How Probate and Inheritance Tax Work (2025 Update)
Losing a loved one is never easy, especially if they live in a foreign country like Spain. Dealing with legal and tax matters afterwards can feel overwhelming. If you’ve recently inherited property or assets in Spain (or expect to), this short blog will help you understand how inheritance tax works, what probate means, and what’s new in 2025.
What Is Inheritance Tax in Spain?
Inheritance Tax (Impuesto de Sucesiones) is a tax paid on assets and property you inherit in Spain. That can be money, real estate, or valuables. Each heir pays their own share of tax, based on the value of what they receive and how closely related they are to the deceased.
It’s one of the most frequently reformed taxes in Spain, with rates and reductions depending heavily on where the deceased lived. We have had new laws and rules as recently as March of 2025.
What Is Probate in Spain?
Probate is the legal process of managing the deceased person’s estate:
- Gathering all assets.
- Paying off any debts and taxes (including inheritance tax).
- Distributing what’s left to the rightful heirs.
In Spain, probate typically includes:
- A death certificate.
- A will (if one exists) or declaration of heirs.
- An official inventory of the estate.
- Filing inheritance tax with the regional tax office.
You have 6 months from the date of death to complete this process and pay any taxes owed. You can request an extension if needed. Our advice is to get moving on it as soon as you can.
How Much Is Inheritance Tax?
The base national rate ranges from 8.65% to 34%, depending on the value inherited. But here’s the good news:
Each Spanish region (autonomous community) applies its own tax reductions and bonuses, and many have made big changes in 2025. This is similar to when rumours circulated that Spain was goign to introduce 100% tax on foreign buyers. Each region has the right to reject the proposal, and they will!
What’s New in Inheritance Tax in Spain in 2025?
Valencian Community, including Alicante, Torrevieja, Orihuela Costa etc. (also the same rules apply in Murcia, covering all “Polaris World” golf resorts and similar)
- 99% tax reduction for spouses, children, and parents.
- That means you only pay 1% of the calculated tax.
- Applies whether you live in Spain or abroad.
Madrid
- 99% reduction for spouses, children, and parents (same as Valencia).
- 50% reduction for siblings, aunts/uncles, and nephews/nieces.
Andalusia
- Tax-free inheritance up to €1 million for close family (spouses, children, parents).
- Beyond that, only 1% tax.
- Extended family (2nd–3rd degree) get up to €250,000 tax-free.
Extremadura
- Inheritance tax eliminated for a broader group of family members—now includes nephews, stepchildren, and others with a “special relationship.”
Catalonia
- Tax-free thresholds vary by relation:
- Spouse: €100,000
- Parent: €50,000
- Grandparent: €30,000
- Children under 21: Up to €196,000 depending on age
Other Regions
Regions like Castilla y León, Cantabria, Murcia, and the Canary Islands also offer up to 99% tax reductions for close relatives.
Who Gets Tax Breaks?
Heirs are classified into four groups: Children under 21, spouses, parents, children over 21, siblings, uncles, nephews, etc and Distant or non-relatives. All groups benefit from the new rules except the non-relatives, who currently are expected to pay the full inheritance tax rate.
| Group | Relationship | Common Reductions |
|---|---|---|
| I | Children under 21 | Very generous (e.g. up to €196,000 in Catalonia) |
| II | Spouses, children over 21, parents | 99% tax reductions in many regions |
| III | Siblings, uncles, nephews, in-laws | Growing tax relief (Madrid: 50%, Valencia from 2026) |
| IV | Distant relatives, non-relatives | Full tax rate applies |
Do You Pay Other Taxes Too?
Yes. If you inherit real estate, you may also owe:
- Plusvalía Municipal: A local tax on the increase in land value.
- This is calculated by the city council, separate from the inheritance tax.
What Should Heirs Do?
First, contact Spanish Solutions.
- Check the residence of the deceased—this determines the regional rules.
- Gather documents: Will, death certificate, asset list.
- Calculate inheritance tax: Based on local reductions.
- File within 6 months (or request an extension).
- Work with a lawyer like Pedro Molina to handle paperwork smoothly.
- Find a good estate agent to help.
Final Tips
- Spain is becoming increasingly heir-friendly, especially for close family.
- Alicante and the Valencian Community now offer near-zero inheritance tax for spouses, children, and parents.
- If you’re part of an extended family, watch for 2026–2027 changes, especially in Valencia and Madrid.
- Non-residents (like UK citizens) also benefit from these regional reductions.
Need Help from Spanish Solutions?
If you’re inheriting in Spain and unsure where to start, consider contacting a local inheritance lawyer (abogado de herencias) or gestor in the region where the deceased lived. At Spanish Solutions, we are always happy to help. We even have trusted estate agents who will see your inherited property if you require that service. We have renovation specialists, property managers, gardeners, painters and tilers on our books too.
You can find us in Cabo Roig and LA Zenia. Just give us a call to arrange a chat.
