23 September 2026
Here is what surprises almost everyone: if you live in Spain, are not a US citizen and hold more than $60,000 in shares of US companies, on your death your heirs will have to pay US estate tax on those shares, at rates of up to 40%. It makes no difference that you hold them through a Spanish broker or that you have never lived in the US. The same tax reaches your US real estate and physical assets; the exemption is a mere $60,000; Spain has no estate tax treaty with the US, so there is no treaty relief; and the return (Form 706-NA) is due nine months after death. The tax paid can be credited in Spain, but where regional allowances are generous that credit is worth very little.
What is US estate tax and why does it matter if you live in Spain?
US estate tax is the federal tax charged on a person’s estate at death, before anything passes to the heirs. If you are neither a US citizen nor domiciled in the US, only your US-situated assets are taxed, but the exemption is a mere $60,000, a tiny fraction of what Americans get.
Two differences from Spanish inheritance tax explain most of what follows. In the US, the estate pays, not each heir. And the test is not tax residence but domicile: a decedent is a non-resident if, at death, their domicile was outside the United States.
A US citizen or resident dying in 2026 has a $15,000,000 exclusion while someone living in Spain gets $60,000 exemption, and the statute does not index that figure for inflation.
You don’t need to be wealthy to be caught. A few years of buying S&P 500 shares through a broker will do it.
Which rules apply in the US and in Spain?
In the US, the tax is governed by the Internal Revenue Code, with sections 2101 to 2108 covering non-residents. In Spain, a resident heir also pays Spanish inheritance tax on everything they inherit, wherever it is. There is no estate tax treaty between the two countries.
On the US side, five pieces matter:
- Rates from 18% to 40%, the same schedule Americans face.
- A filing duty once US-situated assets exceed $60,000.
- A nine-month deadline from the date of death.
- No treaty with Spain. The IRS lists 15 countries with estate or gift tax treaties, and Spain is not one of them (IRS). The Spanish DTA covers income taxes only.
A point for British, Irish, German and other expats: the treaty that matters generally turns on domicile, not passport. If you have made Spain your permanent home, do not assume your home-country treaty will protect you; check its domicile rules first.
In Spain, article 6 of the LISD taxes resident heirs on everything they receive, and article 23 lets them credit foreign tax. Relief from double taxation is therefore one-sided.
Which assets are taxed in the US, and which are not?
Assets treated as situated in the US are taxed: US real estate, tangible property located there and shares in US corporations, wherever they are held. Ordinary bank deposits, debt paying portfolio interest and life insurance, among others, are outside the net.
| Asset | Subject to US estate tax? |
|---|---|
| Real estate in the US | Yes |
| Shares in US corporations, even held through a Spanish broker | Yes |
| US-domiciled funds and ETFs | Yes |
| UCITS ETFs domiciled outside the US (e.g. Ireland), even if they hold US stocks | No |
| US bank deposits not connected with a US business | No |
| Debt whose interest qualifies as portfolio interest | No |
| Insurance on the decedent’s life | No |
Shares are what catch people out. The IRS is blunt: US corporate stock is taxed “even if the nonresident held the certificates abroad or registered the certificates in the name of a nominee” (IRS). A Spanish broker or an omnibus account changes nothing.
How much will your heirs pay? The $60,000 exemption and rates up to 40%
The general estate tax schedule, from 18% to 40%, is applied to the value of US-situated assets, and a flat $13,000 credit is subtracted. That credit is the same as exempting the first $60,000. Above that, the effective rate climbs fast.
| US assets | Tax under schedule | Credit | Tax due | Effective rate |
|---|---|---|---|---|
| $60,000 | $13,000 | $13,000 | $0 | 0% |
| $100,000 | $23,800 | $13,000 | $10,800 | 10.8% |
| $250,000 | $70,800 | $13,000 | $57,800 | 23.1% |
| $500,000 | $155,800 | $13,000 | $142,800 | 28.6% |
| $1,000,000 | $345,800 | $13,000 | $332,800 | 33.3% |
An example: a Madrid resident owns a $350,000 condo in Miami and $150,000 of US shares. On death, the US estate is $500,000 and the tax is $142,800, payable before the heirs see a cent.
Deductions come with a catch. Expenses and debts are allowed only in proportion to the US share of the worldwide estate, and only if the worldwide estate is disclosed to the IRS. To deduct, you have to show everything.
Leaving it all to your spouse doesn’t solve it either. If the surviving spouse is not a US citizen, there is no marital deduction unless the assets pass to a qualified domestic trust (QDOT).
How is it filed, and when are the assets released?
If US-situated assets exceed $60,000, the executor must file Form 706-NA with the IRS within nine months of death. Separately, without an IRS transfer certificate, US brokers, banks and transfer agents will usually refuse to hand the assets over to the heirs.
The sequence we follow:
- List and value the US-situated assets at fair market value on the date of death.
- Decide whether to disclose the worldwide estate in order to claim deductions.
- File Form 706-NA on time, with a certified copy of the will and a copy of the death certificate (IRS instructions). The automatic six-month extension on Form 4768 is for filing; deferring payment has to be requested and justified.
