Cross-Border Inheritance for Foreign Owners in Spain
For foreign owners of Costa del Sol property, two separate systems apply on death: EU Regulation 650/2012 decides which country's law governs who inherits, while Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones) is charged locally, with Andalusia offering a near-total relief for close family. A Spanish will electing your national law, plus early planning of NIE and the six-month tax deadline, avoids most cross-border problems.
Cross-border inheritance is one of the most misunderstood parts of owning property in Spain, and getting it wrong can cost foreign owners on the Costa del Sol both time and money. The key point is that two entirely separate systems apply when an owner dies. One system decides which country’s law governs who inherits (the succession rules), and a completely different system decides how much tax the heirs pay in Spain. Understanding that split is the foundation of any sensible plan for foreign owners in Spain.
Which country’s law governs your estate
Since 17 August 2015, cross-border succession within most of the EU has been governed by Regulation (EU) No 650/2012, often called Brussels IV. It applies to the estates of people who die on or after that date.1 The default rule is that the courts and the law of the country where the deceased had their last habitual residence deal with the whole succession.1 So a foreign owner who has genuinely moved to Marbella or Estepona could, by default, have Spanish succession law applied to their worldwide estate.
This matters because Spanish succession law includes forced heirship (the legitima), which reserves a fixed share of the estate for children and certain relatives and limits how freely you can leave your assets. Many buyers from the United Kingdom, Ireland, Scandinavia and elsewhere expect full testamentary freedom, which Spanish default rules do not give.
Choosing the law of your nationality
The Regulation gives you a way out. You can choose that the law of your country of nationality should apply to your succession instead of the law of your residence.12 This choice, known as a professio juris, must be made expressly, normally in a will or a separate declaration.2 Someone with more than one nationality may pick any of them.2
For most foreign owners on the Costa del Sol the practical answer is to make a Spanish will covering their Spanish assets and, within it, to elect their national law. That keeps the transfer of the property simple in Spain while preserving the freedom to distribute the estate under familiar home-country rules. A Spanish notary records the will in the central registry of last wills, which speeds up the process later. Note that Denmark and Ireland do not participate in the Regulation, so their nationals are in a slightly different position and should take specific advice.2 The United Kingdom never opted in, but a British national resident in or owning assets in a participating state such as Spain can still benefit from the choice-of-law mechanism when the Spanish authorities apply the Regulation.
The European Certificate of Succession
To move an inheritance across borders, heirs, legatees, executors and administrators can obtain a European Certificate of Succession. It proves their status and powers and is recognised in all participating Member States without any special procedure.1 It sits alongside, rather than replacing, the Spanish deed of acceptance of inheritance (escritura de aceptacion de herencia) that a notary prepares to transfer a Costa del Sol property into the heirs’ names.
Inheritance tax is separate and stays in Spain
Here is the trap. Regulation 650/2012 does not deal with tax at all. Inheritance taxes are excluded from the succession rules and are governed by each country’s own national law.2 So even if you validly choose English or German succession law, Spanish inheritance tax (Impuesto sobre Sucesiones y Donaciones, or ISD) is still due in Spain on the Spanish property, because the asset is located here.
Spain’s inheritance tax is set by a state framework (Ley 29/1987) but is largely handed to the autonomous communities, which set their own reductions and reliefs.3 The state scale is progressive, running from 7.65% on the smallest inheritances up to 34% on the largest, before any multiplier for distant relatives.3 Heirs are sorted into four groups: Group I (descendants under 21), Group II (descendants of 21 or over, spouses and ascendants), Group III (siblings, nephews, nieces, aunts, uncles and in-laws) and Group IV (cousins and unrelated persons), with the closest relatives taxed most gently.3
Why Andalusia is one of the best places to inherit
Andalusia has made itself markedly friendly to family inheritance. Close relatives in Groups I and II benefit from a reduction of up to 1,000,000 euros each on the taxable base, and on top of that a bonificacion of 99% of the resulting tax bill.4 In practice this means a surviving spouse or a child inheriting a Costa del Sol home from a parent often pays little or no Spanish inheritance tax at all. These reliefs, consolidated in Andalusian regional tax law, are why the region compares so favourably with higher-tax parts of Spain.4 The relief for Groups III and IV is far more limited, so leaving property to friends, unmarried partners without registered status, or distant relatives can produce a real tax bill.
The reliefs are not automatic in the sense of appearing by magic; they must be claimed correctly on the return, within the deadline, and the heirs must file even when the final figure is zero.
Non-residents can use the Andalusian rules
For years, non-resident heirs were forced onto the harsher state rules and denied the generous regional reliefs. The Court of Justice of the European Union struck this down as discriminatory in 2014 (case C-127/12), and Spain later extended equal treatment to residents of non-EU and non-EEA countries as well.3 Today a non-resident heir inheriting a property in Malaga province can generally apply the Andalusian reliefs, filing with the national office that handles non-resident inheritance tax using the ISD self-assessment (Modelo 650).3 This is a significant point for foreign owners: the tax outcome on the Costa del Sol is usually far better than many families fear.
