Inheritance & Gift Tax (Impuesto sobre Sucesiones y Donaciones – ISD) for Spanish Residents

The Inheritance and Gift Tax (ISD) is a tax levied in Spain on the recipient of assets (the heir or donee), not on the estate of the deceased or the donor. While the core framework is national, significant taxing power is devolved to the Autonomous Communities (CC. AA.).

For Spanish tax residents, this tax applies under the Personal Obligation rule, meaning it covers worldwide assets and rights received, regardless of where they are physically located.

🏛️ Core Principles of the ISD

Key Taxable Events

The ISD is triggered by three main events:

1. Inheritance (Mortis Causa): Acquisition of assets or rights upon the death of the transferor.
2. Gifts (Inter Vivos): Gratuitous transfer of assets or rights between living persons (donations).
3. Life Insurance: Receipt of amounts by beneficiaries when the policyholder is someone other than the beneficiary.

Obligation to Pay

The tax liability falls upon the individual receiving the transfer:

• In Inheritances: The heirs or legatees.
• In Gifts: The donee (the person receiving the gift).
• In Life Insurance: The designated beneficiaries.

Tax Base Calculation

The tax is applied to the Net Value of the acquisition:

• For Inheritances/Gifts: The gross value of assets/rights acquired minus any deductible charges and debts (e.g., funeral costs, outstanding mortgages).
• For Life Insurance: The amounts received are taxed, often accumulated with other inherited assets if the deceased was the policyholder.

🗺️ Jurisdiction and Applicable Law

For individuals who are Spanish tax residents, the jurisdiction for processing the tax and applying the regional rules is typically transferred to the Autonomous Community where the deceased/donor was habitually resident (for inheritances) or where the recipient is resident (for gifts).

💸 Tax Burden: National vs. Regional Law

The biggest planning variable in the ISD is the difference between the State (National) Law and the regional CC. AA. Laws.

The National (State) Law

If the Autonomous Community has not approved its own specific rules, or if those rules cannot be applied, the State Law is used. This system uses a highly progressive tax rate scale, which is then dramatically adjusted by a multiplier.

A. Progressive Tax Rate (Cuota Íntegra)

The National Taxable Base is subject to a progressive scale starting at $7.65\%$ and reaching up to $34.00\%$.

B. The Multiplier Coefficient (Cuota Tributaria)

The resulting tax is multiplied by a coefficient based on two factors: the degree of kinship between the deceased/donor and the recipient, and the recipient’s pre-existing net wealth (Patrimonio Preexistente).

Kinship Groups: Groups I & II (Spouses, children, parents) have the lowest multipliers. Groups III & IV (siblings, non-relatives) face very high multipliers, potentially doubling the final tax due.

The Regional Reliefs (The Planning Opportunity)

Many Autonomous Communities offer significant tax reliefs, reductions, and generous exemptions for close family members (Groups I and II).

• Near-Total Relief: Regions like Madrid, Andalusia, Murcia, and the Canary Islands offer near-total reductions (e.g., 99% or 100% tax bonifications) on the tax quota for inheritances and often for gifts between spouses, parents, and children.
• Generous Exemptions: Some regions offer personal tax-free allowances that far exceed the State’s allowance of €15,957 for Groups I & II (e.g., Andalusia’s mínimo exento often reaches €1,000,000).

For Spanish residents, ensuring the application of a beneficial Autonomous Community’s law (which is possible through correct tax residency declaration and jurisdictional rules) is paramount for minimizing the tax burden on inheritances and gifts.

Summary of Inheritance Tax Regulations by Region (2025)

Self-Assessment Form

You must submit a different Self-Assessment Form depending on the transaction:

📄 Need an official form? > You can download the reference PDF and other tax models in our Spanish Tax Forms Library. We provide summaries and official BOE templates to help you prepare your filing.

🌍 Deduction for International Double Taxation

For Spanish residents who are subject to Personal Obligation (taxed on worldwide assets), receiving assets located in another country that levies a similar inheritance tax can lead to double taxation.

The Spanish tax law provides a deduction to mitigate this:

• Deduction: The Spanish tax due is reduced by the lesser of: (1) the tax effectively paid abroad on that asset, OR (2) the result of applying the Spanish effective tax rate to the net asset value situated outside Spain.

This deduction ensures Spanish residents are not penalized for inheriting worldwide assets but are often still required to go through the administrative process to prove the tax paid abroad.