1. Basic concepts

Which tax applies to inheritances and gifts in Spain?

The Inheritance and Gift Tax, regulated by Law 29/1987, of 18 December, on Inheritance and Gift Tax (hereinafter, the LISD). It is a personal, progressive tax and, to a large extent, devolved to the Autonomous Communities: the State sets the framework and each Community may regulate reductions in the tax base, rate scales, multiplying coefficients and tax credits. This devolution explains the large regional differences set out in section 4.

How does it affect a foreigner who has just settled in Spain?

Becoming a Spanish tax resident, under the criteria of article 9 LIRPF that we have developed in the Frequently asked questions about Spanish tax residence, triggers personal liability to the ISD. A resident is taxed in Spain on any inheritance or gift received, regardless of where the deceased died, where the donor lived and where the transferred assets are located.

The difference from a non-resident is structural: a non-resident is taxed under limited (real) liability, only on assets located in Spain; a resident is taxed on all assets and rights acquired, wherever located.

When does that liability begin?

Personal liability depends on habitual residence in Spain on the accrual date. The ISD accrues on the day of death (inheritances) and on the day the act or contract is executed (gifts), under article 24 LISD. If the recipient is a Spanish tax resident at that moment, personal liability applies.

Are “personal liability” and “limited liability” the same?

No, they are two different regimes.

(i) Personal liability applies to Spanish tax residents, who are taxed on all assets and rights acquired, wherever located.

(ii) Limited liability applies to non-residents, who are taxed only on assets and rights located, exercisable or to be performed in Spain. For real estate, we have developed this in the Frequently asked questions about non-resident property taxation.

2. Inheritances received from abroad

A Spanish tax resident inherits his father’s entire estate; the father was resident in Switzerland. Is it taxed in Spain?

Yes, under personal liability. The inheritance is taxed in Spain in full, even though the deceased was not resident and the assets are outside Spain. This is one of the points that most surprises people coming from jurisdictions with territorial systems or no inheritance tax.

The tax base is the value of the assets and rights acquired. The tax due depends on the State rules or on the applicable regional rules, as explained below.

Which regional rules apply?

As a general rule, inheritances are governed by the rules of the Autonomous Community where the deceased had habitual residence on the accrual date, determined by the greatest number of days spent there in the preceding five years (arts. 32.2.a and 28.1.1.º.b of Law 22/2009). If the deceased was not resident in Spain, this rule does not lead to any regional rules.

For that case there is now a statutory rule. The Second Additional Provision (DA 2ª) of the LISD, introduced by Law 26/2014 following the CJEU judgment of 03/09/2014 (C-127/12) and amended by Law 11/2021, of 9 July, to extend it to all non-residents (not only those in the EU or EEA), provides that, if the deceased was not resident in Spain, the heirs may apply the rules of the Autonomous Community where the greatest value of the estate’s assets and rights located in Spain is found; if there are no assets in Spain, each heir applies the rules of the Community in which he or she resides (DA 2ª.Uno.1.a LISD). The Supreme Court had already extended that access to residents of third countries in its judgment 242/2018, of 19/02/2018, given in State liability proceedings (liability of the State as legislator).

This is the decisive factor. An heir resident in Madrid will apply the Madrid 99 per cent tax credit to the inheritance from a Swiss father. The same heir resident in Barcelona will apply the Catalan rules: kinship reductions, Catalonia’s own scale (up to 32 per cent) and, for inheritances, a tax credit that decreases as the base increases (art. 58 bis of Llei 19/2010), far below Madrid’s for large estates.

What if foreign inheritance tax has already been paid?

Spain has very few ISD-specific 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 treaties, a Spanish tax resident who has paid a similar tax abroad on the same inheritance may apply the international double taxation credit of article 23 LISD: the lower of (i) the tax paid abroad, or (ii) the result of applying the effective average ISD rate to the assets located or rights exercisable abroad.

