How Spanish Inheritance Tax Is Calculated: Six Worked Examples

Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones, or ISD) has a reputation for being complicated. The arithmetic is not. Every bill comes from the same six steps, and the result depends on three facts: which region’s rules apply, how the heir was related to the person who died, and how much that heir receives. The examples below use the rules of the Valencian Community, where most of our clients live, for deaths from 1 June 2026. For other regions, click yours on our inheritance tax map of Spain.

The six steps behind every bill

A Spanish inheritance tax return is a calculation per heir. If three children inherit, there are three calculations and three bills. This is the order a gestor works in, and the order every example below follows.

The kinship group is the fact that moves the bill most. These are the four groups, with the Valencian treatment for deaths from 1 June 2026.

The scale itself is the same for everyone. The groups only change what goes into it and what comes off afterwards. To use it, find the band your taxable base falls in. Take the tax on the amount at the start of that band, then add the band’s rate on the rest.

Whose rules apply? Settle this before any sum

The region is decided by the person who died, not by the heirs. If they lived in Spain, the heirs use the rules of the region where the deceased spent most of the five years before death. If they lived abroad, the heirs use the rules of the region holding the most valuable part of their Spanish assets. Our guide to inheritance tax in Spain by region shows how far apart the regions are.

Where the heirs live no longer decides it. Since Ley 11/2021, heirs living outside Spain, inside or outside the EU, can apply the same regional rules as residents. British heirs are included. The difference can be enormous, as Example 5 shows.

Example 1: two adult children share €400,000

A widow has lived in Javea for twenty years. She leaves her net estate of €400,000 — her share of the villa plus savings, after debts and funeral costs — to her two adult children in equal shares. Each child is in Group II and has modest wealth of their own. Each one files a separate return on €200,000.

The two children pay €248.30 between them, about 0.06% of the estate. To see what the regional relief is worth, run the same share through the state rules alone: a €15,956.87 reduction and no bonification. Each child would then owe €28,250.01.

One condition matters in practice. The Valencian bonification applies to the tax on the assets declared in the return, so an asset left out and found later does not get it. Declare everything, including assets abroad if you, the heir, live in Spain.

Example 2: a nephew inherits €300,000

A childless widow in Javea leaves €300,000 to her sister’s son. A nephew is a Group III blood relative. Group III gets only the state reduction and a 1.5882 multiplier. For deaths from 1 June 2026, it also receives Valencia’s new 25% bonification.

That is 21.2% of the inheritance, due within six months, often before the house can be sold. The date of death matters a great deal here. The 25% relief comes from Valencia’s Ley 5/2025. Had the aunt died before 1 June 2026, the bill would have been €84,855.11. From 1 June 2027 the relief rises to 50%, and the same inheritance would cost €42,427.55.

Two details can push the bill up. First, the multiplier rises if the heir already has substantial wealth of his own. Above roughly €400,000, it moves to 1.6676 and this bill becomes about €66,800. Second, the 25% covers blood relatives only. Relatives by marriage, such as the late husband’s nephew, do not get it.

Example 3: a sister who shared the home

A brother and sister, both retired, have shared his house in Javea for years. He dies and leaves her the house, worth €250,000, and €50,000 of savings. She is Group III, like the nephew. But Valencian law gives the main-home reduction to a sibling or other collateral relative over 65 who lived with the deceased for the two years before the death. The reduction is 95% of the home’s value, capped at €150,000.

Same group, same €300,000 as the nephew, and €40,096.16 less tax. There are strings attached. The house must have been the brother’s main home. The sister must be over 65 and have lived there with him for at least two years. And she must keep the house for five years: sell it sooner and the tax saved becomes payable, with interest.

Example 4: an unmarried partner, registered or not

A couple has lived together in Javea for twenty years without marrying. One dies and leaves the other €300,000. Spanish inheritance tax follows legal status, not the length of the relationship. An unregistered partner is a stranger in the eyes of the tax: Group IV, no reduction and a double multiplier.

Registration is worth €110,617.21 here. Valencian law treats couples registered in the Registro de Uniones de Hecho Formalizadas de la Comunitat Valenciana as spouses for this tax. The registration has to be in place before the death, and marriage achieves the same result. Many other regions treat registered couples the same way, but each sets its own registry and conditions, so check your region’s inheritance tax guide.

For life cover between unmarried partners, who owns the policy changes the tax again. Our guide to life insurance policy ownership and tax works through the combinations.

