Investment approach
Inheritance tax for foreign owners of Spanish property
Spanish property is subject to Spanish inheritance tax whatever the owner's country of residence, and the rules vary widely from region to region.
Property in Spain is subject to Spanish inheritance tax, the Impuesto sobre Sucesiones y Donaciones, regardless of where the owner and the heirs live or what nationality they hold. The amount depends on the region where the property is located: Catalonia has its own reliefs, allowances and rates, so a "Spanish average" tells you nothing here. Since 2021, regional reliefs and rates have applied to non-resident heirs on the same footing as residents, whether they live inside the EU or outside it.
An asset in Spain means Spanish tax
The tax is triggered simply by the property being located in Spain. That creates a tax jurisdiction separate from the rules of the country where the deceased was resident.
Why regional rules decide
Inheritance tax in Spain is largely regulated by the autonomous communities, and each of them is entitled to set its own reliefs, allowances and rates. Property in Catalonia is governed by Catalan rules, which can differ substantially from those of another region. A calculation based on a general "Spanish" rule can give a misleading picture of what a particular heir will actually pay.
Residents and non-residents: the gap was closed
Regional reliefs and rates used to apply only to heirs resident in Spain: a non-resident, even one living in the EU, paid the higher general state rate instead. The Court of Justice of the EU ruled this breached the free movement of capital (case C-127/12, 2014), and Spain's Supreme Court extended the same reasoning to heirs from outside the EU in 2018. Ley 11/2021 then wrote this into the statute: since then, any heir can apply the regional rules regardless of where they live. From there, the amount depends not on residence as such but on where the asset is located, the heir's kinship group and the wealth they already hold in Spain. See the Agencia Tributaria for more.
What can be done in advance
The ownership structure (directly as an individual, through a company, or jointly with the heirs) is decided before an inheritance arises, not after, and it can substantially change the eventual tax burden on the investor's family. This calls for a separate consultation with a Spanish tax lawyer who specialises in international estate planning, not a general calculation done as part of an investment project.
Questions and answers
If the heirs live in different countries, is the tax worked out differently for each of them?
It can be, but not simply because of which country each heir lives in. For an asset in Spain that belonged to a non-resident, both heirs apply the rules of the same region: the one where the property is located. The difference between them usually comes from their kinship group (how closely related they were to the deceased) and each heir's existing wealth, not from residence as such.
Can I pass property to my heirs in advance to avoid inheritance tax?
A lifetime gift (donación) is a separate taxable event with its own rules and rates, not a way around the tax. The decision calls for both scenarios to be worked out for the family concerned.