Spanish inheritance tax has several deductions available at the state level. The available tax exemptions and rates depend on factors like the heir's relationship to the deceased and their wealth. Exemptions exist for things like disabled beneficiaries, life insurance payouts, inheritance of a family home or business under certain conditions. After applying any deductions, tax rates ranging from 7.65% to 34% apply to the remaining taxable inheritance amount. An example calculation is provided.

1. Spanish Inheritance Tax
Deductions at the State Level

2. Factors that determine inheritance tax in Spain:
 tax exemptions (if any)
 tax rates
 the wealth of the beneficiary
 the proximity of the relation between testator and
beneficiary

3. Tax Exemptions are available at either State or Regional
Level. The level of the exemption depends on which group
the heir is deemed to be in as follows:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents,
aunts and uncles
Group IV More distant relatives

4. Once the heir has been assigned a group according to their
relationship with the deceased, the exemption available at a
state level can be calculated.

5. These exemptions are made after other
reductions that the heir are entitled to have
been applied.
Examples of other deductions available at the
state level are:

6. If the beneficiary is disabled:
 Additional exemptions ranging between €47,858.59 and
€150,253.03 available
 The exact rate is determined by degree of disability

7. Income from a Life Insurance Policy:
 The beneficiary must be either a direct descendant (or
adopted), spouse or parent of the deceased
 If this criteria is fulfilled there is an exemption up to €9,159

8. Inheritance of the Family Home:
 Exemption exists for child, parent and spouse of the
deceased
 95% of value up to max of €122,606 per beneficiary
 Property may not be sold for 10 years after inheritance

9. Inheritance of the Family Business:
 Exemption exists for children and spouse of the deceased
 Value of exemption is 95% of value of the business
 Business should be maintained for 10 years
 In the absence of a child or spouse of the deceased other
relatives may benefit from this exemption

10. Other Deductions:
 Funeral Expenses
 Final Medical Expenses of the Deceased
 Debts held be the deceased that are evidenced by public
documents e.g. a mortgage

11. Once again, after any applicable deductions have been
made, the below exemptions can be applied:

12. Once the final amount of tax payable is determined then the
following rates are applied:

13. Example: The taxable amount after applying all legal
deductions is determined to be €45,000. The beneficiary is a
child of the deceased and is a penniless student at the time.
1) First find the amount immediately below this in the table.

14. 2) The tax payable up to €39,943.26 is therefore €3,734.59

15. 3)The portion above €39,943.26 (€45,000 – €39,943.26
= €5,056.74) is taxable at 11.9% = €601.75

16. 4) So, tax payable is:
€3734.59 + €601.75 = €4,336.34

17. 5) If the wealth of the beneficiary is above a certain
threshold then this tax amount may be increased by
a set coefficient as follows:
Pre-existing wealth in euros
Groups
I y II III IV
From 0 to €402,678.11 1,0000
1.5882 2.000
Between €402,678.11 and €2,007,380.43 1.0500 1.6676 2.100
Between €2,007,380.43 and €4,020,770.98 1.1000 1.7471 2.200
Above €4,020,770.98 1.2000 1.9059 2.400

18. In this case as the beneficiary is a child of the deceased
and therefore in Group I with pre-existing wealth below
€402,678.11 then the coefficient to apply is 1.000 which
means the final tax payable is €4,336.34

19. Each year in Spain thousands of expats pay more
tax on inheritance than they should – simply
because they fail to follow some simple rules.
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20. Inheritance La w in Spain
For the most comprehensive analysis
in English on Inheritance Law in Spain go to:
Spanish Inheritance Tax
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