Updated October 2026
Block IV. Article I.
If you are inheriting in Spain as a non-resident, you need to understand a more complex tax landscape than Spanish residents do. The good news is that since 2015-2018, Spanish legislation has advanced significantly towards equal fiscal treatment between residents and non-residents, thanks to key rulings from the Court of Justice of the European Union and the Spanish Supreme Court. This guide will explain to you exactly how inheritance taxation works in Spain for non-residents, regardless of your nationality and country of residence.
Legal Framework of International Successions: Key Changes
What Law Applies to Your Inheritance?
The answer depends primarily on where the deceased person (de cujus) habitually resided at the moment of their death, according to the European Regulation on Successions (650/2012), which applies to the estates of persons who died on or after August 17, 2015. This regulation establishes that the succession is governed by the law of the country where the de cujus had their habitual residence, not by their nationality. This is a fundamental rule that directly affects your inheritance: a single and uniform law is established for the entire succession, which greatly simplifies procedures compared to previous systems.
If the deceased de cujus resided in Spain, their entire inheritance is governed by Spanish law, even if they were a foreigner. If they resided abroad, the inheritance is governed by the law of that country of residence, even though they had assets in Spain. In both cases, the deceased could have chosen the law of their nationality in their will. However, for real estate specifically located in Spanish territory, it always is taxed according to Spanish tax legislation, regardless of where the de cujus resided.
Non-Resident Discrimination: From Injustice to Fiscal Equality
Until 2014, there was clear discrimination: heirs who were non-residents in Spain could not access the autonomous fiscal benefits that Spanish residents enjoyed. This generated a much higher tax burden. The Judgment of the Court of Justice of the European Union of September 3, 2014 (case C-127/12) condemned Spain for this discrimination, arguing that it violated the free movement of capital.
Subsequently, the Spanish Supreme Court (Judgment 242/2018, of February 19) extended this protection also to non-residents in third countries (non-EU citizens), recognizing that Article 63 of the Treaty on the Functioning of the European Union prohibits restrictions on movements of capital also to third countries. Finally, Law 11/2021 legally consolidated these rights.
As a result of these changes, any non-resident heir—whether from the EU, the EEA or third countries—has the right to apply the same autonomous reductions and bonifications that Spanish residents enjoy. This legislative advance is especially important if you inherit in autonomous communities with low taxation such as Madrid, the Balearic Islands or Andalusia.
Fundamental Concepts: The Three Thirds of Spanish Inheritance
Legal Structure: How Your Inheritance is Divided
When the succession is governed by Spanish common law and there are children or descendants, the inheritance is divided into three equal parts (three thirds), each one with different rules established in the Civil Code from Article 807 onwards. This structure protects the closest family and significantly limits testamentary freedom, unlike many other countries. If the inheritance is governed by a foreign law, these rules do not apply.
Third of Legitimate Share: The Protected Part of Forced Heirs
The third of legitimate share equals one third of all your heritable assets and is completely untouchable by the testator. This part must necessarily be distributed among the forced heirs (children and descendants) in equal parts. Not even with a will can you deprive your children or descendants of this hereditary legitimate share, except through legal disinheritance with justified cause. If you die without a will (intestate), the third of legitimate share is automatically distributed in equal parts among your descendants.
Practical example: If you leave an inheritance of 300,000 euros with two children, each one has guaranteed right to 50,000 euros as legitimate share, regardless of what your will says. This right is inviolable under Spanish law.
Third of Betterment: Your Limited Freedom
The third of betterment also equals one third of the patrimony, but here the testator has certain freedom: you can choose to benefit (better) one or several of your forced heirs with amounts different from their legitimate share. However, this third can only be allocated to children or descendants; it cannot go to strangers or to people without family relationship with you.
Did you know that…? Many testators use the third of betterment to compensate those children who have taken care of them the most or who have greater needs, without this being challengeable by the other heirs.
