Spanish Inheritance Tax for UK Expats: What You Need to Know (2026)

Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones) is one of the areas that causes the most concern among British retirees in Spain, and with good reason. The structure is very different from the UK, where most estates pass tax-free between spouses and children only pay above the £325,000 threshold. Spain can apply inheritance tax from much lower levels, with rates that rise steeply for more distant relatives or unrelated beneficiaries.

The good news is that planning ahead makes a significant difference. The bad news is that many expats do not find out about the Spanish inheritance tax position until it is too late to act.

How Spanish Inheritance Tax Works

Inheritance tax in Spain is a national framework administered at a regional level. Each autonomous community (comunidad autónoma) has the power to apply its own allowances, reductions, and rates on top of or instead of the national rules. This means the tax you pay can vary dramatically depending on where in Spain you live.

The tax applies to:

• All assets located in Spain if you are a non-resident
• All worldwide assets if you are a Spanish resident

For British expats resident in Spain, this is the important point: Spanish inheritance tax can apply to your worldwide estate, not just your Spanish assets. Your UK property, bank accounts, and investments are potentially within scope.

Who Pays the Tax

Inheritance tax in Spain is paid by the beneficiary (the person receiving the inheritance), not the estate. This is the opposite of the UK where the estate pays before distribution.

This matters practically because a beneficiary may receive an asset (a house, for example) that they then have to raise cash to pay the tax on. In the UK, estate assets are typically sold to fund the inheritance tax and then the net proceeds distributed. In Spain, the beneficiary faces the tax bill and must fund it themselves.

National Rates and Allowances

Under the national framework (before regional modifications), the tax-free allowances are modest:

• Spouse: €15,956.87
• Children over 21: €15,956.87
• Children under 21: €15,956.87 plus €3,990 per year below age 21 (up to a maximum)
• Parents and grandparents: €7,993.46
• Brothers and sisters: €7,993.46
• More distant relatives or unrelated beneficiaries: essentially zero

These national allowances are low by UK standards. The rates then rise progressively from 7.65% on the first €7,993 of taxable inheritance to 34% on amounts above approximately €800,000.

On top of the base rates, there is a multiplier applied based on the beneficiary’s pre-existing wealth and their relationship to the deceased. For a child with existing assets above €402,000 inheriting from a parent, the multiplier increases the effective rate significantly.

Regional Variations: Why Location Matters Enormously

This is where it gets complicated and where planning makes the most difference.

Several autonomous communities have effectively abolished inheritance tax between close family members through generous regional allowances or deductions. Others retain significant liability.

Near-zero inheritance tax between spouses and direct descendants:

• Andalusia: 99% reduction for spouses and children in most cases (since 2019)
• Madrid: 99% reduction for group I and II (spouses, descendants, ascendants)
• Murcia: 99% reduction
• Galicia: Significant reductions for close relatives
• La Rioja, Cantabria, Asturias: Similar near-elimination for close family

More significant inheritance tax between close relatives:

• Catalonia: More complex system, meaningful tax even between spouses and children for larger estates
• Balearic Islands: Moderate allowances
• Valencia: Some reductions but not full elimination

The practical implication: a British retiree in Malaga (Andalusia) passing assets to their children faces near-zero inheritance tax in Spain between close relatives. The same retiree in Barcelona (Catalonia) could face a meaningful bill.

If you are choosing where to retire in Spain and inheritance planning matters to you, regional tax differences are a legitimate factor in the decision.

UK Inheritance Tax: Does It Still Apply?

Moving to Spain does not automatically remove you from UK inheritance tax. UK inheritance tax applies to:

• UK assets regardless of where you live
• Your worldwide estate if you are UK-domiciled

Domicile is a UK legal concept that is separate from tax residency. Most British nationals who move to Spain retain UK domicile unless they take specific steps to acquire a Spanish domicile of choice. This means UK inheritance tax (currently at 40% above the £325,000 nil-rate band, or £500,000 with the residence nil-rate band for property passing to direct descendants) can potentially apply to your worldwide estate as well.

This creates the risk of double exposure: Spanish inheritance tax from the beneficiary side, and UK inheritance tax from the estate side. The UK-Spain Double Taxation Treaty does include provisions to prevent pure double taxation on the same assets, but the interaction is complex.

Getting this planning right — particularly around domicile, which assets to hold where, and how your will is structured — genuinely requires specialist advice. The cost of getting it wrong, across potentially both UK and Spanish tax at 40% rates each on different assets, is significant.

Blevins Franks: UK-Spain inheritance tax and estate planning

Wills: Do You Need a Spanish Will?

You can have a single will in either country, but most expats in Spain benefit from having a Spanish will for their Spanish assets. The reasons:

Speed: A Spanish will for Spanish assets is processed through the Spanish notary system without needing UK probate. This can be significantly faster and simpler for your beneficiaries.

Clarity: A Spanish will drafted by a Spanish notary in accordance with Spanish succession law removes ambiguity about which country’s succession rules apply to your Spanish assets.

EU Succession Regulation (Brussels IV): UK nationals in Spain can elect to have their Spanish succession governed by UK law rather than Spanish law. This election must be made in a will. Whether this is advantageous depends on your specific circumstances and requires professional advice.

You can hold a UK will and a Spanish will simultaneously, provided they do not contradict each other. A Spanish notary (notario) can draft a Spanish will. Expect to pay €100 to €300 for a straightforward will.

Practical Steps

If you are a British retiree in Spain and have not yet addressed inheritance planning:

1. Get clarity on which autonomous community’s rules apply to your situation
2. Understand your UK domicile position and whether you intend to change it
3. Review your will in the context of both UK and Spanish succession rules
4. Consider whether a Spanish will for Spanish assets makes sense
5. Seek specialist advice on the UK-Spain interaction for estates above modest values

The planning conversations are not pleasant, but the cost of not having them falls entirely on your beneficiaries.

---

Frequently Asked Questions

Does Spain charge inheritance tax between husband and wife?
In many regions, including Andalusia and Madrid, the tax is effectively eliminated between spouses through regional allowances. In other regions, meaningful tax can apply. It depends on which autonomous community you live in.

Can I avoid Spanish inheritance tax by keeping assets in the UK?
Partially. Spanish inheritance tax applies to assets located in Spain regardless of your residency. As a Spanish resident, it also applies to worldwide assets in principle, though the practical enforcement on overseas assets varies. UK inheritance tax applies separately to your UK estate.

Do I need a Spanish will if I already have a UK will?
Not legally required, but strongly recommended for Spanish assets. A Spanish will speeds up the succession process for Spanish property and accounts, and allows you to make the EU succession regulation election if that is advantageous for your situation.

What is the inheritance tax rate in Spain?
Rates run from 7.65% to 34% under the national framework, but most close-family inheritances in major expat regions like Andalusia and Madrid are subject to near-zero effective tax due to regional allowances. Catalonia and some other regions retain more significant rates even for direct family.

---

*See also: UK Pension Tax in Spain | Spain vs Portugal for UK Retirees | Retiring to Spain from the UK*

*Affiliate disclosure: The Blevins Franks link in this article is an affiliate link.*