The credit mitigates double taxation but does not always eliminate it. It matters for inheritances from jurisdictions with high inheritance taxes (United Kingdom, France, Germany). For inheritances from jurisdictions with no inheritance tax or with broad exemptions for close family (Sweden since 2005; Portugal, which exempts spouses, descendants and ascendants; many Swiss cantons; Andorra; the United Arab Emirates), there is usually no foreign tax to credit and the Spanish ISD applies in full.

3. Gifts received from abroad

A mother resident in the United Arab Emirates wants to give a block of shares to her son, who is resident in Spain. Is it taxed in Spain?

Yes, under personal liability. The gift is taxed in Spain because the donee is resident, regardless of the donor’s residence and the location of the assets.

The connecting factor for gifts differs from that for inheritances. For gifts of movable property (shares, bank accounts, jewellery, cryptocurrencies), the rules of the Autonomous Community where the donee has habitual residence apply, determined by the greatest number of days in the five years preceding the accrual date (art. 32.2.c Law 22/2009). For gifts of real estate located in Spain, the rules of the Community where it is located apply (art. 32.2.b); if the property is outside Spain, the resident donee applies the rules of the Community of residence (DA 2ª.Uno.1.d LISD).

And the other way round? A Spanish resident wants to give shares to his son, who is resident in the United Kingdom.

Here the logic changes. The son, as a non-resident, is taxed under limited liability: only on assets located in Spain or rights exercisable in Spain.

For movable property located in Spain, the non-resident donee may apply the rules of the Autonomous Community where that property was located for the greatest number of days in the five years preceding the accrual date (DA 2ª.Uno.1.e LISD).

The resident donor must also bear in mind the Personal Income Tax (IRPF) effect: a gift of securities with a latent gain gives rise to a capital gain subject to the donor’s IRPF (using the value resulting from the ISD rules, art. 36 LIRPF), unless the non-recognition rule of article 33.3.c) LIRPF linked to the 95 per cent family-business reduction applies. And, as we have analysed in connection with binding ruling V-3222-20 and the Central Economic-Administrative Tribunal (TEAC) resolution of 19/02/2026 (RG 1535/2024) on the application of the FIFO method to gratuitous transfers, FIFO applies to identify which homogeneous securities are transferred.

4. The main differences between Autonomous Communities

Quick map by Autonomous Community in 2026.

The Communities most often considered by people settling in Spain:

(i) Madrid: 99 per cent tax credit for groups I (descendants and adoptees under 21) and II (descendants and adoptees aged 21 or over, spouse, ascendants and adopters), for both inheritances and gifts and with no cap. For gifts, the transfer must be formalised in a public document. For group III, the credit introduced for collateral relatives by Law 6/2018, of 19 December, has been raised by Law 2/2025, of 25 June, to 50 per cent for the whole of group III. Since 01/07/2025 a public document is not required where the tax base, aggregating gifts from the same donor in the previous three years, does not exceed EUR 10,000.

(ii) Balearic Islands: 100 per cent tax credit on inheritances for groups I and II, including succession agreements (a figure recognised in Balearic civil law), under Decree-law 4/2023, of 18 July, and Law 11/2023, of 23 November. Group III: 60 per cent credit for siblings, nephews and nieces, and uncles and aunts by blood who do not concur with descendants of the deceased, and 35 per cent in other cases (art. 36 bis of Legislative Decree 1/2014, as worded by Law 6/2025, of 23 July).

(iii) Valencian Community: 99 per cent tax credit for groups I and II on inheritances; for gifts, the 99 per cent covers spouses, parents, children, grandchildren and grandparents. Gifts are subject to stricter formal requirements: a public deed and proof of the origin of the funds and of the means of delivery when money is given. The rules are in article 12 bis of Law 13/1997, of 23 December, as amended by Law 6/2023, of 22 November, and Law 5/2025, of 30 May. Group III (siblings, nephews and nieces, and uncles and aunts by blood): 25 per cent credit, rising to 50 per cent on 01/06/2027 (Law 5/2025, as worded by Law 5/2026, of 31 July).

