Frequently asked questions about Spanish Inheritance and Gift Tax for the foreigner becoming a Spanish tax resident

The questions that follow are the ones that come up most often in conversations with the foreigner becoming a Spanish tax resident who, often, does not know how Spanish Inheritance and Gift Tax (ISD) will reach them. I have grouped them by topic. Each answer is deliberately brief; where a nuance warrants longer treatment, I link to the technical analysis elsewhere in this Spanish Tax Journal.

1. Basic concepts

What tax covers inheritances and gifts in Spain?

The Inheritance and Gift Tax, governed by Act 29/1987, of 18 December, on Inheritance and Gift Tax (LISD). It is a personal, progressive tax and, to a large extent, ceded to the Autonomous Communities: the State sets the framework; each Community can modulate base reductions, scales, multiplier coefficients and rebates on the liability. That cession is the source of the major regional divergences we will see in section 4.

How does it affect me, as a newly arrived resident?

Becoming a Spanish tax resident —under the criteria of article 9 LIRPF, which I have developed in the Frequently asked questions about Spanish tax residence— triggers personal obligation under the ISD. That means you are taxed in Spain on any inheritance or gift you receive, regardless of where the deceased died, where the donor resided, and where the transferred assets are located.

The difference from the non-resident is structural: the non-resident is taxed under real obligation, only on assets located in Spain. The resident is taxed on worldwide inheritance and gift income.

When does that taxation begin?

From the first tax year in which any of the article 9.1 LIRPF criteria are met —stay exceeding 183 days, centre of economic interests, family presumption—. ISD accrues at the moment of the deceased’s death (inheritance) or on acceptance of the gift (donations). If at that moment you are a Spanish tax resident, the personal-obligation regime catches you.

Is “personal obligation” the same as “real obligation”?

No, they are two distinct regimes.

(i) Personal obligation: applies to the Spanish tax resident. Taxation on all assets and rights acquired, regardless of where they are located.

(ii) Real obligation: applies to the non-resident. Taxation only on assets and rights located in or exercisable from Spanish territory. I have developed this in the Frequently asked questions about non-resident property taxation for real estate.

2. The inheritance received from abroad

I am a Spanish tax resident. My father, resident in Switzerland, dies and leaves me his entire estate. Do I pay tax in Spain?

Yes, under personal obligation. The inheritance is taxed in Spain in full, regardless of the deceased being non-resident and of the assets being physically located outside Spain. It is one of the most surprising points for the HNWI expat coming from jurisdictions with territorial systems or no inheritance tax.

The taxable base is the value of the transferred assets and rights. The liability depends on the State scale or, where applicable, the Autonomous Community scale and rebates, as we shall see.

Which Autonomous Community legislation applies?

The connecting factor for inheritances under personal obligation is the deceased’s habitual residence in the five years preceding death, for Autonomous Communities of the common regime (article 32.2.a of Act 22/2009). For a deceased who was not a Spanish resident, there is no Spanish habitual residence and, accordingly, the autonomous legislation would not apply by ordinary route.

But the Spanish-resident heir can invoke the more favourable autonomous legislation under the equalisation operated by European case law: CJEU C-127/12, of 03/09/2014, declared contrary to the free movement of capital (art. 63 TFEU) Spanish legislation that denied EU/EEA non-residents access to the autonomous legislation; STS 242/2018, of 19/02/2018, extended the equalisation to residents of third countries under the same freedom of capital movement, which has erga omnes effect. The second additional provision of the LISD, inserted by Act 26/2014, articulates the technical access.

The practical rule: where the deceased was non-resident, the Spanish-resident heir can apply the legislation of the Autonomous Community where the largest value of the deceased’s Spanish assets is located; if the deceased held no assets in Spain —the typical case of the Swiss father of the expat—, the legislation of the heir’s Autonomous Community of residence applies.

This is the piece that changes the picture. An heir resident in Madrid will receive the inheritance from his Swiss father with the 99 per cent Madrid rebate. The same heir resident in Barcelona will receive it under the full Catalan scale (which reaches 32 per cent on the State scale applied subsidiarily).

And if the inheritance has already paid tax in the other country?

Spain has very few specific Inheritance Tax treaties: with France (Convention of 08/01/1963), Greece (Convention of 06/03/1919) and Sweden (Convention of 25/04/1963). Outside those three conventions, the Spanish resident who has paid an analogous inheritance tax abroad on the same estate may apply the unilateral relief for international double taxation under article 23 LISD: the lesser of (i) the foreign tax actually paid, or (ii) the result of applying the Spanish average effective ISD rate to the assets situated or acquired abroad.

