When a person dies and their heirs acquire the deceased’s assets, they must file Spanish Inheritance and Gift Tax (ISD). This is a state tax partially devolved to the Autonomous Communities in Spain. Therefore, allowances and exemptions may vary depending on the region.
The amount of tax due, together with any debts attached to the estate, may even lead heirs to consider renouncing the inheritance. In this article, we explain what Spanish Inheritance and Gift Tax consists of and which tax forms must be used to declare it.
What is Spanish Inheritance and Gift Tax?
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Spanish Inheritance and Gift Tax is a direct and personal tax levied on increases in wealth obtained by individuals as a result of inheritances, gifts and life insurance proceeds.
Three key characteristics should be highlighted:
- It is a personal tax, as it takes into account the individual circumstances of each taxpayer (degree of kinship with the deceased, disability, etc.).
- It encourages the transfer of certain assets, such as the main residence, through specific reductions.
- It is a progressive tax, as it applies progressive rates and a multiplying coefficient that considers kinship and the taxpayer’s pre-existing wealth.
Which tax forms are used for Spanish Inheritance and Gift Tax?
The declaration of Spanish Inheritance and Gift Tax is made through three main tax forms:
Form 650 (Inheritance – mortis causa)
Form 650 is used to declare acquisitions mortis causa, meaning assets and rights acquired by inheritance, legacy or any other succession title. It is also used to declare amounts received from life insurance policies linked to the deceased.
The following individuals are required to file this form:
- Individuals resident in Spain who acquire assets or rights by inheritance, legacy or other succession title, or who are beneficiaries of a life insurance policy.
- Individuals not resident in Spain who acquire assets or rights located in Spain by inheritance, legacy or other succession title.
The filing deadline is six months from the date of death or from the date the declaration of death becomes final.
Form 650 may be filed:
- In paper format (downloading the form, paying the amount due and submitting it to the competent tax office).
- Through the pre-declaration system provided by the Spanish Tax Agency (AEAT).
- Electronically.
Form 651 (Gifts – inter vivos)
Form 651 is used to declare inter vivos acquisitions, meaning gifts or acquisitions of assets through any other gratuitous legal transaction.
The following individuals must file this form:
- Individuals resident in Spain who acquire assets or rights by gift or other inter vivos gratuitous transaction.
- Individuals not resident in Spain who acquire assets or rights located in Spain by gift or other inter vivos gratuitous transaction.
The filing deadline is 30 working days from the date of the act or contract.
Form 651 may be filed:
- In paper format.
- Through the pre-declaration system provided by the AEAT.
- Electronically.
Form 655 (Consolidation of ownership – extinction of usufruct)
Form 655 is used to declare the consolidation of ownership following the extinction of usufruct.
For example, a mother dies and the father inherits the usufruct of the family home, while the children inherit the bare ownership. When the father later dies, full ownership is consolidated in the children, as the usufruct is extinguished.
The person required to file is the bare owner, once full ownership is consolidated.
The filing deadline is:
- Six months from the death of the usufructuary; or
- 30 working days from the extinction of the usufruct, when it does not occur due to death.
Form 655 may be filed:
- In paper format.
- Through the AEAT pre-declaration system.
- Electronically.
Supporting documentation
For all three forms, specific supporting documentation must be attached. This will depend on each case and may include:
- Notarial deed.
- Death certificate.
- ID card or passport.
- Power of attorney.
- Other relevant documents.
To complete all procedures correctly, it is essential to rely on a law firm specialised in inheritance law, succession matters and Spanish Inheritance and Gift Tax filings.
At LEIALTA, we provide comprehensive advice to ensure full compliance and legal certainty in inheritance and gift tax matters in Spain.
