Inheritance Tax for UK Expats in Spain (2026)

Spain taxes inheritances and lifetime gifts through a single tax known as the Impuesto sobre Sucesiones y Donaciones (ISD), or succession and gift tax. The structure is very different from the United Kingdom. In Spain the tax falls on each recipient rather than on the estate, the rate rises with the size of the share received, and the relationship between the deceased and the heir changes both the allowances and the final bill.

For UK expats the picture is complicated further by Spain's regional system. Each autonomous community can set its own reductions and rebates, so the effective rate on the same inheritance can range from close to nothing to a substantial sum depending purely on which region governs the case. This guide sets out how ISD works, the regional variation, and how non-residents are treated after the European court rulings.

• ISD is paid by the recipient, not the estate, on a progressive scale running from 7.65% to 34% before regional adjustments.
• State allowances are modest: roughly EUR 15,957 for close family (Groups I and II) and EUR 7,993 for siblings, nieces and nephews (Group III). Group IV gets nothing.
• Autonomous communities set their own reductions. Andalucia, Madrid, the Balearics and the Valencian Community apply rebates of 99% or 100% for close relatives.
• Following CJEU and Spanish Supreme Court rulings, non-residents (including UK residents after Brexit) can apply the relevant region's rules rather than the harsher state-only regime.
• There is no UK-Spain inheritance tax treaty. The UK gives unilateral relief so Spanish ISD paid can usually be offset against any UK IHT on the same asset.

How Spanish succession and gift tax works

ISD is charged on the value each beneficiary receives, not on the total estate. The taxable amount is then run through a progressive scale that starts at 7.65% on the first slice and reaches 34% on larger amounts. After that, a multiplier can apply that increases the bill for distant relatives and for heirs who already hold significant wealth. Because the tax is recipient-based, splitting an estate between several heirs can reduce the overall charge compared with leaving everything to one person.

Heirs are sorted into four groups. Group I is children and descendants under 21. Group II is children and descendants aged 21 or over, spouses, and parents or other ascendants. Group III covers siblings, nieces, nephews, aunts, uncles and in-laws. Group IV is everyone else, including unmarried partners who are not recognised under the relevant regional rules and friends. The closer the relationship, the larger the allowance and the lower the multiplier.

State allowances versus regional reductions

The national rules provide only modest tax-free allowances. The position changes dramatically once a region applies its own reductions and rebates. The table below shows the baseline state allowances against examples of regional treatment for close relatives, current for 2025 into 2026.

The contrast matters. The same inheritance passing to a child can attract almost no tax in Andalucia or Madrid yet a meaningful charge in a region that has not adopted a comparable rebate. Identifying which autonomous community has the right to tax a given inheritance is therefore the first step in any calculation, not an afterthought.

Which region applies, and non-resident treatment

For a resident heir, the applicable region is generally the one where the deceased was habitually resident. Where real estate is involved, location of the property also drives the position. This is why a UK family with a holiday home on the Costa del Sol is dealt with under Andalusian rules, while a property near Alicante falls under the Valencian Community.

Non-residents were historically forced onto the harsher state-only regime, which denied them the generous regional rebates. The Court of Justice of the European Union ruled this discriminatory in case C-127/12 on 3 September 2014, breaching the free movement of capital. Spain amended its law from 2015 for EU and EEA residents, and Spanish Supreme Court rulings in 2018 extended the same equal treatment to residents of third countries. In practice this means UK residents, despite Brexit, can claim the rules of the connected autonomous community rather than being confined to the state regime.

Double taxation between the UK and Spain

There is no inheritance tax treaty between the United Kingdom and Spain. The 2013 convention between the two countries covers income and capital taxes only, so it does not prevent the same asset being taxed in both places. A UK-domiciled person can be within the scope of UK inheritance tax on worldwide assets at the same time as Spanish ISD applies to Spanish assets or to a Spanish-resident heir.

Relief comes through the UK's unilateral relief provisions rather than a treaty. Where UK IHT and Spanish ISD both bite on the same asset, the Spanish tax paid can usually be credited against the UK liability on that asset, which reduces but does not always eliminate the double charge. The interaction depends on residence, domicile and which assets sit where, so the order in which the taxes are calculated affects the result.

This article is for general information only and does not constitute financial, tax or regulatory advice. Kaeltripton.com is not authorised or regulated by the FCA. Pension and tax rules differ by country of residence and change over time. Verify any figure with official sources such as GOV.UK, HMRC or the FCA, and take advice from a suitably authorised adviser in your country of residence before acting.

FAQ

Who pays inheritance tax in Spain?

The recipient pays. Unlike the UK, where inheritance tax is charged on the estate, Spanish ISD is charged on each beneficiary based on what they receive and their relationship to the deceased.

Do UK residents qualify for the Spanish regional reductions?

Yes. After the 2014 CJEU ruling and 2018 Spanish Supreme Court decisions, non-residents including those resident outside the EU can apply the rules of the relevant autonomous community rather than the state-only regime.

Is there a UK-Spain inheritance tax treaty?

No. The UK-Spain double taxation convention covers income and capital taxes only. Relief from double inheritance taxation comes through the UK's unilateral relief, which credits Spanish ISD against UK IHT on the same asset.

How much is the tax-free allowance in Spain?

State allowances are modest: around EUR 15,957 for close family and EUR 7,993 for siblings, nieces and nephews. Many regions add far larger reductions or rebates of 99% or more for close relatives.

Why does the bill vary so much between regions?

Each autonomous community sets its own reductions and rebates. Regions such as Andalucia, Madrid, the Balearics and the Valencian Community apply rebates close to 99% or 100% for close family, while others apply less generous relief.