Guide to Inheritance Tax in Spain (Model 650)
We guide you through the entire estate management process, ensuring regulatory compliance and optimizing the Inheritance Tax burden.
Key Information for Estate Settlement
Residents in Spain who receive assets through inheritance or legacy are obliged to file the Inheritance and Gift Tax (Model 650), applying the regulations of the Autonomous Community corresponding to the deceased's habitual residence.
Who Pays Inheritance Tax and Where is it Settled?
Those obliged to pay and file the tax are the heirs (who succeed universally) and legatees (who receive specific assets) who acquire assets and rights due to death or hereditary succession.
The applicable regulations (tax rates, reductions, allowances) are, as a general rule, those of the Autonomous Community where the deceased (causante) had their habitual residence at the time of death. For non-residents, special rules apply, which you can consult in our specific section.
Key Deadlines for Settling Inheritance Tax (Model 650)
- The general deadline for filing and paying Model 650 is 6 months, counted from the date of the deceased's death.
- This period is extendable by another 6 additional months, provided the extension request is submitted within the first 5 months of the initial period.
- It is crucial to meet these deadlines for the settlement of the inheritance, as failure to file or late filing can lead to surcharges, late payment interest, and possible penalties from the Tax Agency.
Essential Documents for Processing an Inheritance and Inheritance Tax
The documentation required to process an inheritance may vary slightly depending on the Autonomous Community, but generally the following is required (original or certified copy):
- Literal Death Certificate of the deceased.
- Certificate from the General Registry of Last Will Acts (indicates if the deceased made a will and before which notary).
- Authorized copy of the last valid will (if it exists) or, failing that, the Declaration of Heirs Ab Intestato (if there is no will or the existing one is null).
- Identification documents (DNI/NIE) of the deceased and all heirs and legatees.
- Detailed inventory and valuation of the assets and rights composing the inheritance (property deeds, bank certificates of balances and positions at the date of death, vehicle documentation, life insurance policies with beneficiary designation, etc.).
- Proof of deductible debts of the deceased and deductible expenses of the inheritance (e.g., burial and funeral expenses, last illness expenses).
- Deed of manifestation, acceptance, and adjudication of inheritance (if granted before a notary, it is the document where heirs formally accept the inheritance and distribute the assets).
Importance of Regulatory Compliance!
Correctly and timely filing of Inheritance Tax is crucial not only to avoid penalties but also to be able to register inherited assets (real estate, vehicles) in the names of the new owners in the corresponding registries (Property Registry, Traffic, etc.).
Inheritance Tax Reductions and Allowances by Autonomous Community
State regulations for Inheritance Tax establish basic reductions, but Autonomous Communities (ACs) have extensive powers to significantly improve them or introduce important allowances on the tax liability. It is crucial to know the specific regulations of the applicable AC to optimize the tax burden.
By Kinship
There are very significant state and regional reductions depending on the degree of kinship with the deceased (Groups I and II: direct descendants, direct ascendants, spouse). Many ACs also apply significant allowances on the tax liability for these groups, in some cases reaching 99% or even 100%.
For Acquisition of Primary Residence
Reduction in the taxable base for the acquisition of the deceased's primary residence (generally 95%, with maximum limits varying by AC), if the heirs are spouse, ascendants, or descendants (or collaterals over 65 who lived with the deceased) and meet maintenance requirements for a specified period.
For Family Business or Professional Practice
Reduction of up to 95% (or more depending on AC) in the value of shares in entities or individual family businesses, if strict requirements for maintaining the activity and shares by the heirs are met.
For Heir's Disability
Additional reductions for heirs with a recognized degree of physical, mental, or sensory disability, the amount of which varies according to the degree of disability and AC regulations.
For Life Insurance Proceeds
Specific reduction of 100% up to a maximum limit (currently €9,195.49 at state level, improvable by ACs) for amounts received from life insurance contracts, if the beneficiary is the spouse, ascendant, or descendant of the deceased policyholder.
