Spanish Inheritance Tax on US Assets: A Guide for Expats
Inheritance tax Spain vs US
When moving to Spain from the United States, many expatriates are surprised to learn that the Spanish inheritance tax (Impuesto de Sucesiones y Donaciones) applies to their US-based assets. While the US may not impose estate taxes on inheritances under a certain threshold, Spain takes a different approach, taxing the recipient of the inheritance rather than the estate. This can result in significant tax liabilities for heirs living in Spain, even if the decedent was US-based.
The Growing Trend of US Expatriates Moving to Spain
According to the Spanish National Institute of Statistics, nearly 350,000 people moved to Spain in 2023, with a significant proportion being expatriates from the United States. This trend is growing, with many retirees and workers relocating to Spain for its favourable climate, lower cost of living, and rich cultural heritage. However, with the influx of expats comes a complex set of tax implications, especially regarding inheritance tax.
US vs. Spanish Estate & Inheritance Tax Systems
In the US, estate tax exemption limits are relatively high compared to other countries. For instance, in 2025, the federal estate tax exemption stands at $13.40 million, meaning estates below this amount are not taxed. In contrast, Spain imposes inheritance tax on the beneficiary, not the estate, and the rates vary based on the region of Spain and the relationship to the deceased.
It is important for US expats residing in Spain to understand that the inheritance tax may still apply to their US assets—even if the decedent’s estate does not owe estate taxes in the US.
Americans living in Spain will also want to know what income tax rates apply in both countries. One of the most significant areas of concern is the Spanish Income Tax on ROTH IRAs and other American retirement accounts.
Tax Rates and Exemptions: What You Need to Know
Inheritance tax in Spain varies by region, with each autonomous community having its own rates and exemptions. For example, Andalusia, Catalonia, and Madrid all have different tax brackets, deductions, and exemptions for heirs. To get a clearer picture, let’s take a look at a comparison of inheritance tax rates across several key regions in Spain:
Please note that local and regional governments can adjust these rates. There are 17 autonomous regions in Spain, and each of them decides the inheritance tax laws. The inheritance tax rate paid in Spain would depend on where you live.
| Region | Tax Rate on Inheritance | Exemptions/Allowances |
| Andalusia | 7.65% – 34% | Exemption for direct relatives (spouse, children) up to €1,000,000 (increases for closer relationships) |
| Aragon | 7.65% – 34% | Exemption for direct descendants and spouses up to €100,000 (increases for closer relationships) |
| Asturias | 7.65% – 34% | Exemption for direct relatives (spouse, children) up to €200,000; larger exemptions for closer relationships |
| Cantabria | 7.65% – 34% | Exemption for direct relatives up to €150,000 (increases for closer relationships) |
| Castilla y Leon | 7.65% – 34% | Exemption for direct descendants and spouses up to €300,000 (additional deductions for closer relatives) |
| Castilla-La Mancha | 7.65% – 34% | Exemption for direct family members (spouse, children) up to €200,000 |
| Catalonia | 7% – 32% | Exemption for direct descendants and spouses up to €100,000 |
| Extremadura | 7.65% – 34% | Exemption for children and spouses up to €250,000 |
| Galicia | 7.65% – 34% | Exemption for direct descendants and spouses up to €400,000 |
| Madrid | 7.65% – 34% | Exemption for direct relatives (spouse, children) up to €300,000 |
| Murcia | 7.65% – 34% | Exemption for direct relatives (spouse, children) up to €150,000 |
| Navarre | 7.65% – 34% | Exemption for direct descendants and spouses up to €100,000 |
| La Rioja | 7.65% – 34% | Exemption for direct relatives (spouse, children) up to €150,000 |
| Valencia | 7% – 34% | Exemption for direct family members up to €150,000 |
| Baleares (Balearic Islands) | 7.65% – 34% | Exemption for children and spouses up to €300,000 |
| Canary Islands | 7.65% – 34% | Exemption for direct relatives up to €300,000 |
| Basque Country | 7.65% – 34% | Exemption for direct relatives (spouse, children) up to €500,000 |
| Ceuta and Melilla | 7.65% – 34% | Exemption for direct relatives up to €200,000 |
| Galicia | 7.65% – 34% | Exemption for direct relatives (spouse, children) up to €400,000 |
Notes:
Tax Rates: Inheritance tax in Spain is calculated based on the value of inherited assets (from their home country of the United States). The rates increase as the value of the inheritance grows, and the relationship to the deceased (whether a direct relative or distant relative) influences both the tax rate and the available exemptions.