(iv) Catalonia: here the logic is different. For gifts there is no general tax credit; instead, the reduced scale of article 57 of Llei 19/2010, of 7 June, applies to gifts to groups I and II formalised in a public deed or court judgment. For inheritances, the decreasing tax credit of article 58 bis applies.

(v) Other Communities with heavier taxation apply their own scale or the State scale, with more limited credits.

Catalonia: the reduced scale of art. 57 Llei 19/2010.

It is one of the least known rules for people resident in Barcelona. When a gift to descendants, spouse, ascendants or other members of groups I and II is formalised in a public deed, the rates applicable to the taxable base are:

• Up to EUR 200,000: 5 per cent (tax of 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.

Where a deed is not a validity requirement (for example, a gift of money), the law requires the gift to be formalised in a public deed within one month of delivery to access the reduced scale. This is often missed: a gift of money by bank transfer without a subsequent deed falls under the general Catalan scale (art. 57.3 Llei 19/2010), which reaches 32 per cent.

The multiplying coefficient (art. 58 Llei 19/2010: between 1.0 and 1.2 for groups I and II, depending on pre-existing wealth) increases the tax. A EUR 1,000,000 gift from father to son in a public deed produces gross tax of EUR 74,000 (5 % on 200,000, 7 % on 400,000 and 9 % on 400,000), or 7.4 per cent, which may reach EUR 88,800 with the maximum coefficient. Without a deed, the general scale gives gross tax of EUR 217,000, before reductions and coefficient.

Madrid: the 99 per cent tax credit.

The formula is different. The scale applies in full, but a 99 per cent credit is applied to the resulting tax for groups I and II. Result: 1 per cent of the tax is paid.

For gifts, the formal requirement is a public document, unless the tax base, aggregating gifts from the same donor in the previous three years, does not exceed EUR 10,000 (Law 2/2025). For inheritances, no special formality is required beyond the deed of acceptance and partition.

How to choose a Community when there is room to do so?

For someone moving to Spain who has not yet established a connecting factor, choosing Madrid over Barcelona, or the Balearic Islands over the Valencian Community, has a material impact on future inheritance taxation. Three precautions:

(i) Actually meet the connecting factor. For the ISD, the Community of residence is the one where the person has spent the greatest number of days in the five years preceding the accrual date (art. 28.1.1.º.b Law 22/2009). A formal residence without physical presence is hard to sustain in a tax audit, as we explain in the Frequently asked questions about Spanish tax residence.

(ii) Plan ahead. Making a gift immediately after settling in Madrid may raise suspicion if the move is manifestly tax-driven. The anti-avoidance clause of article 28.4 Law 22/2009, against changes of residence whose main purpose is to obtain lower taxation, remains available to the tax authorities.

(iii) Document the move: municipal registration, lease, schooling, bank movements, healthcare and social ties. We have set this out in the defence file described in the tax residence FAQs.

5. Access to regional rules where the deceased or the recipient is not resident in Spain

If a recent Spanish resident inherits from his father, who died in Switzerland, which Community’s rules apply?

The rule is in DA 2ª.Uno.1.a) LISD:

(i) If the (non-resident) deceased had assets in Spain, the rules of the Community where the greatest value of those assets is found apply.

(ii) If the deceased had no assets in Spain, each heir applies the rules of the Community of residence.

In practice, an heir resident in Madrid applies the 99 per cent credit even where the inheritance comes entirely from abroad and the deceased never lived in Spain.

What about heirs or donees resident in third countries?

Since Law 11/2021, DA 2ª LISD grants all non-residents, whether or not resident in the EU or the EEA, statutory access to regional rules. The rules are: if the deceased was resident in a Community, that Community’s rules (DA 2ª.Uno.1.b); if not resident in Spain, those of the Community where the greatest value of the deceased’s assets in Spain is located (1.a); for gifts of real estate, those of the Community where it is located (1.c); and for gifts of movable property, those of the Community where it was located for the greatest number of days in the preceding five years (1.e).

6. International double taxation

If UK Inheritance Tax is paid on a father’s estate and the same inheritance is then taxed in Spain, is there a credit?

