If you have just learned that you are a beneficiary of an estate in Madrid — a father’s apartment in Barrios Salamanca, a mother’s finca on the outskirts of the city, a bank account she held for years — you are probably dealing with two things at once: grief, and a legal system in a foreign language that nobody explained to you in advance. I want to start with the reassurance that matters most: what you are facing is routine for us, Madrid’s inheritance tax regime is currently one of the most favorable in Spain for close family, and this guide will walk you through exactly what happens next.
My name is Michael Davies. I am a Spanish lawyer specialised in inheritance work and I have practiced law in Spain since 1994 — over thirty years — representing mainly English-speaking clients from the United States, the United Kingdom, Ireland, Canada and Australia who are inheriting Spanish property or need a Spanish will of their own. A large share of our inheritance clients over the years have been American, British , Irish , Canadian and Australian families dealing with a Madrid estate for the first time, and this guide draws directly on that experience.
We are accustomed to handling Inheritance cases all over Spain , including the Island ( Balearics and Canaries ) , and have been doing so since 1994.
This article is written mainly for one group of readers: beneficiaries who have just discovered they are inheriting an estate in Madrid. Toward the end, there is also a short section for property owners in Madrid who have not yet made a Spanish will — but if you are here because you are inheriting, start with the sections below.
Spanish Law Governs the Madrid Property, Whatever Your Home State or Country Says
The first thing every American client asks us is some version of “my father had a will in Florida — doesn’t that cover his apartment in Madrid?” . A US will, an English will, or a Canadian or Australian will is a vital piece of evidence if there is no Spanish will , but a property located in Madrid is transferred under Spanish legal procedure: before a Spanish notary, followed by registration at the Spanish Land Registry (Registro de la Propiedad). A US Letters Testamentary or Letters of Administration establishes who is authorized to administer the estate under US law — it does not, by itself, establish who is entitled to inherit the Spanish property, and it does not transfer title. The process has to be followed in Spain either using a Spanish will, con validating a will and probate document from abroad, consolidating letter of administration that has been handled as an intestate process in your home country , or an intestate process in Spain. We can advise on all these different situations.
This distinction catches a lot of American and Canadian families out, because in a common-law probate system the court process itself feels like the final word. In Spain, it is simply one document among several that a notary needs in order to complete a separate, Spanish process.
The Good News: Madrid’s 99% Inheritance Tax Relief for Close Family
Madrid has had one of the most attractive inheritance tax regimes in Spain since 2007, and it remains so today. If you are the spouse, child, grandchild or parent of the deceased, here is what you need to know:
- Group I and Group II beneficiaries — children (including adult children), grandchildren, spouses and parents — benefit from a 99% relief on the final tax liability. In practice, this means a son or daughter inheriting a Madrid apartment pays only a small fraction of the tax that the headline rates would otherwise suggest.
- Group III beneficiaries — siblings, nieces, nephews, aunts and uncles — benefit from a 50% relief, following a further reform (Ley 2/2025) that took effect on 1 July 2025.
- Group IV beneficiaries — more distant relatives and unrelated beneficiaries — currently receive no regional relief and are taxed at the standard rates.
- There is a separate 95% reduction on the value of the deceased’s habitual residence, up to a limit of roughly €123,000 per heir, provided the property is generally kept for a minimum holding period afterward.
This applies to you even if you have never set foot in Spain. Following a 2014 ruling of the Court of Justice of the European Union, EU and EEA residents gained the right to apply regional tax benefits rather than the older, less generous national scale. Crucially for our American, Canadian and Australian clients, the Spanish Supreme Court extended this same right to residents of non-EU countries in 2018, a position later reinforced by statute in 2021. In plain terms: a beneficiary living in New York, Toronto or Sydney is now entitled to the same 99% Madrid relief as someone living in Madrid itself, if the majority of the assets in Spain are situated in this region. Important to note that you will need to claim these regional exemptions even though as non-residents you will need to present the self assessment forms to the national tax office and not the regional tax office. (extra care needs to taken to claim the regional exemptions correctly)
A note for US beneficiaries specifically: Spain does not have an inheritance tax treaty with the United States, so this is not a matter of an automatic tax credit. Where Spanish inheritance tax is paid, US beneficiaries generally need to look to the foreign tax credit provisions of US federal tax law, and should coordinate with a US-qualified CPA or tax attorney alongside the Spanish side of the process.
Some of the Things You Need to Do as a Beneficiary
Even with the tax bill sharply reduced, the estate does not administer itself. In our experience, the process generally involves:
- Obtaining an apostilled death certificate and, where one exists, the original will — Spanish or foreign.
- Applying for an NIE (Número de Identificación de Extranjero) for each beneficiary. You cannot inherit Spanish property, open a Spanish bank account, or sign at a Spanish notary without one.
- Establishing the heirs formally. With a Spanish will, a simple certificate from Spain’s Central Registry of Wills confirms it as the last valid will. Without one — the more common situation for our American clients — a foreign grant of probate or letters of administration needs to be supplemented, typically with a formal court determination of heirship or an affidavit of heirship supported by a local attorney’s opinion on the relevant state or provincial intestacy law, apostilled and translated into Spanish. This is because a foreign grant establishes administrative authority, not entitlement, under the law that actually governs the succession.
