What Are Spanish Inheritance Laws and Taxes for U.S. Citizens?

The short answer: if your home is in Spain, Spanish law governs your entire estate unless your will elects otherwise, and Spanish law reserves two-thirds of it for your children and a life interest in part of it for your spouse. Under the EU Succession Regulation you may elect the law of your U.S. state instead, and most Americans should. Tax is a separate matter that no election avoids. Spain’s inheritance tax is charged on each heir, at rates that begin at 7.65 percent and climb to 34 percent before regional reductions, and the regions vary so much that the same inheritance can be nearly tax-free in Madrid and heavily taxed a few hundred miles away. Spain does not recognize trusts, and the United States, which continues to tax your worldwide estate, has no estate tax treaty with Spain.

This article explains who inherits under Spanish law, how to elect American law, how Spanish inheritance tax and wealth tax reach a U.S. citizen, why the revocable living trust misfires in Spain, and what to have in place. It is a guide to the conversation with a Spanish abogado and notario, not a replacement for it.

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Which Country’s Law Governs Your Estate If You Live in Spain?

Spain applies the EU Succession Regulation, which since August 17, 2015 has governed cross-border successions in participating member states. The default rule is that the law of the country of your habitual residence at death governs the succession as a whole, wherever the assets sit. An American who lives year-round in Barcelona or Málaga is habitually resident in Spain, and without a valid election Spanish law will govern the Spanish apartment, the house in Connecticut, and the New York brokerage account together.

Spain adds a layer that France and Portugal do not. It has several civil law systems: the national Civil Code, and separate regional laws in Catalonia, Aragón, the Balearic Islands, Galicia, Navarre, and the Basque Country. When Spanish law applies to a foreigner’s estate, which regional law governs turns on where within Spain the person was most closely connected, generally their habitual residence. The differences are substantial and are described below.

What Does Spanish Forced Heirship Reserve for Your Family?

Under the national Civil Code, children and descendants are forced heirs entitled to two-thirds of the estate. One-third, the legítima estricta, must be divided equally among the children. The second third, the mejora, must go to descendants but may be allocated among them as the parent chooses. Only the final third is freely disposable. A surviving spouse who inherits alongside children receives a usufruct, a lifetime right to use and take income from, the mejora third. If there are no descendants but parents survive, the parents take a reserved share and the spouse’s usufruct grows to one-half.

The regional systems differ sharply. Catalonia reserves only one-quarter of the estate for descendants, computed on the estate plus gifts made in the prior ten years. Navarre and the Basque territory of Ayala allow nearly complete testamentary freedom. Aragón, Galicia, and the Balearic Islands each have their own rules. For an American whose habitual residence is in Catalonia, Spanish law is far less restrictive than for one living in Madrid or Valencia.

None of these systems resembles American state law, under which a parent may leave a child nothing.

Can a U.S. Citizen Choose American Law Instead?

Yes. Article 22 of the regulation permits a person to choose the law of a country of their nationality to govern their succession as a whole. Spanish authorities have insisted that the choice be express and deliberate: a will that merely recites the testator’s American nationality or was signed in the United States does not, by itself, establish an election. The will must say, in terms, that the testator chooses the law of the United States or of a particular U.S. state to govern the succession. Because the United States has fifty legal systems, the election should identify the state, ordinarily the state of the testator’s domicile.

A valid election of your home state’s law removes the Spanish reserved share. Spain has no compensatory levy of the kind France adopted in 2021, so the election is generally respected. It should appear in both the U.S. will and the Spanish will, and the documents must be drafted so that neither revokes the other.

How Does Spanish Inheritance Tax Work?

Spain’s Impuesto sobre Sucesiones y Donaciones is charged on each heir, not on the estate, and the amount depends on three things: what the heir receives, how closely related the heir is, and which region’s rules apply.

The state scale is progressive from 7.65 percent to 34 percent, with a multiplier that increases the tax for more distant relatives and for heirs who already have substantial wealth. Heirs are grouped by relationship, with children under 21 in the most favored group, adult children, spouses, and parents in the next, siblings and nieces and nephews further down, and unrelated heirs last. The regions then apply their own allowances and reductions, and this is where the real variation lies. Madrid and Andalucía, among others, reduce the tax for spouses, children, and parents by 99 percent, so a child inheriting a Madrid apartment from a parent may owe almost nothing. Other regions offer far less, and an heir outside the favored groups can face the full state scale plus the multiplier.