Exemption/Allowance Values: Exemptions vary based on the degree of relationship between the heir and the deceased. For example, direct descendants (children, spouse) often benefit from higher exemptions compared to more distant relatives.
Additional Allowances: Some regions provide extra deductions for inheritances deemed “family business” assets or properties used in agricultural or rural settings. Check with local authorities for specific allowances in these cases.
Each region has a sliding scale for inheritance tax, with higher rates for larger estates and greater distances between the deceased and the heir. In addition, family members such as spouses, children, and parents benefit from exemptions or deductions, making it critical to know where the assets are located to better plan for tax liabilities.
California to Madrid – $5 Million
Scenario: John, a Californian who moved to Madrid for work, inherits $5 million worth of assets from his parents after they pass away. While the inheritance falls under the US federal estate tax exemption (so no estate taxes are due in the US), John is liable for inheritance taxes in Spain.
Steps to Take:
Declare the inheritance: John must declare the inheritance to Spanish authorities within six months of the death.
Calculate the tax: In Madrid, John would pay between 7.65% to 34% in inheritance taxes, depending on how the $5 million is divided. Since John is a direct descendant, he can benefit from significant exemptions.
New York to Marbella – Inheriting $3 Million
Scenario: Susan, a New Yorker, relocates to Marbella on a non-lucrative visa after her parents pass away, leaving her with a $3 million inheritance. While no US estate taxes apply (since the amount is below the threshold), Susan faces Spanish inheritance tax because she is now a resident in Andalusia.
Steps to Take:
Submit the inheritance: Susan must submit the inheritance paperwork to the Andalusian Tax Agency.
Examine exemptions: As a direct descendant, Susan may be eligible for substantial deductions, but the taxable amount will still be considerable.
Payment in instalments: If the inheritance tax is too high to pay upfront, Susan can request instalment payments from the tax authorities.
Texas to Barcelona – An $8 Million Estate
Scenario: Mark, originally from Texas, moves to Barcelona on a Digital Nomad Visa and inherits $8 million worth of assets from his parents. Again, while the estate is below the US federal exemption, the inheritance tax in Spain, especially in Catalonia, can be steep.
Steps to Take:
Valuation of assets: Mark must have the assets properly valued for inheritance tax purposes.
Assess regional deductions: Mark will be eligible for exemptions for direct family members in Catalonia, but the overall tax burden will still be substantial due to the large value of the estate.
Tax Implications and Legal Requirements for US Expats
Here’s a breakdown of the core legal requirements for US expats inheriting assets in Spain:
Inheritance Tax Filing: The beneficiary must file an inheritance tax return with the Spanish tax authorities within six months of the death.
Taxable Assets: Any global assets in the US, Spain, or elsewhere will be considered for inheritance tax in Spain. This includes bank accounts, real estate, and stocks.
Double Taxation: The US-Spain tax treaty helps prevent double taxation on inherited assets. However, tax credits may need to be applied, and careful record-keeping is essential.
Conclusion
Navigating Spanish inheritance tax on US assets is a complex but manageable process for expats. Beneficiaries can significantly reduce tax liabilities by understanding the specific tax rates, exemptions, and legal requirements in both the US and Spain. Consulting a tax expert and ensuring all filings are accurate and timely can help avoid costly penalties and maximize available exemptions.
Q&A
Q1: Should I pay inheritance tax in Spain if I inherit assets from my US-based family?
Yes, Spain imposes an inheritance tax on all inherited assets, including those outside Spain, depending on your residency and region.
Q2: Are there exemptions for close relatives in Spain?
Yes, Spain offers significant exemptions for spouses, children, and parents, which can reduce the inheritance tax liability.
Q3: How do I declare my inheritance to Spanish authorities?
You must file an inheritance tax return within six months of the decedent’s death with the Spanish tax agency in your region.
Q4: Can I avoid paying inheritance tax on US assets if I have already paid estate taxes in the US?
Although Spain and the US have a tax treaty, Spain may still impose inheritance tax on US assets, but you may be eligible for tax credits to offset the US taxes.
Q5: Should I consult a tax advisor when inheriting US assets in Spain?
It’s highly recommended to consult a tax advisor familiar with US and Spanish tax laws to ensure compliance and optimize your tax situation.