Inheritance and gift tax in Spain: complete guide 2025

Introduction

Transferring assets in Spain, whether by inheritance or gift, involves taking into account inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones - ISD). Although this tax has undergone a number of reforms, it remains an essential stage in the transfer of assets.

1. Who is affected by ISD?

ISD applies to

• To heirs or beneficiaries resident in Spain, for assets received anywhere in the world.
• Non-residents, for property received located in Spain.
  
  In other words, even if the heir lives in France or Belgium, he must pay ISD in Spain if he inherits Spanish property.

2. Applicable rates

The calculation of ISD depends on :

• The value of the property inherited.
• The family relationship between the deceased and the heir.
• The autonomous community in which the property is located.

At national level, the scale is progressive, with rates ranging from 7.65% to 34%. However, each Autonomous Community applies its own reductions and exemptions, which are sometimes very advantageous for direct line heirs.

3. Exemptions and reductions

There are a number of cases where tax can be considerably reduced:

• Significant reductions for direct heirs (children, spouses, parents).
• Special allowances for the disabled.
• Partial tax relief on the principal residence, depending on the region.
• Advantages for transfers of family businesses or business assets.
  
  In some regions, such as Madrid, ISD can be virtually nil for direct heirs.

4. Gifts in Spain

A gift is subject to the same rules as an inheritance, but must be declared immediately. The donee must pay the gift tax at the time of the transfer. Gifts of property require a notarial deed and entry in the land register.

5. Practical example

A French resident inherits a flat in Spain worth €300,000:

• If the property is located in Catalonia, after allowances and reductions, the heir can pay around €10,000.
• If the property is located in Madrid, the direct heir can benefit from a 99% reduction, reducing the tax to just a few hundred euros.

6. Procedures and deadlines

The heir has 6 months from the date of death to file the declaration and pay the ISD. It is possible to request an extension of a further 6 months. In the case of a gift, the declaration must be made within 30 days of the signing of the deed.

7. Consequences of non-payment

Late payment will incur interest and penalties. In addition, no transfer of ownership may be effected in the Land Register without proof of payment of or exemption from ISD.

8. Practical advice

To prepare for a transfer in Spain :

• Consult a notary and a tax expert to optimise taxation in your region.
• Consider a gift during your lifetime if it will reduce tax.
• Take into account the tax treaties between France, Belgium and Spain to avoid double taxation.
• Anticipate the payment to avoid blockages when the property is transferred.

Conclusion

Inheritance and gift tax in Spain is a complex tax system because it depends so heavily on the autonomous communities. Good preparation, together with specialist advice, can considerably reduce the amount payable and ensure a smooth transfer of assets.

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