If you do not specify in the will to whom you benefit, the third of betterment is automatically distributed among all children in equal parts, as part of the common legitimate share.
Third of Free Disposal: Your Total Freedom
The third of free disposal is the only part in which you have absolute freedom. You can leave these assets to whoever you wish: to a friend, to a person who has taken care of you, to a charitable association, to a nephew, to a trusted employee, or even to a person without family relationship with you. This is the only part that is not subject to forced heirs.
You can distribute this third among several people or leave it to a single one, in the proportions you deem appropriate. If you die without disposing of the third of free disposal, this accretes automatically to the forced heirs (generally your children).
Practical case: John is a widower and has three children. In his will he can: leave 100,000 euros (third of legitimate share) divided in equal parts among the three children (33,333 euros each one), better his eldest daughter with another 100,000 euros additional (third of betterment), and leave the last third (100,000 euros) to the Down Syndrome Association that has supported him over the years.
Taxation for Non-Residents: Tax on Successions and Donations (ISD)
When Does the Non-Resident Pay Tax in Spain?
As a non-resident heir, you pay tax in Spain for the following acquisitions by inheritance:
- Real estate located in Spain: You pay tax in Spain, regardless of your residence or nationality
- Movable assets in Spanish territory: Bank accounts, vehicles, works of art, etc., located in Spain are taxed in Spain
- Economic rights over Spanish assets: Shares of Spanish companies, participations, surface rights, etc.
As a non-resident, you do not pay tax in Spain on assets located abroad, even if the deceased lived here: the real obligation only covers assets located in Spanish territory.
Critical Deadlines to File the Succession Tax Declaration
Filing deadline: You have 6 months from the death to file Form 650 (self-liquidation of the ISD). This deadline is fundamental. You can request a single extension for another 6 months, within the first 5 months of the initial deadline; if granted, late-payment interest accrues for the extension period.
What happens if the deadline expires?: If you file late without a prior request from the Tax Agency, a surcharge of 1% plus an additional 1% for each full month of delay applies; after twelve months, the surcharge is 15% plus late-payment interest. If the Tax Agency detects the breach, penalties may be imposed.
Types of Taxes Applicable According to Your Residence
For Residents in Spain: The Tax on Successions and Donations (ISD) applies, with the rules of the Autonomous Community where the deceased lived for the most days in the 5 years prior to death (if the deceased was not resident in Spain, those of the region where the assets located in Spain have the greatest value). Regional reductions and reliefs vary greatly from one region to another.
For Residents in the EU/EEA: Since 2015, if you reside in another country of the European Union or of the European Economic Area, you have the right to apply the autonomous regulations of the Autonomous Community where the deceased resided or, if the deceased did not live in Spain, of the region where the inherited assets located in Spain have the greatest value.
For Residents in Third Countries (Non-EU): Since 2018 (confirmed by Law 11/2021), you have exactly the same rights as EU residents: access to autonomous bonifications, application of reductions by kinship, and non-discriminatory fiscal treatment. This is a result of the judicial rejection of the previous discrimination.
Taxation by Type of Assets: Differentiated Treatment
Inherited Real Estate: Succession Tax + Municipal Appreciation
When you inherit real estate (house, flat, land plot, terrain), you must face two different taxes:
- Tax on Successions and Donations (ISD)
It is calculated on the cadastral reference value or, if higher, the declared market value, at the date of death. Non-residents pay tax on all property located in Spain.
- Municipal Capital Gain Tax (IIVTNU – Tax on Increase in Value of Land)
This tax levies the increase in value of the land from when the deceased acquired it until death. Here is the fiscal surprise for many: it is payable even if the property is not sold. However, since the 2021 reform it is not due if it is proven that the land has not gained value, and the base can be calculated either with the official coefficients according to years of ownership or with the real gain.
