madrid, Canaries) is symbolic or close to zero. This guide walks you through Spain’s Inheritance and Gift Tax (ISD), how it applies to non-residents, which regional law is used, and how it interacts with the heir’s country of residence.

1. What is the Spanish Inheritance and Gift Tax (ISD)?

The ISD is a state tax devolved to the Autonomous Communities, ruled by Law 29/1987 and Royal Decree 1629/1991. It taxes:

• Mortis causa acquisitions (inheritances and legacies).
• Inter vivos gifts.
• Life insurance proceeds where the beneficiary differs from the policyholder.

Although the tax is state-level, each Autonomous Community has regulatory power over reductions, tariffs, multipliers and bonuses. That is why the same villa is taxed radically differently in Málaga, Alicante, Palma or Madrid.

2. When does a non-resident heir pay tax in Spain?

A non-resident heir is taxed on a limited liability basis: only on assets located in Spain. If the heir receives a villa in Marbella, an apartment in Denia and a Spanish bank account, all of that falls into the Spanish tax base. Assets in the UK, Germany or the US are not taxed in Spain.

The heir self-assesses using Modelo 650 before the AEAT or the competent Autonomous Community within 6 months of death (extendable by 6 more months if requested during the first 5 months).

2.1. The game-changing rule: CJEU C-127/12 and Law 11/2021

Before 2014, non-resident heirs could only apply the harsher state law. The Court of Justice of the European Union ruled that restriction contrary to the free movement of capital (Judgment C-127/12, 3 September 2014). Later, Law 11/2021 extended that equality to residents of third countries (post-Brexit UK, US, Switzerland, Norway, etc.).

Practical consequence: any non-resident heir, regardless of country of residence, can apply the law of the Autonomous Community where the most valuable Spanish asset is located. Regional bonuses for descendants and spouses (Groups I and II) reach 99% in most coastal regions.

3. Kinship groups

• Group I: descendants and adopted children under 21.
• Group II: descendants and adopted children aged 21+, spouses, ascendants and adopters.
• Group III: second- and third-degree collaterals (siblings, uncles, nephews) and in-laws.
• Group IV: cousins, unregistered partners, friends and strangers.

Regional reliefs concentrate on Groups I and II. Groups III and IV usually pay the full rate with multipliers of up to 2.4.

4. State tariff and gross tax

The state scale runs from 7.65% (bases up to €7,993) to 34% (bases over €797,555), with a multiplier from 1.0 to 2.4 depending on the group and pre-existing wealth of the heir.

A Group II heir with no pre-existing wealth and pure state law would pay around €58,000 on a €300,000 property. The same inheritance under Andalusia’s or Madrid’s 99% relief drops to less than €600.

5. Regional reliefs on Spain’s main non-resident hotspots

5.1. Andalusia (Costa del Sol, Marbella, Málaga, Almería)

• €1,000,000 reduction per heir for Groups I and II.
• 99% relief on the tax quota for Groups I and II.
• Result: a parent-to-child inheritance of an €800,000 villa in Marbella typically pays €0.

5.2. Valencian Community (Costa Blanca, Alicante, Valencia, Castellón)

• €100,000 reduction per heir (Groups I and II).
• 99% relief on the quota for Groups I and II (Law 6/2023, in force since 28 May 2023).
• The old €156,000 cap is gone.

5.3. Community of Madrid

• 99% relief for Groups I and II.
• 25% relief for siblings, uncles and nephews by blood (Group III).

5.4. Balearic Islands (Mallorca, Ibiza, Menorca)

• Specific reduced tariff for Groups I and II from 1% to 20%.
• 100% relief for Group I and 50%-25% for Group II (Decree-Law 4/2023).

5.5. Canary Islands

• 99.9% relief for Groups I, II and III — among the most generous regions.

5.6. Catalonia (Barcelona, Costa Brava, Sitges)

• Reliefs decreasing with the taxable base (99% for small bases, dropping progressively).
• Habitual residence reduction up to 95% subject to holding requirements.

6. How the applicable region is chosen

For non-residents holding Spanish real estate, the applicable regional law is that of the Autonomous Community where the most valuable asset is located. Example: a German heir inherits an apartment in Denia (Valencian Community, €250,000) and one in Málaga (Andalusia, €400,000). Andalusian law applies to the entire Spanish base, even though part of it sits in Valencia.

7. Taxable base: how the property is valued

Since Law 11/2021, the taxable base uses the Cadastre’s valor de referencia (or market value if none exists). It is objective, published by the Directorate-General of the Cadastre, and typically below the actual sale price but above the old cadastral value. It can be challenged with a certified appraisal.

Deductible from the base: mortgage debt outstanding, funeral costs up to €4,500, last-illness expenses and documented debts of the deceased.

