Understanding Spanish Succession & Gift Tax (SSGT) in 2025: What Expats Need to Know

Succession tax in Spain has long been a concern for expatriates, but recent reforms across several regions have significantly reduced the burden for immediate family members.

If you live in Spain or are planning to relocate, it’s essential to understand how Spanish succession and gift tax (SSGT) works, how it varies by region, and how it could affect your estate and beneficiaries.

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Regional Reforms Have Eased the Burden—In Some Cases

While Spain’s national succession tax framework remains in place, autonomous communities now have considerable discretion to reduce rates and offer additional allowances. As of 2025, popular regions including Andalucía, the Balearic Islands, Canary Islands, Madrid, Murcia and the Valencian Community have introduced near-total relief for immediate family members—particularly spouses, children, parents, and grandchildren.

These reforms mean that, in practice, many families may now face little or no tax when inheriting assets—but this depends heavily on where you live and who your heirs are.

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How Spanish Succession and Gift Tax (SSGT) Works

SSGT applies to both inheritances and lifetime gifts. Here are some key features:

• The tax is levied on the beneficiary, not the estate.
• It applies if:
  • The beneficiary is tax resident in Spain, or
  • The asset is located in Spain (such as property or a Spanish bank account).

Beneficiary Groups:

1. Group I: Descendants under 21
2. Group II: Descendants over 21, parents, grandparents, and spouses
3. Group III: Siblings, aunts, uncles, nieces, nephews, in-laws, stepchildren
4. Group IV: Everyone else, including unmarried partners not recognised as spouses under regional rules

✅ Note: Some regions recognise parejas de hecho (registered partners) as equivalent to spouses for tax purposes. This includes Andalucía, Balearics, Canaries, Madrid, Murcia and Valenciana.

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Standard State Allowances and Tax Rates (Where Regional Rules Don’t Apply)

• Personal reductions:
  • €15,957 for Groups I & II
  • €7,993 for Group III
  • Group IV beneficiaries receive no state allowance
• Main home: Up to 95% relief on the inherited value (max €122,606 per heir) when inherited by close relatives who retain it for 10 years.
• Tax rates:
  • Range from 7.65% to 34%, subject to multipliers based on:
    • The relationship to the deceased
    • The heir’s pre-existing wealth

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Regional Reliefs for 2025

🟢 Andalucía

• 99% relief on inheritance and gifts for spouses, ascendants and descendants
• €1 million tax-free threshold
• Group III beneficiaries get €10,000 allowance
• Tax rates capped at 26%
• Lifetime gifts also receive 99% relief for Groups I & II

🟣 Balearic Islands

• Since May 2023:
  • 100% relief for spouses, parents, and children
  • 50% relief for siblings and other close relatives
  • 25% for other Group III beneficiaries

🟡 Canary Islands

• From September 2023:
  • 99.9% relief for inheritances received by Groups I, II, and III
  • Lifetime gifts: 99.9% relief for Groups I & II

🔵 Madrid

• Long-standing 99% relief for Groups I & II
• 25% relief for siblings, aunts/uncles and nephews/nieces introduced in 2023
• Increased to 50% in 2024

🟠 Murcia

• 99% relief for spouses, children, parents and grandparents since 2018
• Applies to both inheritance and gifts

🟤 Valencian Community (Valencia, Alicante, Castellón)

• From May 2023:
  • 99% relief for spouses, children, parents
  • Additional €100,000 allowance for Groups I & II
• As of May 2025:
  • 25% relief for Group III (e.g., siblings), rising to 50% in June 2027

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Cross-Border Considerations: UK Inheritance Tax Still Applies

British nationals living in Spain may remain liable for UK inheritance tax (IHT) on worldwide assets for up to 10 years after breaking UK domicile, or indefinitely on UK-based assets.

However, Spain offers a credit for tax paid in the UK to avoid double taxation on the same assets. Even so, cross-border planning is essential to ensure your estate is structured efficiently.

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Forced Heirship and Brussels IV

Under Spanish succession law, children are legally entitled to two-thirds of your estate. This rule applies by default—even to foreign residents—unless you actively opt out.

Thanks to the EU Succession Regulation (Brussels IV), you can elect for the law of your nationality (e.g. English or Scottish law) to govern your estate, rather than Spanish law. This must be clearly stated in your Spanish will.

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Estate Planning Tips for Expats

• ⚠️ If you have children from a previous marriage, be especially careful. Leaving everything to your spouse could trigger extra tax for your children when they inherit as stepchildren later on.
• 📜 Ensure you have a Spanish will that coordinates with your home-country will.
• 🧮 Consider how succession tax applies to non-immediate family, such as unmarried partners or stepchildren.
• 🏡 Review how property ownership, pensions, and investment vehicles are treated under both Spanish and UK inheritance rules.

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Final Thoughts

Recent regional reforms have made Spanish succession tax far more manageable for many families, especially in southern and coastal regions popular with UK expatriates. But the system remains complex, and exceptions are common.

Each family’s situation is different, and the interaction between Spanish and UK inheritance laws can present unexpected challenges. By taking personalised advice, you can ensure your estate is structured according to your wishes—and that your loved ones inherit in the most tax-efficient way possible.

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📞 Need clarity on your Spanish estate plan?
Blacktower’s cross-border advisers can help you navigate the complexities of succession tax and ensure your legacy is protected.

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Disclaimer:
This communication is for informational purposes only and does not constitute financial, legal or tax advice. Tax treatment depends on individual circumstances and may change in the future. Spanish succession and gift tax varies by region. Individuals should seek professional advice tailored to their personal situation before taking action.