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TAXES

Where are the best and worst places for inheritance tax in Spain?

Inheritance tax varies greatly in Spain depending on what region you or your relatives live in. Find out what the rates are across the Spanish territory in 2022 so you can plan accordingly.

old couple in Spain
Get clued up on inheritance laws in Austria before making a will. Photo: Christian Bowen / Unsplash

Spain’s inheritance or succession tax, known as ‘el impuesto de sucesiones‘ is both complex and controversial, but it’s important to understand how it works in order to avoid any unfortunate financial surprises when a loved one with a connection to Spain passes away. 

Spanish inheritance tax is decided by the Spanish State but all of the country’s 17 regions have the right to change these rules to make them more beneficial or detrimental to heirs. Luckily, the general trend is towards the former. A word you’ll come across frequently when reviewing inheritance tax in Spain is bonificación, which means tax reduction. 

The succession tax rates will differ depending on how much is inherited, ranging from 7.65 percent on the first €7,933 up to 34 percent on €797,555+. 

There are many factors to consider, such as which category heirs and other beneficiaries fall into, or the fact that in Spain the spouse of the deceased is also subject to inheritance tax, which is not the case in the UK and many other countries.

Keep in mind that regional governments can and do change their inheritance tax conditions relatively often, so make sure you double-check with a Spanish source, preferably the website of your regional government.

What are the different groups of heirs in Spain?

As mentioned above, there are several categories or groups that heirs can fall into and this will depend on how much allowance they can benefit from. The groups are the following:

Group 1: Children under 21 years of age

Group 2: Children over 21 years of age, spouses and parents

Group 3: Siblings, nieces, nephews, as well as aunts and uncles

Group 4: Cousins or more distant relations

EXPLAINED: How choosing the right region in Spain can save you thousands in inheritance tax

What are the inheritance rates in my region?

Andalusia

In Andalusia, the inheritance tax rate varies between 7 percent and 36 percent, depending on the value of the inheritance. However, in January 2022 the Andalusian government approved through a Royal Decree a reduction of 99 percent both for inheritance and gift tax for those who are included in groups 1 and 2.

Aragón

In Aragón there is 100 percent discount on the tax base, with a limit of €3,000,000 for descendants under the age of 21 or for those that have a disability. In addition, the spouse, parents or descendants of the deceased may also benefit from a cut of 100 percent of the tax base.

Asturias

In Asturias there is an allowance of €300,000 for those groups 1 and 2. For all other groups, it establishes various reductions included in the state regulations. In addition, in case of inheriting a home, the tax reduction will be between 95 and 99 percent, depending on its value.

Balearic Islands

In the Balearic Islands, for those in groups 1 and 2, deductions of €25,000 are applied, plus €6,250 per year that the taxpayer is under the age of 21, up to a maximum of €50,000. For those in group 3, a deduction of €8,000 is applied and for those in group 4, it’s €1,000. An allowance of €48,000 will also be made for those with disabilities.

Basque Country

For those in groups 1 and 2 in the Basque Country, inheritances with an amount less than €400,000 are not required to pay taxes. When the amount is greater than €400,000, a tax rate of 1.5 percent will be applied.

READ ALSO: Why you should move to this region in Spain if you want to pay less tax

Canary Islands
Those in group 1 get an allowance of €47,859, while those in group 2 get an allowance of €15,957. Those in group 3 will get €7,993, while those in group 4 get no allowance at all. After the deduction, inheritance tax rates are calculated on the remaining balance which range between 7.65 percent and 34 percent on anything above €797,555.

Cantabria

For those in group 1, there is a reduction of €50,000 plus €5,000 for each year the taxpayer is under 21. For those in group 2, it’s also €50,000 and for those in group 3, it’s €25,000.

Castilla La-Mancha

In Castilla La-Mancha those in groups 1 and 2 will benefit from discounts ranging from 80 percent to 100 percent, depending on the amount of the payable base.

Castilla y León

Castilla y León allows reductions for children spouses and parents. Those in groups 1 and 2 will benefit from an allowance of €60,000. An additional reduction of €6,000 will be applied for each year the taxpayer is under the age of 21. A variable reduction will also be applied, which is calculated as the difference between €400,000, plus the sum of the previous amounts and the state deductions.

Catalonia

In Catalonia, spouses will receive a tax reduction of 99 percent and the rest of the heirs in groups 1 and 2 may apply a tax cut that varies between 57 percent and 99 percent, depending on the tax base.

Extremadura

A tax reduction of 99 percent is applied for amounts of up to €300,000 between parents, children and spouses.  

Galicia

In Galicia, heirs in group 1 have an allowance on amounts up to €1,000,000, plus there is a reduction of €100,000 for every year the beneficiary is younger than 21, with a limit of €1,500,000. For those in group 2, the reduction varies between €900,000 and €400,000, depending on the taxpayer’s age. In the cases of groups 3 and 4, the bonus will be €16,000 or €8,000. The applicable rate in Galicia stands at between 5 and 18 percent, which is well below the rest of the regions. 

