Margaret and Tom are British, aged 64 and 66, and have lived in Madrid since 2016, when he was transferred here by his company. Now that they are retiring they are torn between staying near their daughter and moving to the coast in Alicante or Málaga. Their criteria include the climate, flights and the taxes their children will pay when they inherit, and they have found three contradictory tables online with percentages by region. Their question is reasonable. What does not work is the idea that usually follows it: "we'll pick the cheapest region and that's that".
What each region can change
The Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones, ISD) is a State tax, but it is ceded to the regions. Law 29/1987 leaves several parts of the calculation to the autonomous communities under the common system:
| Part of the tax | What the region can do | Legal basis |
|---|---|---|
| Reductions in the base | Approve its own, applied after the State ones, and improve those for kinship, home or business | Art. 20.1 LISD |
| Scale | Approve its own scale | Art. 21.1 LISD |
| Multiplying coefficients | Set its own and the bands of pre-existing wealth | Art. 22.1 LISD |
| Deductions and reliefs on the tax due | Approve whatever it sees fit, on the tax already calculated | Art. 23.2 LISD |
| Administration | Forms, payment deadlines and formal requirements within the State framework | Art. 31 LISD and Law 22/2009 |
If the region does not regulate a part, the State one applies. That is why two regions can have the same relief and charge very different amounts, because they start from different scales or reductions.
The Basque Country and Navarre have their own tax and are outside this comparison.
Where the differences are most noticeable
Between regions, the gap varies greatly by kinship:
- Spouse and children (groups I and II). This is where almost all regions have concentrated their benefits, so for an average inheritance the differences may be moderate, although they shoot up with large estates or with requirements that are not met.
- Siblings, nephews and nieces, uncles and aunts (group III). Here the regions diverge a great deal. Some considerably improve on the State position; others leave it almost untouched.
- Cousins and strangers (group IV). This is where you find the fewest improvements, and the State starting point is harsh: no reduction and a coefficient of 2.0 or more.
- Gifts compared with inheritances. Some regions treat both alike; others give large reliefs on inheritances and small ones on gifts, or require a deed and proof of the origin of funds only for gifts.
We do not publish on this page the specific percentage each region has today: those figures change with every regional law, and an old table leads to wrong decisions. We calculate it for each case with the rules in force on the date of the event.
Why it cannot be chosen
Here is the part the online tables leave out. The region is not chosen by declaring an address: the law fixes it.
- Inheritances. The region where the deceased lived for the most days in the five years before death applies (articles 32.2.a and 28.1.1.º.b of Law 22/2009).
- Gifts of money and movable assets. The recipient's region of residence, with the same five-year count (article 32.2.c).
- Gifts of property. The region where the property is (article 32.2.b), with no option.
- Non-residents. The second additional provision of Law 29/1987 assigns the region by fixed criteria: the deceased's residence, the location of the greatest value of the assets in Spain or the days movable assets have been located there.
In addition, article 28.4 of Law 22/2009 denies effect to changes of residence whose main purpose is to pay less in the ceded taxes, and describes indicators linked to income tax. A change of region that does not reflect a real change of life is open to challenge.
Margaret and Tom's case: when the new region starts to count
Suppose they genuinely settle in Málaga on 1 March 2024, after eight years in Madrid, and that Tom dies in 2026.
- If he dies on 1 May 2026: the five-year window contains 791 days in Andalucía and 1,035 outside it. The Comunidad de Madrid applies.
- If he dies on 1 September 2026: 914 days in Andalucía against 912. Andalucía applies.
- The difference between the two scenarios is four calendar months, and no paperwork can bring it forward.
There is also a subtlety for people arriving from abroad: days lived in another country belong to no region. If Margaret and Tom had moved straight to Málaga from England in 2024, the count would only compare Spanish regions, and the reasonable conclusion would be that Andalucía was theirs, being the only region with days in the window. That is why the order of the moves matters as much as the dates, and we check it with exact dates in each case.
Moving because of inheritance tax means betting that the regional rules will be the same at the time of death, which may be twenty years away. Regions change their benefits often, in both directions. We do not recommend deciding where to live on the basis of this tax, and we do not guarantee that an advantage that exists today will exist tomorrow.
And if what they are planning is lifetime gifts, their move matters less than they think: for gifts of money, the residence of the daughter who receives them is what counts, not that of the parents. If their daughter stays in Madrid, the Madrid rules govern those gifts wherever Margaret and Tom live.
Comparing with numbers: what to ask for
If you still want a comparison, ask for it for your specific case and with this information: the value and make-up of the estate, how many heirs and their relationship, their pre-existing wealth, whether there is a habitual home or a family business, and whether any of them lives abroad. With that, each heir's tax can be calculated under each set of rules.
As a reference for how much kinship weighs before any relief, on the State scale an inheritance of 150,000 € carries tax of 18,277.60 € for a child and 31,393.57 € for a niece (worked through in inheriting from an uncle or a friend). The regions act on that gap, reducing it a great deal in some cases and hardly at all in others.
The comparison is more useful for something else: anticipating requirements. Knowing that the region of residence will require a public deed for a gift, or ten years of holding the inherited home, lets you organise your assets to meet them. The usual requirements for gifts are in the relief on gifts and those for the home in the habitual home reduction.
If you would like us to compare your situation under the rules of the regions you are considering, send us the details through the inheritance form. We give you the figures under each set of rules in force and the risks of each scenario; the decision on where to live is yours.
Margaret and Tom chose Málaga for the airport and the climate. What they took away from the conversation was a Spanish will coordinated with their English one and a clear idea of the date from which their new residence would count.
The guide with the table of ISD competences summarises who manages each case, and at Salama Tax for inheritance and gifts we explain how we approach families who settle in Spain from abroad.