Non-resident heirs and estates of non-resident decedents were once excluded from regional relief. That changed for EU residents in 2014 and, after a 2018 Spanish Supreme Court ruling, for residents of other countries including the United States. A U.S. heir of Spanish property may now apply the rules of the region where the greatest value of the Spanish assets is located, filing with the national tax agency rather than the regional one.

The tax is due within six months of death. An extension of a further six months is available if requested within the first five, but interest runs from the original deadline. Spanish-resident heirs are taxed on worldwide inheritances received; non-resident heirs are taxed on Spanish-situs assets. A separate municipal tax on the increase in urban land value, the plusvalía municipal, is also due on inherited real estate in the town where it sits.

Does Spain Have a Wealth Tax?

Yes, and it reaches non-residents. Spain’s wealth tax, the Impuesto sobre el Patrimonio, applies annually to residents on worldwide net wealth and to non-residents on Spanish-situs assets, with a state allowance of 700,000 euros and regional variations that in some regions eliminate the tax entirely. Since 2022 a national solidarity tax on large fortunes has applied to net wealth above three million euros, originally as a temporary measure and now extended indefinitely; it applies to non-residents on Spanish assets as well. An American who keeps a valuable Spanish home while living in the United States should expect annual filings, not just a tax at death.

Does the United States Also Tax the Estate?

Yes. U.S. citizens are taxed on their worldwide estate wherever they die, with a basic exclusion of 15 million dollars per person for deaths in 2026. Most Americans in Spain will owe no federal estate tax, but the two systems must still be reconciled, and there is no U.S.-Spain estate or gift tax treaty. The countries have an income tax treaty only. Relief for Spanish inheritance tax against any U.S. estate tax depends on the foreign death tax credit provisions of U.S. law rather than a treaty, and the fit is imperfect because Spain taxes the heir while the United States taxes the estate.

Heirs who later sell Spanish property face Spanish capital gains tax on their own gain and U.S. capital gains tax computed from the stepped-up basis, two calculations that rarely align.

How Does Spain Treat an American Trust?

Spain does not recognize the trust as a legal institution and has not joined the Hague Trusts Convention. Spanish tax authorities apply a look-through approach: the trustee is disregarded, and every transaction is treated as if it happened directly between the settlor and the beneficiaries.

For a revocable living trust, the result is that the settlor is treated as still owning everything in it, for income tax, for wealth tax, and for inheritance tax at death. The trust provides no Spanish benefit and adds reporting complexity, because Spanish residents must disclose foreign assets above threshold values on the annual Modelo 720, and a trust interest must be analyzed to determine what is reportable.

For an irrevocable trust, the treatment can be worse. If the beneficiaries are identified and resident in Spain, funding the trust is treated as a direct gift from the settlor to those beneficiaries, and Spanish gift tax can be due at that moment, years before anyone receives anything. Distributions during the settlor’s life are gifts; distributions after death are inheritances from the settlor. Asset protection and Medicaid planning trusts drafted for American purposes can produce a Spanish tax bill for a child living in Spain that no one anticipated. Families with Spanish-resident beneficiaries should have every trust reviewed by Spanish counsel, and in doubtful cases should seek a binding ruling from the Spanish tax directorate before funding.

What Spanish Planning Tools Should Be on the Table?

A Spanish will. The standard form is the testamento abierto, made before a notario who keeps the original and reports it to the central registry of wills, the Registro General de Actos de Última Voluntad. A foreigner needs only a passport or Spanish tax identification number to make one. The Spanish will should cover Spanish assets, state the choice of law expressly, and be coordinated with the U.S. will so that neither revokes the other, the single most common cross-border drafting failure.

Usufruct. Spanish law separates the right to use property from bare ownership, and giving children the bare ownership of a home while a spouse retains a lifetime usufruct is a standard Spanish technique that also reduces inheritance tax on the second death.