La Rioja

Those who inherit in La Rioja benefit from a deduction of 99 percent of the tax quota if the tax base is less than or equal to €500,000. The deduction will be 98 percent for amounts that exceed €500,000.

Madrid

Madrid applies a discount of 99 percent of the tax quota for taxpayers included in groups 1 and 2. In addition, for the heirs included in group 3, it establishes a discount of 15 percent or 10 percent, depending on what relation they are to the deceased.

Murcia

In the region of Murcia, the law includes a deduction of 99 percent for those in groups 1 and 2. Likewise, for the rest of the heirs, it also recognises different reductions depending when the money is inherited and the amount to be received.

Navarre

In Navarre no discounts are applied, but how much tax varies according to what group you fall under. Spouses for example have a rate of 0 percent up to €250,000, and 0.80 percent from there upwards. In the case of descents and parents, the applicable rate varies between 2 percent and 16 percent.

Valencia region

In Valencia discounts of 75 percent are applied for those in group 1 or 50 percent for those in group 2. In case the of those with disabilities, the taxpayer will also receive a tax cut of 75 percent.

Case study example

For example, in the case of a 30-year-old son who inherits assets worth €800,000, the most amount of tax would be paid in Asturias, with at €103,135.48; followed by Castilla y León €81,018.76; Valencian €63,193.76; Aragon €55,466.81; La Rioja €32,342.86; Castilla-La Mancha €31,759.23 and the Canary Islands €31,748.63. 

These regions would be followed by Navarre €17,000; Catalonia €9,796.89; the Balearic Islands €5,950; the Basque Country €3,150; Murcia €1,640.49; Extremadura €1,587.96 and Madrid €1,586.04). Andalusia, Cantabria and Galicia have a net quota of 0.

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SPAIN AND THE US

Spain and the US to exchange more language assistants in bilingualism push    

The governments of Spain and the United States have agreed to recruit more English and Spanish-language assistants from each other’s countries as a means of bolstering bilingual education in the two nations.

Spain and the US to exchange more language assistants in bilingualism push    

Spain’s Education Minister Pilar Alegría and US ambassador to Spain Julissa Reynoso met on Wednesday to sign a memorandum of understanding which will reinforce educational cooperation between the two countries. 

The agreement had been previously signed by Miguel Cardona, the United States Secretary of Education, who tweeted: “This week, alongside [Spanish] Ambassador [Santiago] Cabañas, I signed a memorandum supporting the study of Spanish language & culture in the US, and the study of English in Spain”.

It is in fact a renewal of a memorandum between the United States and Spain which has facilitated mobility of both conversation assistants and students between the two countries in recent years.

The aim of this newest memorandum of understanding is to further strengthen student and teacher exchange programmes and promote bilingual and multicultural teaching in both educational systems.

No exact details have yet been given about how many extra language assistants will be given grants to join the programme. 

Several teacher recruitment sources suggest the current number of North American language assistants (including Canadians) heading to Spain every year is between 2,000 and 2,500. 

The Spanish government has stated that in 2023, this figure will be around 4,500, which represents a considerable increase in the number of US and Canadian citizens who can apply through the NALCAP programme, which stands for North American Language and Culture Assistants in Spain. 

According to Spain’s Foreign Ministry, the following requirements must be met by US candidates in order to participate in the programme:

  • Be a U.S. citizen and have a valid passport
  • Have earned a bachelor’s degree or be currently enrolled as a sophomore, junior or a senior in a bachelor’s programme. Applicants may also have an associate degree or be a community college student in their last semester.
  • Have a native-like level of English
  • Be in good physical and mental health
  • Have a clean background check
  • Be aged 18 – 60.
  • Have at least basic knowledge of Spanish (recommended)

NALCAP recipients receive a monthly stipend of €700 to €1,000 as well as Spanish medical insurance.

Application dates for 2023 are usually announced in late November. See more information on the NALPAC programme for US nationals here

According to The Fulbright Program, one of several US cultural exchange programmes that organises the recruitment of US nationals for Spain: “English Teaching Assistants assist teaching staff at the early childhood, elementary, middle school, high school, vocational and/or university level for up to 16 hours per week, with an additional two hours for planning & coordination meetings. Responsibilities include assistant-teaching, in English, subjects such as social studies, science and technology, art, physical education, and English language.”

READ MORE: The pros and cons of being an English language assistant in Spain

There are also currently more than 1,000 Spanish teachers working as visiting teachers in the United States, Spain’s Moncloa government has said, without adding yet how many more will be recruited in 2023.

Additionally, more than 1,000 North American students now take part in the Spanish Language and Culture Groups managed by the Spanish Education Ministry’s Overseas Education Action (or Acción Educativa Exterior, AEE).  

Canadian applicants can find out more about working as language assistants in Spain by visiting the NALCAP Canada website.

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