In the Impuesto sobre Sucesiones y Donaciones, Spain's inheritance and gift tax, the first question is not how much you pay. It is which autonomous community (Spain's regions, which set most of the rules of this tax) is in charge. That answer decides the reductions, the reliefs, the deadline and even the office where the return is filed. And nobody gets to choose it: it is fixed by Ley 22/2009, the law on regional financing, through connecting factors (puntos de conexión) that leave no room for creative interpretation.
Three rules for three situations
| Transaction | Region in charge |
|---|---|
| Inheritance (acquisition on death) and life insurance | The region of habitual residence of the deceased on the accrual date |
| Gift of real estate | The region where the property is located |
| Gift of any other assets and rights | The region of habitual residence of the person receiving the gift |
Notice the asymmetry: in an inheritance the deceased decides, while in a gift of money the recipient decides. That is the source of half the misunderstandings. A parent living in a region with a relief and a child living in another without one produce opposite results depending on whether assets pass during life or on death, and the order of those decisions cannot be undone later.
If a flat in one region and money in an account are given at the same time, there are two different connecting factors inside the same transaction: the flat goes to the region where it stands, and the money to the recipient's region. Tax is assessed in both, each part under its own rules. It is entirely possible for one part to be almost exempt and the other not.
The five-year rule
"Habitual residence" here does not mean where you are on the municipal register today. Ley 22/2009 treats an individual as resident in a region when he or she has spent there the largest number of days in the five years immediately before, counted from date to date and ending on the day before the tax accrues.
In other words, you look back over five years and the region where the most days were spent wins. An absolute majority is not needed; a relative majority is enough. A retired person who moved two years ago is still "resident", for the purposes of this tax, where he or she lived for the three years before.
| Days in the five-year period | Region A | Region B | Region C | In charge |
|---|---|---|---|---|
| Case 1 | 1,100 | 700 | 26 | A |
| Case 2 | 730 | 1,095 | 0 | B |
| Case 3 | 610 | 600 | 616 | C |
Case 3 shows how awkward this can get: a difference of six days decides which rules apply to an inheritance worth several hundred thousand euros. When there have been recent moves, the entry on the padrón (the municipal register of residents), utility consumption, the tax address declared in the income tax return and medical records are the evidence on which one conclusion or the other is built. We always warn that this ground is open to argument and that the region that loses out may review it.
An anti-avoidance rule that shuts the door on the last-minute move
Ley 22/2009 takes a dim view of changes of residence whose main purpose is to lower the tax bill. When the stay in the new region is short and the person returns to the previous one within a brief period, the change has no effect and is treated as if no move had happened. It is a clause designed exactly for the taxpayer who registers in another region a few months before a large transaction.
A genuine move, on the other hand, is legitimate: the law allocates jurisdiction by residence, and someone who really moves is taxed where they live. The difference between the two is a matter of facts, not of declared intentions, and it is proved by daily life: where the children go to school, the doctor, the workplace, the car, the utility bills.
When someone from outside Spain is involved
If the deceased, the heir, the donor or the recipient is not resident in Spain, or if the assets are abroad, the power to collect the tax lies with the central state, through the Oficina Nacional de Gestión Tributaria (the national tax management office in Madrid), not with a region. But that does not mean state rules apply. The second additional provision of Ley 29/1987, the Inheritance and Gift Tax Act, allows the regional rules to be applied according to these criteria:
| Situation | Regional rules that apply |
|---|---|
| Deceased not resident in Spain, with assets here | Those of the region where the greatest value of the assets located in Spain lies |
| Deceased not resident, with no assets in Spain | Those of the region where the heir resides |
| Heir not resident, deceased resident in Spain | Those of the region where the deceased lived |
| Gift of property located in Spain to a non-resident recipient | Those of the region where the property is located |
| Gift of property located outside Spain to a resident recipient | Those of the region where the recipient lives |
| Gift of movable assets located in Spain to a non-resident recipient | Those of the region where the assets were located for the most days in the preceding five years |
The last row is the one that governs gifts of money to children living abroad, and it is developed in international gifts and the 99 % reliefs. The rest of the international map (personal and territorial liability, double taxation, reporting duties) is in when assets or people are outside Spain.
The Basque Country and Navarre go their own way
The foral territories, the Basque provinces and Navarre with their historic tax autonomy, do not apply Ley 29/1987. There, inheritance and gift tax is a tax under an agreed regime with its own legislation, governed by the Normas Forales of each historic territory and by the Navarrese foral law. They have their own kinship groups, their own reductions and their own rates, and also their own connecting factors, laid down in the Concierto Económico with the Basque Country and in the Convenio Económico with Navarre.
The general rules look alike (residence of the deceased for inheritances, location of the property for gifts of real estate, residence of the recipient for everything else), but they are not identical, and the calculation of foral habitual residence has its own nuances. When one part of a family is in the common territory and another in a foral territory, deciding which administration is competent stops being a formality: the applicable Concierto or Convenio has to be read and compared with Ley 22/2009.
Conflicts of jurisdiction between a foral tax authority and the state, or between regions, are not settled by the taxpayer choosing where to file. There are specific bodies (the arbitration boards of the Concierto and of the Convenio, and the arbitration board for conflicts over state taxes handed to the regions) that decide who is entitled. Meanwhile the taxpayer may face two assessments for the same event, and the way out is to file where the connecting factor can be supported, document it well and defend the position. We cannot guarantee what the final decision will be.
Jurisdiction, applicable rules and who collects are three different things
- Jurisdiction: who manages the tax and where you file. A region, or the central state if there is an international element.
- Applicable rules: which reductions and reliefs are used. They may be regional even when jurisdiction lies with the state.
- Collection: which administration receives the money. It follows jurisdiction.
Mixing them up produces two expensive mistakes: filing at the wrong office, which interrupts nothing and may let the deadline pass; and assessing the tax under another region's rules, which, if it favoured the taxpayer, will end in a supplementary assessment with interest.
The deceased's residence is not the last address
The death certificate states where the death occurred, and that proves nothing: a person can die in a hospital in a province where they never lived. Nor is the address in the will enough, since it is usually the one on the day the will was signed, sometimes twenty years earlier. What counts is the five-year period of actual presence, and reconstructing it means looking at the padrón, utility use, healthcare records and the declared tax address.
The difficult case is the elderly parent who spends spells with each child in different regions, or the one who moves into a care home far from their city for the final years. There the conclusion may be debatable and should be documented before filing, because once tax has been assessed in one region, changing position means asking for a refund in one and assessing again in the other, with the deadline already gone.
What we check before assessing the tax
- The deceased's death certificate and historical padrón record, to reconstruct the five-year period.
- The five years of IRPF returns (Spanish income tax), because the declared tax address carries weight.
- A tax residence certificate if anyone lives abroad; without one, the tax authorities presume whatever suits them. How to request it is explained in tax residence certificate.
- Where each asset is located, one by one, because real estate does not follow the person.
With all that on the table, the jurisdiction question is settled in an afternoon and, above all, it is put in writing in case anyone disputes it three years later. If you have an inheritance or a gift with more than one region involved, tell us about it in the inheritance and gift form: the first thing we do is fix the region in charge, because everything else depends on it. And we say so with the caution that belongs to ground where two administrations may want the same thing.