Example 5: a son in England inherits an Alicante flat

A widow lives in England and owns a flat in Alicante province with a valor de referencia of €220,000. She leaves it to her son, who also lives in England. Neither is resident in Spain, so Spain taxes only the Spanish asset: the flat. Because the flat is in the Valencian Community, the son can apply Valencian rules.

The right-hand column is roughly what non-resident heirs used to face, before European and Spanish courts forced a change that Ley 11/2021 wrote into the law. Had his mother lived in Spain, say in Murcia, he would use Murcian rules instead, because the region follows the person who died.

The son files his Modelo 650 with the state tax agency (AEAT), not the Valencian one, and he needs an NIE. If UK inheritance tax is also due on the flat, the UK normally gives credit for the Spanish tax paid. Our guide to the inheritance process in Spain covers the notary, the certificates and the town hall’s plusvalía on the flat.

Example 6: what a life insurance payout adds

Go back to the nephew in Example 2. Suppose his aunt also held a €100,000 life policy naming him as beneficiary. The insurer pays him directly, outside the estate, within the 40-day legal window. But Spain adds a life payout to whatever else the same person inherits from the deceased, so it is taxed at his top rate. The €9,195.49 life insurance reduction does not help him: it is only for a spouse, descendants and ascendants.

The table compares him with an adult child in the same position: €300,000 inherited, plus the same €100,000 policy.

The policy added €30,374.33 to the nephew’s bill. It still did its job: €100,000 arrived within weeks and covered the whole €94,015.66 while the house waited for a buyer. The lesson for Group III heirs is to size the cover for the tax on the payout itself, not only the tax on the estate. For the child, the same payout added €214.81.

Ownership can change the route entirely. If the nephew had taken out and paid for the policy on his aunt’s life himself, the payout would fall under income tax, not inheritance tax. Our guide to who owns a life policy and how it is taxed explains when that helps and when it hurts.

The examples side by side

The pattern is clear. In Valencia, close family pays almost nothing, and the real exposure sits with nephews, nieces, siblings and unmarried partners. Those are exactly the heirs that many expat couples without children plan to leave their Spanish home to.

What the examples leave out

Each example isolates one effect. Real estates combine several, and a few further rules can change the result:

• Marital property. Only the deceased’s own share of jointly owned assets is inherited. The couple’s matrimonial property regime decides what that share is.
• Deadlines. Filing late without an extension adds surcharges: 1% plus 1% for each full month, rising to 15% plus interest after twelve months (Ley 58/2003, art. 27).
• Other costs. Inheritance tax is not the only bill. The town hall’s plusvalía, the notary and the land registry come on top.
• Other reductions. Valencia also relieves family businesses and disabled heirs. Our Valencia inheritance tax guide lists them.
• Foral regions. The Basque Country and Navarra run their own systems, so the six steps above do not apply there in the same form.
• Other regions. Each region sets its own reductions and bonifications, and the same family can face a very different bill elsewhere.

Run your own numbers, region by region

Our free Spanish inheritance tax calculator runs steps 2 to 5 for any region and any heir in seconds. For the rules behind it, start with the clickable inheritance tax map of Spain or the inheritance tax hub. Then open your region’s guide:

Andalusia · Aragón · Asturias · Balearic Islands · Basque Country · Canary Islands · Cantabria · Castilla-La Mancha · Castilla y León · Catalonia · Extremadura · Galicia · La Rioja · Madrid · Murcia · Navarra · Valencia

Most regions now relieve children and spouses heavily. Catalonia and Asturias are the main exceptions, where larger inheritances to children still pay meaningful tax. Group III and IV heirs pay real tax almost everywhere.

Frequently asked questions

Sources & references: Ley 29/1987 del Impuesto sobre Sucesiones y Donaciones (art. 20 reductions, art. 21 scale, art. 22 multipliers); Real Decreto 1629/1991 (art. 39, life payouts added to the inheritance); Ley 13/1997 de la Generalitat Valenciana (Valencian reductions, bonifications and registered couples); Ley 5/2025 de la Generalitat (Group III bonification), summarised by Garrigues and Cuatrecasas; Ley 11/2021 (non-resident heirs, valor de referencia); Ley 58/2003 General Tributaria (art. 27 surcharges); Ley 50/1980 (arts. 18 and 88, life payouts).

The examples apply Valencian rules to deaths from 1 June 2026, assume heirs whose own wealth is under about €400,000, and are calculated to the cent on the state scale. Rates and reliefs change, often every year, so check the rules in force on the date of death. Nothing here is tax or legal advice, and Turner Insurance does not provide tax advice: confirm your position with a gestor, lawyer or tax adviser before acting.