A decentralised system with extreme variation

Spain’s Impuesto sobre Sucesiones y Donaciones (ISD) — inheritance and gift tax — is a national tax whose administration is largely devolved to Spain’s 17 autonomous communities. Each region can set its own rates, allowances, reductions and bonuses, and the variation is substantial. A family inheriting property in Andalusia may face almost no Spanish succession tax. The same family inheriting an equivalent property in Catalonia could face a meaningful bill.

Unlike UK IHT, which is charged on the deceased’s estate, Spanish ISD is paid by each individual beneficiary on what they receive. The tax follows the recipient’s relationship to the deceased and, in many cases, where the inherited assets are located.

Forced heirship and the Brussels IV solution

Spanish succession law reserves mandatory shares for protected heirs — children are generally entitled to two-thirds of the estate (the legítima), divided between them. The surviving spouse has rights to the usufruct of a portion depending on whether there are children. These rules apply when the deceased’s habitual residence was Spain.

UK nationals can elect to have English, Scottish or Northern Irish succession law apply to their Spanish estate by making an explicit statement in their will under Brussels IV (EU Succession Regulation 650/2012). Spain continues to apply Brussels IV to UK nationals despite Brexit. This election overrides the forced heirship rules — but, as with Portugal, it has no effect on tax liability. A Brussels IV election changes succession law; it does not reduce the Spanish ISD bill.

Why location is a succession planning decision

The region where a Spanish asset is located determines which autonomous community’s rules apply to beneficiaries who inherit it. For non-residents inheriting Spanish assets, the rules of the region where the most valuable Spanish assets are located typically apply.

This has two practical implications. First, the location of property acquisitions is a meaningful factor in succession planning, not merely a lifestyle decision. Second, the rules of the most favourable regions — those offering near-total exemptions for direct family — are available to UK beneficiaries following the 2014 CJEU ruling and subsequent Spanish legislative changes. Non-EU nationals, including UK nationals post-Brexit, can access regional rules under principles confirmed by Spanish case law, though the position should be verified with a specialist.

Pensions and the April 2027 UK reform

From April 2027, unused UK pension pots are to be brought within the UK IHT estate. For UK nationals living in Spain with significant pension savings, this adds a new dimension to the cross-border picture: assets previously outside the UK IHT calculation will now be included, potentially affecting both UK IHT exposure and the starting point for calculating any credit relief against Spanish ISD.

Spanish authorities may also seek to tax pension assets in certain circumstances, particularly where income has been drawn from them. The interaction between the two pension tax regimes should be reviewed as part of any cross-border succession planning exercise.

Where you need a specialist

This guide explains the principles. It cannot tell you which autonomous community’s rules apply to your specific Spanish assets, whether UK unilateral relief will offset your Spanish ISD bill in practice, how your specific trust structure will be treated by Spanish tax authorities, whether your existing wills — including any Brussels IV election — are correctly coordinated, or how the April 2027 pension reform affects your overall cross-border position.

UK-Spain succession requires a specialist who understands both systems in depth — and specifically one familiar with the regional variation within Spain. Generic international tax knowledge is not sufficient.