For Historical Heritage Assets
Applicable reduction (generally 95%) for the acquisition of assets listed in the General Inventory of Spanish Historical Heritage or equivalent AC registries, under certain conservation and maintenance conditions.
Highlighted Inheritance Allowances in the Community of Madrid
The Community of Madrid is one of the ACs with the greatest tax benefits in Inheritance Tax for direct relatives:
- 99% allowance on the tax liability for acquisitions by descendants (children, grandchildren...), spouse, and ascendants (parents, grandparents) - Kinship Groups I and II.
- 25% allowance on the liability for acquisitions between siblings (second-degree collaterals by consanguinity) - Group III. (Applicable from January 1, 2025).
- 25% allowance on the liability for acquisitions between uncles/aunts and nephews/nieces (third-degree collaterals by consanguinity) - Group III. (Applicable from January 1, 2025).
This means the tax burden for closest relatives is practically nil in Madrid, and significantly reduced for siblings, uncles/aunts, and nephews/nieces from 2025.
Estimate Your Inheritance Tax Easily
Need to calculate an estimate of the tax on an inheritance? Access our online tax calculator for Inheritance and Gifts, which considers the regulations of all ACs and specific rules for non-residents.
Access IGT CalculatorFrequently Asked Questions (FAQ) about Inheritance and Estates in Spain
1. What is Inheritance Tax?
The Inheritance and Gift Tax (IGT) is a direct and subjective tax levied on wealth increases obtained by individuals titolo lucrativo (i.e., free of charge). The Inheritance modality applies to acquisitions of assets and rights due to death (inheritances, legacies, and other succession titles).
2. Who is liable to pay Inheritance Tax (taxpayers)?
Those liable for payment of the tax as acquirers (taxpayers) are:
- In "mortis causa" acquisitions (due to death), the heirs, legatees, and those who acquire assets by any other succession title.
- The beneficiaries of life insurance contracts, when the policyholder is a person other than the beneficiary, except for the exceptions in IRPF (Personal Income Tax) regulations.
3. When does Inheritance Tax become due (obligation to pay arises)?
The tax becomes due (i.e., the obligation to pay it arises) on the day of the deceased's death (the person leaving the inheritance) or when the declaration of death becomes final. The deadlines for its settlement and payment begin from this date.
4. What is the deadline for filing Inheritance Tax?
The general deadline for filing the self-assessment or declaration of Inheritance Tax (Model 650) is 6 months, counted from the day of the deceased's death or from when the declaration of death becomes final.
5. Can an extension be requested for filing Inheritance Tax?
Yes. Taxpayers can request an extension of the filing period for an additional 6 months. This request must be made within the first 5 months of the initial filing period (i.e., before the end of the fifth month from death). Granting the extension entails the accrual of late payment interest corresponding to the extension period but does not prevent the application of surcharges if the filing is made after the granted extension has ended.
6. What happens if I do not file Inheritance Tax on time?
Failure to file the tax on time can have several negative consequences:
- Surcharges for late filing: If filed late without prior request from the Administration, a surcharge on the amount due will apply.
- Late payment interest.
- Tax penalties.
- Inability to dispose of assets.
7. How is the taxable base for Inheritance Tax calculated?
The taxable base is calculated starting from the real value of the assets and rights composing the inheritance, adding addable assets, and subtracting deductible charges, debts, and expenses.
12. Does Inheritance Tax vary between Autonomous Communities?
Yes, significantly. Autonomous Communities have broad regulatory powers.
14. What form is used to settle Inheritance Tax?
The main form for the self-assessment of Inheritance Tax is Model 650.
23. Is professional advice recommended for inheritance and IGT?
Yes, absolutely. Given the complexity, having expert advisors is highly recommended. You can contact us for a personalized study.
Expert Advice on Inheritance and Inheritance Tax
At GESTISYD, we offer expert advice and handle the entire processing of Inheritance Tax (Model 650) and comprehensive estate management. Contact us for efficient tax planning and hassle-free processing.
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