The relief mitigates but does not neutralise double taxation. For significant inheritances from jurisdictions with high inheritance tax —United Kingdom, France, Germany, United States—, the piece is relevant. For inheritances from jurisdictions without inheritance tax —Sweden since 2005, Portugal, much of Switzerland, Andorra, UAE—, there is no foreign tax to deduct; the Spanish ISD operates in full.

3. The gift received from abroad

My mother, resident in the UAE, wants to gift me a parcel of shares. Do I pay tax in Spain?

Yes, under personal obligation. The gift is taxed in Spain under the regime applicable to your status as resident donee, regardless of the donor’s residence and the assets’ location.

The connecting factor for gifts differs from that for inheritances. For gifts of movable assets (shares, bank accounts, jewellery, crypto), the Autonomous Community legislation of the donee’s habitual residence in the five years preceding the chargeable event applies (art. 32.2.c Act 22/2009). For gifts of real estate, the legislation of the Autonomous Community where the property is located applies (art. 32.2.b Act 22/2009).

And reverse planning? I am a Spanish resident wanting to gift shares to my son, a UK resident.

The logic changes here. Your son, as a non-resident, is taxed under real obligation: only on assets located in Spain. If the shares are of a Spanish company and deemed located in Spain, yes; if they are of a foreign company, no.

For Spanish-situs assets, your son, as non-resident, can apply the autonomous legislation where the largest value is located (2nd AP LISD + STS 242/2018). And as a resident donor, bear in mind the IRPF effect: the gift of shares with latent gain generates a capital gain subject to IRPF in your hands as donor (art. 36 LIRPF), unless it qualifies under the non-recognition rule of art. 33.3.c LIRPF for the 95 per cent family-business reduction. And, as we have analysed in connection with binding consultation DGT V-3222-20 and the recent TEAC Resolution RG 1535/2024 of 19/02/2026 on application of the FIFO method to gratuitous transfers, FIFO is imposed for identifying which specific securities are transferred.

4. The major differences between Autonomous Communities

Quick map by Autonomous Community in 2026.

The Autonomous Communities most relevant for the HNWI expat:

(i) Madrid: 99 per cent rebate of the tax liability for Groups I (descendants and adopted under 21) and II (descendants and adopted over 21, spouse, ascendants and adoptants). Both for inheritances and gifts, with no maximum amount. Gifts require a public document. Stabilised regime after Act 7/2018 and recent Act 2/2025, which extended the rebate to Group III (siblings, nephews, uncles) and eased formal requirements for gifts up to EUR 10,000.

(ii) Balearic Islands: 100 per cent rebate of the inheritance tax liability for Groups I and II, including succession by way of succession pact (a figure admitted in Balearic civil law). Decret Llei 4/2023, of 18/07/2023, confirmed by Act 11/2023, of 23/11/2023. Group III with partial rebate (50 per cent if the deceased has no descendants; 25 per cent in other cases). In force and stable in 2026.

(iii) Valencia: 99 per cent rebate for Groups I and II in inheritances and gifts. For gifts, reinforced formal requirements: public deed and traceability of funds (identifiable banking movement). Act 13/1997 modified by Act 6/2023 (chargeable events from 28/05/2023) and Act 5/2025. Group III with progressive rebate increasing from June 2026.

(iv) Catalonia: here the logic is different. There is no general percentage rebate on the liability for Groups I and II; instead, the special reduced scale of article 38 of Llei 19/2010 on inheritance and gift tax applies, only to gifts between Group I and II members and only when formalised by public notarial deed or judicial decision.

(v) Other heavily-taxed Autonomous Communities (Asturias, parts of Castilla-La Mancha): general scale applicable subsidiarily with more limited rebates.

Catalonia: the reduced scale of art. 38 Llei 19/2010.

It is one of the least-known pieces for the HNWI expat resident in Barcelona. Where a gift between ascendants/descendants/spouse/civil partner is formalised by public notarial deed, the rates applicable to the liquidable base are:

• Up to EUR 200,000: 5 per cent (liability: EUR 10,000 on the first EUR 200,000).
• From EUR 200,000 to EUR 600,000: 7 per cent (cumulative: EUR 38,000 at EUR 600,000).
• Above EUR 600,000: 9 per cent on the excess.

For cash gifts —where the public deed is not a validity requirement—, the rule requires elevation to public deed within one month from delivery to access the reduced scale. It is an operational point often missed: a cash gift by bank transfer without subsequent deed falls under the general Catalan scale, which reaches 32 per cent on the State scale applied subsidiarily.

The multiplier coefficient (art. 58 LISD) can modulate the liability based on the donee’s pre-existing wealth, but operates on very reduced rates. In practice, a gift of EUR 1,000,000 from father to child by public deed in Catalonia generates a liability of roughly EUR 74,000 (5% on 200k + 7% on 400k + 9% on 400k), an effective 7.4 per cent. The same transaction at the Catalan general scale without public deed would exceed EUR 280,000.