Yes, unilaterally under article 23 LISD. In the absence of an inheritance tax treaty with the United Kingdom, the international double taxation credit applies: the lower of (i) the tax actually paid abroad, or (ii) the result of applying the effective average Spanish ISD rate to the assets located abroad.

The credit is capped at the part of the Spanish tax attributable to the assets taxed abroad; if the foreign tax is lower, Spain collects the difference. For inheritances from high-tax jurisdictions (United Kingdom, France), the credit usually exhausts that part of the Spanish tax. For inheritances from low-tax or no-inheritance-tax jurisdictions (many Swiss cantons, Andorra, the United Arab Emirates, or the United States, which taxes only above a high federal exemption), the Spanish tax applies practically in full.

What about inheritance tax treaties?

Only with France (1963), Greece (1919) and Sweden (1963). They are old conventions, each with its own allocation rules, which should be checked in their text. Outside them, the unilateral regime of article 23 LISD applies.

7. Succession agreements: the regional civil-law route

What is a succession agreement?

A figure of the regional civil laws (Catalonia, the Balearic Islands, Galicia, Aragon, Navarre and the Basque Country, each with its own rules) that allows assets to be transferred during lifetime under the tax regime for acquisitions on death: assets are transferred during lifetime, but taxed under inheritance rules rather than gift rules. Accrual takes place on the day the agreement is entered into (art. 24.1 LISD). The tax advantage is significant in Communities with very high inheritance tax credits (such as the Balearic Islands, at 100 per cent) and heavier taxation of gifts.

It is not available under common civil law: it requires the corresponding regional civil status (vecindad civil).

For IRPF purposes, if the beneficiary transfers the assets within five years of the agreement or before the death of the transferor, the beneficiary takes over the transferor’s acquisition value and date (art. 36 LIRPF, as worded by Law 11/2021).

8. Family business: the 95 per cent reduction

How does the 95 per cent family-business reduction work?

The 95 per cent family-business reductions are in article 20.2.c) LISD for inheritances and in article 20.6 for gifts (in the latter case, the donor must be 65 or over or incapacitated and must cease to perform management functions). Both require the holdings to qualify for the exemption in article 4.Ocho.Dos of the Wealth Tax Act (LIP) and to be retained for ten years under the State rules, a period that many Communities reduce to five.

It is the central element in the transfer of family businesses in Spain. Two recent analyses are relevant:

(i) Binding ruling V-0354-26, of 19/02/2026, on the interposition of a managing holding company and the loss of the Wealth Tax exemption (and, by extension, of the ISD reduction) for family members who keep direct ownership of the operating company.

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

9. Deadlines, forms and place of filing

Deadlines?

Under the State rules: inheritances, six months from death; gifts, 30 working days from execution. Forms and some deadlines vary depending on the competent Autonomous Community (at the Spanish Tax Agency, AEAT, forms 650 and 651).

Where to file?

Where there is a regional connecting factor, with the tax administration of the relevant Community. Where the taxpayer must pay to the State Administration (non-residents or a non-resident deceased), with the AEAT (National Tax Management Office), applying where appropriate the regional rules resulting from DA 2ª LISD.

And if a recent resident receives an inheritance from abroad?

If the deceased was not resident in Spain, the return is filed with the AEAT (National Tax Management Office), applying the regional rules resulting from DA 2ª.Uno.1.a): those of the heir’s Community of residence, if the deceased had no assets in Spain.

10. Special cases

Cryptocurrencies received by inheritance or gift.

Cryptocurrencies are included at market value on the accrual date. If the heir or donee is resident in Spain, personal liability applies to the whole amount, wherever the assets are deemed located.

The location of cryptocurrencies for limited-liability purposes (non-resident recipient) is not expressly resolved by the law. In our opinion, the question is doubtful and depends on the circumstances, for example whether custody is held by an entity established in Spain; it should be analysed case by case.

Foreign trusts and foundations.

