Inheritance Tax After Brexit 2025 update

Inheritance Tax in Spain for UK Nationals (2025 Update)

Since Brexit, UK nationals are considered non-EU citizens in Spain. This status affects inheritance tax obligations, especially for those owning property or assets in Spain. In 2025, understanding the nuances of Spanish inheritance tax is crucial for effective estate planning.

Who Pays Spanish Inheritance Tax?

Inheritance tax in Spain is levied on the beneficiary, not the estate. Both residents and non-residents are liable:

• Residents: Taxed on worldwide assets.
• Non-residents: Taxed only on assets located in Spain.

Tax rates vary based on the beneficiary's relationship to the deceased and the region where the assets are located.

Regional Variations and Allowances

Spain's autonomous communities have the authority to set their own inheritance tax rates and allowances. Some regions offer significant reductions:

• Andalucía: 99% reduction for spouses, descendants, and ascendants.
• Madrid: 99% reduction for close relatives; 50% for siblings and other relatives.
• Valenciana: 99% reduction for spouses, children, grandchildren, and parents.

It's essential to consult local regulations or a tax advisor to understand the specific allowances applicable to your situation.

Impact of Brexit on Inheritance Tax

Despite Brexit, UK nationals can still benefit from regional tax allowances due to a 2019 Spanish Supreme Court ruling. This decision extended favorable tax treatments to non-EU residents, ensuring that UK beneficiaries are not disadvantaged solely based on their non-EU status.

Additional Taxes and Considerations

Beyond inheritance tax, beneficiaries should be aware of other potential taxes:

• Capital Gains Tax: If the inherited property is sold, non-residents pay 24% on the gain.
• Plusvalía Municipal: A local tax on the increase in land value, payable upon inheritance and sale.
• Imputed Income Tax: Non-residents may be liable for this annual tax on Spanish properties, calculated based on the property's cadastral value.

Planning Ahead

Effective estate planning can significantly reduce tax liabilities:

• Draft a Spanish Will: Specify the applicable national law to govern your estate.
• Consider Gifting: Lifetime gifts can sometimes be more tax-efficient, depending on regional laws.
• Consult Professionals: Engage with tax advisors familiar with both UK and Spanish laws to navigate complexities.

Sources:

• Blevins Franks: Spanish Tax in 2025
• Tejada Solicitors: Inheritance Tax Spain
• IberianTax: Understanding Taxes When Inheriting Assets in Spain
• Pellicer & Heredia: Inheritance Tax Spain