8. State reductions (art. 20 Law 29/1987)

• Group I: €15,956 + €3,990 per year under 21 (max €47,858).
• Group II: €15,956.
• Group III: €7,993.
• Group IV: none.
• 95% reduction on the deceased’s habitual home (minimum 10-year holding, some regions relax to 5).
• Life insurance reduction: €9,195.

9. Modelo 650: how, where and when to file

• Deadline: 6 months from death (extendable by 6 more months, requested within the first 5).
• Competent body for non-residents: either the Autonomous Community where the highest-value asset sits, or the AEAT if pure state law is chosen (rarely optimal).
• Minimum documentation: death certificate, Last Wills registry certificate, will or declaration of heirs, deed of acceptance of inheritance, asset valuations, DNI/NIE of all parties, powers of attorney if applicable.
• NIE is mandatory for every non-resident heir before filing.
• Without the ISD payment receipt, the Land Registry will not record the transfer.

10. Municipal plusvalía on inheritance

In addition to ISD, the local council may levy the Impuesto sobre el Incremento del Valor de los Terrenos (IIVTNU) — the plusvalía. Many municipal ordinances grant a 95% relief when the transfer is between parents and children and involves the deceased’s habitual home.

11. International double taxation

Spain has specific inheritance treaties with only France, Greece and Sweden. Otherwise, unilateral relief applies:

• In Spain: the credit for international double taxation (art. 23 Law 29/1987) — the lesser of (a) the tax paid abroad on non-Spanish assets, or (b) the result of applying the Spanish average rate to those assets.
• In the heir’s country: a foreign tax credit is typically available for the Spanish ISD paid, up to the domestic liability.

Country notes:

• United Kingdom: UK Inheritance Tax (IHT) covers the worldwide estate of a UK-domiciled deceased. No bilateral inheritance treaty — HMRC’s unilateral relief applies.
• United States: Federal Estate Tax has a very high exemption ($13.61M in 2024). There is a limited US-Spain estate tax treaty covering specific assets.
• Germany: Erbschaftsteuer taxes the heir (not the estate). Without a treaty, §21 ErbStG allows crediting the Spanish tax.

12. Full worked example

A British couple owned a €700,000 Marbella villa 50/50. The husband dies. The widow (Group II, no material pre-existing Spanish wealth) inherits his 50% share (€350,000).

• Taxable base: €350,000.
• State Group II reduction: €15,956.
• Net base: €334,044.
• Gross state quota (approx.): €75,500.
• Multiplier Group II, no pre-existing wealth: 1.0.
• Tax quota: €75,500.
• Andalusian 99% relief: −€74,745.
• Final Spanish tax due: €755.

The difference against pre-2014 state-only rules is enormous. That is why regional equality is the single most important lever for a non-resident heir.

13. Common mistakes to avoid

• Filing late (5%, 10%, 15% or 20% surcharges).
• Applying pure state law when regional law is available.
• Forgetting the municipal plusvalía.
• Not obtaining NIEs for every heir before signing the deed.
• Overvaluing the property — the cadastral reference value is enough.
• Not updating the IBI and the following year’s Modelo 210 to the new owners.

14. What comes next: IBI and Modelo 210 for the new owners

Once the inheritance is recorded, the new owners become liable for the IBI from 1 January after the death and for the Modelo 210 on imputed income (or rental income) for the proportional part of the year they acquired. See our internal guides:

• Modelo 210: practical guide
• Imputed income tax for non-residents
• Rental income tax for non-residents

15. Conclusion

Inheriting Spanish property as a non-resident is no longer the fiscal drama it used to be. Thanks to the regional equality extended by Law 11/2021, any EU, EEA or third-country heir (including post-Brexit UK) can apply the reliefs of the region where the most valuable Spanish asset sits. In Andalusia, Madrid, Valencia, the Balearics and the Canaries, the ISD bill for descendants and spouses is almost symbolic, though filing Modelo 650 on time, getting the NIE, valuing the property correctly and coordinating with the heir’s country of residence remain mandatory steps.

Sources

• 1Ley 29/1987 del Impuesto sobre Sucesiones y Donaciones (ISD)
• 2Reglamento del ISD — RD 1629/1991
• 3Agencia Tributaria — Modelo 650 (Sucesiones no residentes)
• 4STJUE C-127/12 (3-sept-2014) — equiparación no residentes UE/EEE
• 5Ley 11/2021 — extensión de la equiparación a residentes de terceros países
• 6Junta de Andalucía — bonificación 99 % ISD grupos I-II
• 7Generalitat Valenciana — reducciones y bonificaciones ISD
• 8Comunidad de Madrid — bonificación 99 % ISD
• 9Ministerio de Hacienda — Convenios para evitar la doble imposición (CDI)