Particularity for non-residents: The taxpayer (who pays) of the appreciation is the heir (in inheritances), not the seller. Furthermore, in inheritances in favor of spouse, ascendants or descendants, the appreciation can have bonifications of up to 95% according to municipal ordinance.
Real example: Maria, who lives in London, inherits from her father a flat in Madrid valued at 300,000 euros. As his daughter, she can apply the Madrid rules, which give children a 99% relief on the ISD due, so the tax is greatly reduced. She will also pay the municipal capital gains tax, which is not calculated on the market price but on the cadastral value of the land (or on the real gain, if lower), with any reliefs provided for in the Madrid City Council by-law.
Bank Accounts and Deposits
When you inherit money in bank accounts, investment funds, or time deposits:
- ISD: You pay completely on the total balance at the moment of death, applying reductions by kinship
- IRPF: There is no capital gain imputed by the inheritance itself
- Future: The returns that the inherited money generates (interest, dividends) will be taxed under the relevant income tax (in Spain, Non-Resident Income Tax if obtained here and you are not resident)
Key fiscal benefit: Unlike other countries, inherited money does not generate additional taxation at the moment you receive it in Spain; it only pays the ISD once.
Shares, Investment Funds and Securities
Something special happens here: the accumulated capital gain in the shares/funds of the deceased does not pay tax in the IRPF (neither of the deceased nor yours), but it does pay tax by the ISD as part of the inherited patrimony.
Important rule: When you inherit shares or funds, your adjusted cost basis for future capital gains is the market value at the moment of inheritance, not what the deceased originally paid. This is very favorable: the capital gain is “reset”.
Example: Your father bought 100 shares of a listed company at 5 euros 20 years ago (investment of 500 euros). Today they are worth 100 euros each (total value 10,000 euros). Your father would correspond a gain of 9,500 euros in taxes if he sells, but he dies. You inherit the 100 shares; you pay ISD on 10,000 euros, but when YOU sell them tomorrow, your cost basis is 10,000 euros, not 500 euros. If you sell them at 105 euros, you will only be taxed on 500 euros of gain (5 euros × 100 shares), not on 9,500 euros.
Vehicles, Jewels and Personal Assets
The treatment is straightforward:
- Taxation: They pay ISD at the market value on the date of death
- Documentation: You need a certified appraisal or official valuation value (important for vehicles: the average sale price tables published each year by the Spanish Tax Agency)
- Particularity: If you later sell the vehicle, no municipal capital gains tax is due, as it only applies to urban land
Inherited Life Insurance
A beneficiary of a life insurance of the deceased faces a special situation: the collection of the insurance is subject to the ISD as if it were an inheritance, but it is governed by special rules. The ISD accrued on the date of death and must be declared in Form 650.
Special Cases: EU Residents vs. Non-EU Residents
If You Reside in a Country of the European Union or EEA
You have the best fiscal position:
- Automatic access to autonomous benefits (since 2015)
- Not mandatory to designate tax representative in Spain
- You can act directly before Spanish Administration
- Apply the autonomous regulations of the Autonomous Community where the inherited asset is located
- Subject to exchange of tax information with Spain (mutual fiscal transparency)
Example: If you are French resident in Paris and inherit a flat in Andalusia, you directly apply Andalusian regulations (with its corresponding autonomous reduction), managed by the National Office of Tax Management.
If You Are Resident in a Third Country (Non-EU)
Since 2018, your fiscal situation is comparable to EU citizens (thanks to judicial jurisprudence and Law 11/2021), but with an additional procedural requirement:
- Obligation to designate Spanish tax representative: You must name a natural or legal person resident in Spain who will represent you before the Tax Agency.
- This representative acts in your name to file the tax and receive notifications.
- Equal access to autonomous benefits: There is no discrimination since 2018.
- Non-discriminatory fiscal treatment: The Judgment of the National Court of July 28, 2025 confirms that non-EU citizens can deduct expenses in rentals on equal terms.