- Pay and request the transfer certificate, which the IRS issues only once the tax has been paid or provided for.
- File the Spanish inheritance tax return (autoliquidación) within six months of death (article 67.1 of Real Decreto 1629/1991), including the US assets.
Step 4 is where estates get stuck. The same regulation warns custodians and transfer agents that they avoid liability for the tax only by demanding the certificate before releasing anything. That is why accounts freeze. For estates of $60,000 or less, the certificate is requested by affidavit, and the IRS quotes 12 to 18 months to process it.
Watch the calendars, too: six months in Spain, nine in the US. If the US tax is paid after the Spanish return is filed, the heirs will need to ask for the Spanish return to be corrected to claim the credit.
Can the US tax be credited against Spanish inheritance tax?
Yes. Article 23 of the Spanish Inheritance Tax Act lets a Spanish-resident heir credit tax paid abroad, but only up to what Spain itself would charge on the same assets. Where the regional tax is already close to zero, the credit recovers almost nothing of what went to the IRS.
Article 23.1 allows the lower of two amounts: the tax actually paid abroad “by reason of a similar tax”, or the Spanish average effective rate applied to the foreign assets taxed there.
What if the estate, not the heir, pays the US tax? In a judgment of 12 April 2024 (appeal 627/2023), Spain’s National High Court (Audiencia Nacional) held that it is enough for a similar tax to have been effectively paid, whoever paid it. That matters, because US estate tax is always paid by the estate.
Here is the point most guides miss. Under article 23.2, regional allowances apply after state-level credits. In the Community of Madrid, heirs in groups I and II (descendants, spouse, ascendants) get a 99% reduction of the tax due. They would pay next to nothing in Spain, with or without US tax. For them, the US tax is a pure extra cost. Where Spanish tax does bite, as with many inheritances by nephews and nieces, the credit works, capped at the Spanish average effective rate.
Common mistakes and planning options
The most common mistake is thinking US estate tax is only for the very wealthy or for people with a house in Florida. A portfolio of US shares worth more than $60,000 is enough. There are alternatives, but each has Spanish tax consequences that need weighing — with tax advice for non-residents in Spain — before you move anything.
The mistakes that come up most often in these estates:
- Missing the nine-month deadline. A 5% penalty on the tax for each month late, up to 25%, plus interest; and the tax becomes a lien on the estate’s assets for 10 years.
- Forgetting state estate tax. Florida has none for deaths after 2004. New York does, with its own threshold, and it can reach property of people who did not live there.
Three planning routes, in order of complexity. First: replace US shares and ETFs with UCITS funds domiciled outside the US, which are not US assets. Selling now, though, triggers a capital gain for Spanish income tax.
Second, lifetime gifts. The US does not charge gift tax on intangibles given by a non-resident, so gifting US shares is free there; gifting US real estate is not. In Spain, however, the donor pays income tax on the gain, a gain that would be wiped out on death (article 33.3.b), and the recipient pays Spanish gift tax.
Third, a non-US company holding the property: its shares are not US assets, but it needs genuine substance and carries tax costs in both countries. It only pays off for substantial holdings.
Frequently asked questions
If I live in Spain and hold US shares, do I owe US estate tax?
Yes, once they exceed $60,000. Even if you live in Spain and are not a US citizen, shares in US companies count as situated in the United States, so on your death your heirs must settle US estate tax on them, at rates of up to 40%. It makes no difference whether you hold them through a Spanish broker or an omnibus account: what matters is that the issuing company is American. The $60,000 threshold applies to all your US-situated assets together, not to each holding.
Are Irish-domiciled ETFs subject to US estate tax?
No. A UCITS ETF domiciled in Ireland is a foreign entity, and IRC § 2104(a) treats as US-situated only the shares of US corporations, even if the fund tracks the S&P 500. Check the domicile in the prospectus: an ISIN beginning “IE” is a clue, not a guarantee.
Are my US bank accounts subject to estate tax?
As a rule, no. Deposits with US banks that are not connected with a US business are treated as situated outside the US (IRC § 2105(b)(1)). One of the system’s oddities: a checking account in New York escapes, while US shares in a Madrid brokerage account do not.
What happens if the heirs don’t file Form 706-NA?
They face a 5% monthly penalty on the tax, up to 25%, plus interest. The tax remains a lien on the estate’s assets for ten years. And, in practice, the part that hurts most: the US custodian will not release the shares without the transfer certificate.
Does this apply to US citizens living in Spain?
Not on these terms. A US citizen is taxed on their worldwide estate wherever they live, with the general $15,000,000 exclusion in 2026. The $60,000 regime applies only to people who are neither citizens nor domiciled in the US. A green card holder may well be US-domiciled and needs separate advice.
Conclusion
If you hold more than $60,000 in US shares or own US property, the problem exists today, not on the day you die. Reviewing your portfolio takes an afternoon; unlocking an estate frozen by a US custodian can take more than a year.
At Martínez-Cardós Abogados, specialists in inheritance for non-residents in Spain, we assess your exposure and coordinate Spanish inheritance tax with the US side. If you have inherited US assets, or want to plan ahead for your own, we can help.