Madrid: 99 per cent rebate.

The formula is structurally different. The State ISD scale applies in full, but on the resulting liability a 99 per cent rebate is granted for Groups I and II. Result: the Madrid resident pays 1 per cent of the theoretical liability.

For gifts, the formal requirement is public deed (with the recent qualification of Act 2/2025 for gifts of EUR 1,000-10,000 in private document). For inheritances, no special formality beyond the acceptance and partition deed is required.

How to choose the Autonomous Community where there is margin.

For the new resident relocating to Spain who has not yet consolidated a connecting factor, the choice between Madrid and Barcelona, or between the Balearic Islands and Valencia, has material impact on future inheritance taxation. Three operational caveats:

(i) Effectively meeting the connecting factor (habitual residence in the five years preceding the ISD accrual). A formal residence without material presence does not withstand an inspection, as we have analysed in the Frequently asked questions about Spanish tax residence on the STSJ of the Canary Islands of 20/12/2024.

(ii) Anticipating the planning. Gifting immediately upon settling in Madrid can be viewed with suspicion if the move is manifestly tax-driven. The autonomous rule of non-effectiveness of residence changes (art. 28.4 Act 22/2009) operates between Autonomous Communities under the three-year presumption; between State and Autonomous Community, the AEAT can also examine the substance.

(iii) Documenting the change. Census registration, lease agreement, schooling, banking movements, medical visits, social ties. We have systematised this in the defensive file described in the residence FAQ.

5. Resident access to the more favourable autonomous regime

If I am a new Spanish resident and my father dies in Switzerland, can I choose the Autonomous Community?

Yes, by virtue of the equalisation operated by CJEU C-127/12, STS 242/2018 and the 2nd AP LISD. The rule is:

(i) Where the (non-resident) deceased held assets in Spain, the legislation of the Autonomous Community where the largest value of those assets is located applies.

(ii) Where the deceased held no assets in Spain, the legislation of the Autonomous Community of the heir’s residence applies.

That means, in practice, that the Madrid-resident heir benefits from the 99 per cent rebate even when the inheritance comes entirely from abroad and the deceased never resided in Spain. It is one of the commercially most relevant points for the planning of outbound HNWI wealth towards Spain with a succession perspective.

And residents of third countries?

The same criterion applies thanks to STS 242/2018. The free movement of capital of article 63 TFEU has erga omnes effect, extending the equalisation to heirs resident in third countries (United States, Switzerland outside the EC-Switzerland Agreement, post-Brexit UK, etc.). The AEAT has been admitting access to the more favourable autonomous legislation without distinction by nationality or residence.

6. International double taxation

If I pay UK Inheritance Tax on my father’s estate and then pay tax in Spain on the same estate, is there relief?

Yes, via the unilateral route of article 23 LISD. Spain, lacking a specific inheritance treaty with the UK, applies the relief for international double taxation: the lesser of (i) the foreign tax actually paid, or (ii) the result of applying the average effective Spanish ISD rate to the assets situated abroad.

The relief is not full: Spain will always collect at least the difference between its average rate and the foreign one. For estates from high-rate jurisdictions (UK 40 per cent, France 45 per cent), the relief typically exhausts the Spanish liability. For estates from low-rate or no-inheritance-tax jurisdictions (Switzerland variable, Andorra none, UAE none, US federal but only above USD 13.6 million estate), the Spanish liability operates almost in full.

And inheritance treaties?

Only France (1963), Greece (1919) and Sweden (1963). All three are old conventions and operate the classical allocation of taxing rights —the State of situation taxes real estate and PE-affected assets; the State of the deceased’s residence taxes the rest—. Outside those three conventions, the unilateral regime of art. 23 LISD applies.

7. Succession pact: the structured route of regional civil law

What is the succession pact?

A figure of regional civil law (Catalonia, Balearic Islands, Galicia) that allows the early implementation of succession upon death with partial inter vivos effects, retaining the ISD tax regime of succession by death. That is: assets are transferred during the lifetime but are taxed under inheritance rules, not gift rules. The tax advantage is relevant in Autonomous Communities with very high inheritance rebates (Balearic Islands 100 per cent, Madrid 99 per cent) and with stricter taxation of gifts.

The figure is not available to residents under common civil law. It requires regional civil status (vecindad civil) of Catalonia, the Balearic Islands or Galicia.

We will dedicate a specific FAQ to it in a future publication.

8. Family business: the 95 per cent reduction

How does the 95 per cent reduction of article 20.6 LISD work?

Where the inheritance or gift includes shareholdings in a family business meeting the requirements of article 4.Ocho.Dos LIP —non-patrimonial status, qualified shareholding, remunerated management functions within the family group—, the ISD taxable base for those shareholdings is reduced by 95 per cent. The reduction is conditioned on holding the acquisition for 5 or 10 years, depending on the Autonomous Community.