Lifetime gifts. Gifts are taxed under the same law as inheritances, and in regions with 99 percent reductions for children a lifetime gift of Spanish real estate can carry little Spanish tax, at the cost of the U.S. step-up in basis and with U.S. gift tax reporting.

Life insurance. Proceeds are subject to Spanish inheritance tax in the hands of the beneficiary but with their own allowances, and the policy passes outside the reserved-share calculation.

Choosing where to live within Spain. Because both forced heirship and inheritance tax depend on region, the choice between Barcelona and Madrid, or between the Balearics and Valencia, has estate planning consequences that most people never consider.

What Happens to Assets Back in the United States?

U.S. real estate and accounts pass under U.S. procedures regardless of Spanish law. Real estate requires probate or another transfer mechanism in the state where it sits, retirement accounts pass by beneficiary designation, and New York and Connecticut impose their own estate taxes. Our overview of how probate works in New Jersey and New York explains what a family abroad should expect. Spanish-resident heirs, however, owe Spanish inheritance tax on what they inherit from the United States, so the U.S. side of the plan affects the Spanish tax bill even when the assets never leave America.

Should You Have One Will or Two?

Two, and in Spain the six-month tax clock makes the case more strongly than anywhere else in Europe.

A single U.S. will can legally govern the whole estate with the Article 22 election inside it. But before a Spanish notario will sign the deed of acceptance of inheritance that transfers the apartment or releases the bank account, the heirs must produce an apostilled copy of the will with a sworn Spanish translation, a certificate from the central registry of wills, proof of the U.S. law being applied, and in most cases the U.S. probate court’s order admitting the will. U.S. probate takes months. Spanish inheritance tax is due six months after death regardless, and the extension must be requested within the first five months. Families relying on a U.S. will alone routinely pay interest and penalties in Spain because the American court had not yet acted.

A Spanish will, made before a notario as a testamento abierto and reported to the central registry, cuts the Spanish estate loose from the U.S. timetable. It covers only Spanish assets, states the election of U.S. law expressly and in the same words as the U.S. will, and gives the notario a Spanish document to work from on the day after death. The U.S. will covers everything else.

Three rules keep two wills from cancelling each other:

• No general revocation clause. Each will revokes only prior wills dealing with the assets it covers and expressly leaves the other in force. Spanish notarial wills traditionally open with a clause revoking all prior wills; that clause must be limited or it wipes out the U.S. will.
• One choice of law, express and identical. Article 22 permits a choice for the succession “as a whole.” You cannot elect Spanish law for the Spanish apartment and your home state’s law for the rest. And because Spanish authorities require the election to be express, a Spanish will that is silent on choice of law while the U.S. will elects American law invites an argument that no valid election was made, which would bring Spanish forced heirship back for everything.
• One residuary clause. Decide which will catches assets in third countries and after-acquired property, and make sure the two documents neither overlap nor leave a gap.

Neither will should direct Spanish assets into an American trust. Spain’s look-through treatment and the gift tax exposure on funding make a trust the wrong vehicle for anything located in Spain.

Have both advisors review both drafts before either is signed, then sign them in a sequence where the second expressly acknowledges the first.

How Do You Coordinate Planning on Both Sides?

A Spanish abogado and notario handle the Spanish will, the regional analysis of both forced heirship and tax, the trust review, and the six-month filing. A U.S. attorney handles the U.S. will and trusts, federal and state estate tax, beneficiary designations, and the election language. Each needs the other’s drafts. Bring a complete asset list by location and title, the region of residence of the testator and of each child, the date and place of marriage, and every existing will and trust.

Plan Well. Live Better.

Spain rewards planning more than almost any other country Americans retire to, because so much of the outcome depends on choices that can still be made: which law, which region, which instruments. At Milvidskiy Law Group, we handle the U.S. side of cross-border plans and coordinate directly with Spanish counsel so the two halves work together. Learn more about our international estate planning services.

This article is for general informational purposes only and does not constitute legal or tax advice, and it does not address Spanish law as a Spanish practitioner would. Reading this article does not create an attorney-client relationship. Spanish succession and tax rules vary by region and change frequently. Figures were verified in September 2026 against Spanish, EU, and U.S. sources and should be confirmed before relying on them.