The practical timeline and paperwork
Spanish inheritance tax has a strict deadline. The return must be filed and any tax paid within six months of the date of death, although a further six-month extension can be requested if applied for in good time.3 Missing the deadline triggers surcharges and interest, so early action matters.
Every heir needs a Spanish tax identity number (NIE) before the estate can be processed, and the property transfer is completed by notarial deed and then registered at the Land Registry. Heirs typically also have to deal with the plusvalia municipal (the local tax on the increase in urban land value, Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana), which is paid to the town hall on the same broad six-month timetable. After the reform introduced by Royal Decree-Law 26/2021, there is no plusvalia to pay where no real increase in land value can be shown, which protects heirs in flat or falling markets. Related guidance in our NIE and residency guide and our making a Spanish will guide covers these building blocks in more detail.
Ongoing and exit taxes the heirs inherit too
Once a non-resident heir owns a Costa del Sol home, they step into the same tax position as any other foreign owner. Annual local property tax (IBI) continues to be due to the town hall, and non-residents must file the annual non-resident income tax (IRNR) on Modelo 210, covering either imputed income on a home kept for personal use or actual rental income if it is let. Our non-resident taxes and Modelo 210 guide sets out those rates and filing rules.
If the heirs later decide to sell, the standard non-resident rules apply. The buyer must withhold 3% of the price and pay it to the tax authority as a payment on account of the seller’s capital gains tax, and the non-resident seller then settles the real gain on Modelo 210, offsetting that 3% retention.5 Because the acquisition value for an inherited property is the value declared for inheritance tax, keeping clean records from the inheritance stage directly reduces the gain (and the tax) on a future sale. Our guides on selling your Costa del Sol property and the 3% retention explained walk through that exit in full.
A sensible plan for foreign owners
Bringing it together, a foreign owner on the Costa del Sol should do three things. First, make a Spanish will for the Spanish assets and, if you want home-country distribution rules, expressly elect the law of your nationality under Regulation 650/2012. Second, understand that Spanish inheritance tax stays in Spain regardless of that choice, and that Andalusia’s reliefs make the tax outcome for close family unusually light. Third, plan for the practical mechanics in advance: NIE numbers for likely heirs, the six-month deadline, and clean valuations. Cross-border inheritance is very manageable in Spain when it is planned, and expensive only when it is left to chance. Given that this is money-and-law territory, confirm the current-year figures and your own position with a Spanish abogado or gestor before acting.
Frequently asked questions
Does making a Spanish will avoid Spanish inheritance tax?
No. A will decides who inherits and under which country's succession law, but Spanish inheritance tax (ISD) is charged separately because the property is located in Spain. Even if you elect your national law under EU Regulation 650/2012, the Spanish tax on the Spanish asset still applies. What makes the tax light for close family on the Costa del Sol is Andalusia's regional reliefs, not the will itself.
Can non-resident heirs use Andalusia's inheritance tax reliefs?
Generally yes. After the 2014 Court of Justice ruling (C-127/12) and later Spanish reforms, non-resident heirs (including those from outside the EU and EEA) can apply the reliefs of the autonomous community where the property is located. For a Costa del Sol home that means the Andalusian reductions and the 99% bonificacion for Groups I and II, filed with the national office for non-resident inheritance tax using Modelo 650.
How long do heirs have to pay inheritance tax in Spain?
The inheritance tax return must be filed and paid within six months of the date of death. A one-off extension of a further six months can be requested if you apply within the first five months. Miss the deadline and surcharges and interest apply, so it is wise to start the NIE and paperwork early.
Which country's law decides who inherits my Costa del Sol property?
By default, EU Regulation 650/2012 applies the law of the country where you were habitually resident when you died. If you were resident in Spain, that could mean Spanish forced-heirship rules. You can override this by expressly choosing the law of your nationality in your will, which most foreign owners do to keep full freedom over how they leave their estate.
What is a European Certificate of Succession and do I need one?
It is an EU document that proves an heir's, executor's or administrator's status and is recognised across participating Member States without extra formalities. It is useful when an estate spans several countries. In Spain it works alongside the notarial deed of acceptance of inheritance that transfers the property into the heirs' names at the Land Registry.
Will the heirs face extra taxes when they eventually sell the property?
Yes, the normal non-resident selling rules apply. The buyer withholds 3% of the price as a payment on account, and the non-resident seller settles the real capital gain on Modelo 210. The starting value is the amount declared for inheritance tax, so an accurate inheritance valuation directly lowers the future gain. Ongoing IBI and annual Modelo 210 filings also continue while they own the home.