Additional Taxes for Non-Residents: Tax on Income of Non-Residents (IRNR)
When Does IRNR Appear After the Inheritance?
IRNR only applies when you generate returns after the inheritance, not at the moment of receiving it. However, it is crucial to understand these taxes for future movements:
Situations that generate IRNR: Form 210.
- Sell inherited real estate: Capital gains are taxed at 19% (any non-resident, whether EU or not)
- Rent the real estate: Rental income returns.
- Obtain returns from the inherited money: Interest, dividends…
Withholding rates in origin (applies when you transfer the asset or it generates returns):
- Withholding of 3% in real estate sale by non-residents.
- Withholding of 19% in other returns.
Change of Fiscal Residence: Can I Change Before Inheriting?
A frequent question among people with expected inheritances in Spain is: can I move to an Autonomous Community with low taxation before my heirs pay the ISD?
The answer is legal but with important restrictions:
Anti-Fraud Presumptions
For Personal Income Tax, the law presumes that a change of residence between Autonomous Communities did not take place if all of the following occur:
- Your tax base increases more than 50% in the year of the change compared to the previous year.
- Your effective taxation decreases compared to what you would have paid in the previous Autonomous Community.
- You return to the previous Autonomous Community within 3 years.
If all three are met, the Tax Agency treats the change as non-existent for Personal Income Tax. Inheritance Tax follows a different rule: the rules of the region where the deceased lived for the most days in the five years before death apply, so a last-minute move does not work.
Genuine Change of Residence
A genuine change can reduce taxation, but what counts is the residence of the deceased, not the heir: the applicable Autonomous Community is the one where the deceased lived for the most days in the five years prior to death.
Frequently Asked Questions: Real Doubts of Non-Residents
Do I have to live in Spain to process the inheritance?
No. As a non-resident, you can process everything via electronic means through the Electronic Office of the AEAT, or through a representative. You do not need to travel to Spain.
What happens if the inheritance had debts?
Debts are subtracted from the total value of the inheritance before calculating the ISD. You must provide documentation proving the debts.
Can I renounce the inheritance if it is very burdensome fiscally?
Yes. If the inheritance is governed by Spanish law, you can renounce as long as you have not accepted it: there is no six-month deadline. If an interested party asks you before a notary to decide, you will have 30 calendar days. Bear in mind that renouncing means losing all the assets, not just the tax cost. Consult with a lawyer on how to do it officially before a notary.
Does the Treaty on Double Taxation Apply if the de cujus lived in another country?
It depends. Spain only has inheritance tax treaties with France, Greece and Sweden (income tax treaties do not cover inheritances). Where a treaty exists, real estate is usually taxed where it is located. Money and movable assets may have specific rules according to each treaty.
Is the Change Since 2018 on Non-Discrimination of Non-EU Citizens Retroactive?
Partially. The Supreme Court has recognized patrimonial responsibility of the State for taxpayers who paid unduly in previous years, but there are limits: rectifying the self-assessment is generally time-barred after four years, and state liability claims have stricter deadlines.
Conclusion: Your Inheritance is Protected by Law
Since 2015-2018, Spanish legislation has aligned its succession regulations with European principles of non-discrimination. As a non-resident heir, today you have legal protections that did not exist a decade ago. Access to autonomous benefits, equal fiscal treatment, and legal certainty are now your established rights in law and confirmed by key judicial rulings.
The key is in understanding the tax structure (ISD for successions, IRNR only for future returns), identifying what applicable law governs your inheritance (Regulation 650/2012), and strictly complying with administrative deadlines. With professional advice and adequate documentation, processing an inheritance as a non-resident is today a more transparent and predictable process than ever.
Remember: the inheritance that you receive is taxed only once in the ISD; administrative error or delay in filing can generate additional avoidable costs.
Article written by Mario Martínez-Cardós Bada, Spanish lawyer specializing in tax and inheritance law.