- Valuing the Madrid property and the rest of the estate, since both the tax return and the notarial deed depend on a defensible valuation.
- Signing the escritura de aceptación y adjudicación de herencia before a Madrid notary — the deed of acceptance and distribution of the estate. This is often arranged by power of attorney, so beneficiaries do not always need to travel to Spain.
- Filing and paying the ISD return (Modelo 650), settling the plusvalía municipal (the Ayuntamiento de Madrid’s separate tax on the increase in land value), and registering the property in the heirs’ names at the Land Registry.
The Deadline That Catches Families Out
You have six months from the date of death to file the Spanish inheritance tax return, and this applies even to beneficiaries who live thousands of miles away and have never visited Madrid. A single six-month extension can be requested, but the request must be made within the first five months — it is not automatic and it is not available after the fact. Miss the six-month deadline without an extension in place and surcharges begin to accrue, even in cases where the tax ultimately due is close to zero because of the 99% relief. American and Canadian families in particular often lose the first few months to an unfamiliar domestic probate process before Spain even enters the picture — which is exactly why we recommend starting the Spanish side in parallel, not afterward.
If There Is No Spanish Will — Or the Only Will Is From Home
Most of our Madrid inheritance cases involve the deceased having a Spanish will bu not always .Sometimes there is only a will from the home country or no will . This is entirely manageable, but it takes longer and is more expensive for two main reasons.
First, as noted above, that foreign grant has to be converted into a formal Spanish determination of who the legal heirs actually are.
Second, you need to establish which law governs the succession at all. Under EU Regulation 650/2012 (“Brussels IV”), the estate of anyone who dies owning property in Spain is governed either by Spanish law or by the law of the deceased’s nationality — but only where a valid election was made during their lifetime. Without that election, the default is the law of the deceased’s last habitual residence, which for a long-term Madrid resident may mean Spanish succession law applies by default, including Spain’s forced heirship rules (the legítima), which reserve a fixed share of the estate for children regardless of what a will says. Madrid follows the national Spanish Civil Code on this point — there is no regional variation here, unlike in some other parts of Spain — which at least makes the position easier to explain, even if it still surprises clients accustomed to full testamentary freedom at home.
A Note for Property Owners: The Spanish Will You Have Been Meaning to Make
If you own property in Madrid and arrived at this article because a friend sent it to you rather than because you are currently handling an inheritance, everything above should make the case on its own. A Spanish will lets you elect the law of your own nationality under Brussels IV, sits alongside your existing US, UK, Irish, Canadian or Australian will without conflicting with it, and lets your family prove their entitlement to a Madrid notary in days rather than months. It is inexpensive to prepare, signed in a single notary appointment, and it is the single most effective thing you can do now to spare your family the heirship-determination process described above. If this applies to you, we would be glad to talk it through — but for most people reading this, the more urgent starting point is the inheritance already in front of them.
Frequently Asked Questions
Do I owe Spanish inheritance tax if I live in the United States, Canada or Australia and have never lived in Spain?Potentially, but for spouses, children, grandchildren and parents inheriting Madrid property, the 99% regional relief generally applies to you as a non-resident in exactly the same way it applies to Madrid residents, following Spanish Supreme Court rulings extending this to non-EU countries. The connecting factor and the precise calculation should be confirmed for your specific estate.
How long do I have to deal with a Madrid inheritance? Six months from the date of death to file the tax return, with a possible six-month extension if requested within the first five months.
My father’s will was made in the US (or the UK, Ireland, Canada or Australia) — is it valid for his Madrid property? It is valid as evidence of his wishes and, for US and Canadian estates, as the basis of a probate or administration proceeding at home, but it does not by itself transfer the Madrid property. That still requires a Spanish notarial deed, usually supported by a formal determination of heirship under the law that governs the succession.
Is there a tax treaty between Spain and the United States that prevents double taxation on inheritance? No. Spain does not have an inheritance tax treaty with the United States. US beneficiaries who pay Spanish inheritance tax generally need to rely on the foreign tax credit provisions of US federal law and should coordinate with a US tax professional.
Should I use my home-country attorney or a Spanish attorney for the Madrid side? Both, working together. Your home-country attorney handles the domestic probate or administration; a Spanish attorney handles the notarial deed, the Modelo 650 filing, and registration. We regularly coordinate directly with US, UK, Irish, Canadian and Australian counsel to keep both sides moving at the same time.
How We Can Help
Davies Abogados has represented English-speaking beneficiaries and property owners across Spain since 1994, including a substantial number of American families dealing with a Madrid estate for the first time. We work daily in both English and Spanish, we are used to coordinating with US, UK, Irish, Canadian and Australian attorneys handling the home-country side of an estate, and we regularly manage the Madrid process from abroad by power of attorney, so travel is kept to a minimum.
If you have just learned that you are inheriting property in Madrid, please get in touch. We would be glad to talk it through with you.
This article is intended as general guidance based on the rules in force at the time of writing and does not constitute individual legal or tax advice. Madrid and Spanish tax rules are subject to change, and the position for any particular estate depends on its specific facts. Please contact us for advice tailored to your circumstances.