The DGT does not recognise the trust: contributions have no effect and the beneficiaries’ acquisitions are deemed to come directly from the settlor, at the moment they actually occur (V-1991-08, of 30/10/2008; V-0022-25, of 09/01/2025; V-1700-25, of 18/09/2025). Thus, designating beneficiaries with effect from the settlor’s death gives rise to an acquisition on death subject to the ISD and, according to the DGT, the beneficiary may apply the reductions, credits and coefficients based on kinship with the settlor, provided the other requirements are met. The DGT makes an exception where the beneficiary’s powers amount to ownership from the time of the contribution.

We have commented on this doctrine in the analyses International trusts and inbound workers and The DGT consolidates the tax transparency of the foreign trust.

Spanish real estate inherited by a non-resident.

It is taxed in Spain under limited liability, with access to the rules of the deceased’s Autonomous Community of residence, if the deceased lived in Spain, or of the Community where the greatest value of the deceased’s assets in Spain is located, if not (DA 2ª.Uno.1.a and b LISD). We have developed this in the Frequently asked questions about non-resident property taxation.

Deceased with dual nationality or several residences.

The analysis should be done in advance. The law applicable to the succession under Regulation (EU) No 650/2012 (the European Succession Regulation), which excludes tax matters from its scope, may have a material impact on who the forced heirs are and, through that, on tax planning.

The ISD is one of the most sensitive taxes for a foreigner settling in Spain. The above is a general map, not an opinion. The choice of Autonomous Community, executing a public deed within the deadline, using a succession agreement where available and coordinating the family-business reduction have a very high quantitative impact and, for the most part, cannot be corrected once accrual has occurred.

For the prior question of Spanish tax residence, see the Frequently asked questions about Spanish tax residence. For the Beckham regime applicable to inbound workers, the Frequently asked questions about the Beckham Law. For a later departure with a portfolio of holdings, the Frequently asked questions about the exit tax.

Sources

State legislation

• Law 29/1987, of 18 December, on Inheritance and Gift Tax (LISD): arts. 20, 23 and 24, and Second Additional Provision, introduced by Law 26/2014 and amended by Law 11/2021, of 9 July.
• Law 22/2009, of 18 December, on the financing system of the common-regime Autonomous Communities (arts. 28 and 32, connecting factors).
• Law 35/2006, of 28 November, on Personal Income Tax (art. 36, valuation in gratuitous transfers and succession agreements; art. 33.3.c, non-recognition rule for family businesses).

Regional legislation

• Catalonia: Llei 19/2010, of 7 June, regulating inheritance and gift tax (art. 57, scales; art. 58, coefficients; art. 58 bis, inheritance tax credit).
• Madrid: Legislative Decree 1/2010, of 21 October, of the Community of Madrid, as amended by Law 6/2018, of 19 December, and Law 2/2025, of 25 June.
• Valencian Community: Law 13/1997, of 23 December (art. 12 bis), as amended by Law 6/2023, of 22 November, Law 5/2025, of 30 May, and Law 5/2026, of 31 July.
• Balearic Islands: Legislative Decree 1/2014, of 6 June (arts. 36 and 36 bis); Decree-law 4/2023, of 18 July, and Law 11/2023, of 23 November; Law 6/2025, of 23 July.

Administrative doctrine

• DGT, Binding ruling V-1991-08, of 30/10/2008 (trust: non-recognition and beneficiary’s acquisition on death): link
• DGT, Binding ruling V-0022-25, of 09/01/2025 (contribution of shares to irrevocable trusts): link
• DGT, Binding ruling V-1700-25, of 18/09/2025 (trust: direct transfer from settlor to beneficiary and DA 2ª LISD): link
• DGT, Binding ruling V-0354-26, of 19/02/2026 (managing holding company and family-business exemption): link

Case law

• CJEU, judgment of 03/09/2014, Case C-127/12, Commission v Spain (access of EU/EEA non-residents to regional rules): link
• Spanish Supreme Court, Third Chamber, Fifth Section, judgment 242/2018, of 19/02/2018 (appeal 62/2017, ECLI:ES:TS:2018:550), on the extension to residents of third countries: www.poderjudicial.es.

Inheritance tax treaties in force

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