Who has to file in Spain
A non-resident heir or donee must file when the inherited or gifted asset is located in Spanish territory, or when rights over it can be exercised in Spain. Non-residents file with the AEAT (Oficina Nacional de Gestión Tributaria), not with a regional tax office, but they can claim the reductions and allowances of the region where the property is situated. Where several heirs exist, each one files their own Modelo 650 for their individual share — there is no single joint return.
How the taxable base is calculated
The starting point is the reference value (valor de referencia) of the property, or its market value if higher, plus any other assets and rights, minus deductible debts and expenses. From that net value, kinship reductions apply (Group I and II descendants, spouses; Group III siblings, nephews, in-laws; Group IV others). The resulting base goes through the progressive scale, and the result is multiplied by the coefficient for the heir's group and prior wealth. Many regions — Andalucía, Comunidad Valenciana, Madrid, Baleares, Murcia — then apply very large rebates for close family, which can reduce the final bill to almost nothing.
Inheritance tax vs gift tax: key differences
Inheritance tax is triggered by death and is calculated on the estate share received; gift tax is triggered by a lifetime transfer and is normally taxed with fewer reductions. Crucially, a gift also creates a capital gain for the donor: the person giving the property away must declare the gain between acquisition value and the value at the time of the gift (Modelo 210 for non-resident donors). Inheritance, by contrast, produces no capital gain for the deceased ("plusvalía del muerto" is not taxed). Municipal plusvalía (IIVTNM) is due in both cases.
How this differs from Modelo 210
Modelo 210 is the ongoing non-resident income tax (IRNR): imputed income for a property at your own disposal, rental income if it is let, or the capital gain when you sell. Modelo 650 and 651 are one-off wealth transfer taxes. Inheriting a Spanish property therefore starts two obligations: paying ISD on the transfer, and filing Modelo 210 every year from that point onwards for the period you own it.
Practical steps for a non-resident heir
Obtain the death certificate and the certificate of last wills (Registro de Actos de Última Voluntad); get a NIE for every heir; sign the deed of acceptance of inheritance before a Spanish notary (in person or via power of attorney); file Modelo 650 and pay within 6 months; register the property in the Land Registry; pay municipal plusvalía; update the Cadastre; and from the following year file Modelo 210 for your share.