It is the tax pillar of family-business transfer in Spain. Two recent analyses are worth bearing in mind:

(i) Binding consultation DGT V-0354-26 of 18/02/2026 on holding interposition and the loss of the family-business exemption for family-group members with direct shareholdings in the operating entity.

(ii) The TEAC Resolutions of 20/03/2026 on the full-time employee requirement met at group level in family real-estate rental groups.

9. Time limits, forms and filing place

Time limits?

Inheritances: 6 months from death (Form 650 in autonomous regions; Form 660 declaration of assets). Gifts: 30 working days from formalisation (Form 651).

Place of filing?

In Autonomous Communities: before the corresponding Autonomous Tax Administration. For non-residents with Spanish-situs assets: before the AEAT (Oficina Nacional de Gestión Tributaria) —although, under the 2nd AP LISD and STS 242/2018, the non-resident can apply the more favourable autonomous legislation—.

And if I am a new resident and the inheritance comes from abroad?

Filing before the AEAT (Oficina Nacional de Gestión Tributaria), applying the autonomous legislation that corresponds by connecting factor —heir’s residence, where the deceased held no Spanish assets—.

10. Special cases

Crypto received by inheritance or gift.

Bitcoin and other cryptocurrencies are valued at market on the accrual date. The asset is deemed located at the holder’s residence for real-obligation purposes (DGT criterion in V0999-18 and subsequent consultations). Where the heir/donee is a Spanish resident, personal obligation applies.

Trusts and foreign foundations.

Highly sensitive material. We will dedicate a specific upcoming FAQ to this. As a guiding criterion, the AEAT and Spanish courts tend to look through the structure (transparency) when the settlor retains powers of control or the trust is revocable. An irrevocable trust with beneficiary different from the settlor can operate as a genuine transfer, with the consequence that the ISD accrual is deferred until distribution to beneficiaries.

Spanish property inherited by a non-resident.

Real-obligation taxation in Spain, with access to the autonomous legislation of the Community where the property is located (2nd AP LISD). We have developed this in the Frequently asked questions about non-resident property taxation.

Deceased with dual nationality or multiple residences.

Worth anticipating the analysis of succession forum shopping. The choice of law applicable to succession under Regulation (EU) 650/2012 (Rome I succession) can have material impact on the determination of forced heirs and, by elevation, on the tax planning of the deceased.

ISD is the most sensitive tax for the foreign HNWI settling in Spain. The above is a map, not an opinion. If you are planning your move to Spain with a succession perspective, if you have received a significant inheritance or gift from abroad, or if you are organising the succession of multi-jurisdictional wealth, get in touch before taking operational steps. Choice of Autonomous Community, timely formalisation by public deed, use of the succession pact where available and coordinated application of the family-business reduction are pieces with material quantitative impact and, for the most part, irreversible once the ISD has accrued.

For the prior condition of Spanish tax residence, see the Frequently asked questions about Spanish tax residence. For the Beckham regime applicable to the relocated worker, the Frequently asked questions about the Beckham Law. For the subsequent exit with a portfolio, the Frequently asked questions about the exit tax.

Sources

State legislation

• Act 29/1987, of 18 December, on Inheritance and Gift Tax (LISD), including the 2nd additional provision inserted by Act 26/2014.
• Act 22/2009, of 18 December, on the financing system of the Autonomous Communities of the common regime (art. 32 on connecting factors).
• Act 35/2006, of 28 November, on Personal Income Tax (art. 36 transfer value in gifts; art. 33.3.c non-recognition rule in family business).

Key regional legislation

• Catalonia: Llei 19/2010, of 7 June, on Inheritance and Gift Tax (art. 38 special reduced rate on public-deed gifts).
• Madrid: Royal Legislative Decree 1/2010, of 21 October, modified by Act 7/2018 and by Act 2/2025 (99 per cent rebate).
• Valencia: Act 13/1997, of 23 December, modified by Act 6/2023 and by Act 5/2025 (99 per cent rebate with public deed and traceability).
• Balearic Islands: Decret Llei 4/2023, of 18 July, confirmed by Act 11/2023, of 23 November (100 per cent inheritance rebate Groups I-II).

Key case law

• CJEU, judgment of 03/09/2014, Case C-127/12 (equalisation of EU/EEA residents for access to autonomous legislation): link
• Spanish Supreme Court, judgment 242/2018, of 19/02/2018 (extension to residents of third countries): link

Spain’s inheritance treaties in force

• Convention Spain-France, of 08/01/1963.
• Convention Spain-Greece, of 06/03/1919.
• Convention Spain-Sweden, of 25/04/1963.