The inheritance and gift tax (ISD — Impuesto sobre Sucesiones y Donaciones) is the Spanish tax with the greatest territorial variation. A child inheriting €500,000 in cash and shares may pay virtually nothing if their mother was resident in Madrid, or between €25,000 and €40,000 if she was resident in Catalonia or Aragon. This is not tax avoidance: it is the direct consequence of delegating legislative competence to the autonomous communities, which since Act 22/2009 may set their own reliefs, reductions and rates.
This guide sets out the reliefs in force in 2026 for all autonomous communities, includes comparative numerical case studies and explains the rules that determine which region collects the tax.
What ISD Is and the Regulatory Framework for Regional Delegation
The inheritance and gift tax is governed by Act 29/1987, of 18 December, and the Regulation approved by Royal Decree 1629/1991, of 8 November. It is a direct and personal tax levied on gratuitous increases in wealth received by individuals, whether by inheritance (mortis causa) or by gift (inter vivos).
The delegation to the common-regime autonomous communities was initially structured under LOFCA and consolidated by Act 22/2009, of 18 December, which governs the regional financing system. This Act delegates the full revenue collection from ISD and the legislative power to regulate:
- Reductions in the taxable base (additional to state reductions)
- The tax scale (applicable rates)
- The amounts and coefficients for pre-existing wealth
- Liability reliefs (the instrument most widely used in practice)
The foral regime autonomous communities — the Basque Country and Navarre — have full autonomy in ISD matters, with their own systems that differ substantially from the common regime. When referring to “common-regime autonomous communities” in this document, the foral territories are excluded.
The Kinship Groups: The Key to Understanding Reliefs
Act 29/1987 classifies beneficiaries into four groups that determine the state reduction and the application of most regional reliefs:
| Group | Who is included | State base reduction |
|---|---|---|
| I | Descendants and adopted children under 21 | €15,956.87 + €3,990.72 per year under 21 |
| II | Spouse, descendants and adopted children aged ≥21, ascendants and adoptive parents | €15,956.87 |
| III | Second- and third-degree collateral relatives (siblings, nephews/nieces, aunts/uncles), ascendants/descendants by affinity | €7,993.46 |
| IV | Fourth-degree or more remote collateral relatives, unrelated persons | No state reduction |
The vast majority of regional reliefs benefit only Groups I and II. Groups III and IV are taxed much more heavily in virtually every region.
ISD Relief Table by Autonomous Community 2026
The table covers liability reliefs for inheritances (mortis causa). Gifts are addressed in a separate section.
| Autonomous Community | Groups I and II | Groups III and IV | Notes |
|---|---|---|---|
| Madrid | 99% | No relief | In force uninterruptedly since 2006. |
| Andalusia | 99% | No relief | Approved in 2019, consolidated in 2021. |
| Galicia | 99% | No relief | Robust relief, includes spouse and ascendants. |
| Murcia | 99% | No relief | Applies to Groups I and II on gross liability. |
| Castile and León | 99% (descendants) | No relief | Covers children and adopted children; ascendants and spouse also at 99% under their own rules. |
| La Rioja | 99% | No relief | Groups I and II without base limit. |
| Canary Islands | 99.9% | No relief | The highest relief in the common regime; results in near-zero taxation. |
| Cantabria | 100% | No relief | ISD effectively abolished for Groups I and II. |
| Asturias | 100% up to €300,000; progressive above | No relief | Free of charge up to €300,000 per heir; above that, the progressive scale applies. |
| Extremadura | 99% up to €300,000 base | No relief | Quantitative limit; excess subject to state scale without relief. |
| Castile-La Mancha | 100% up to €300,000 | No relief | Effective allowance of €300,000 per heir. |
| Balearic Islands | 99% Group I; 100% children up to €700,000 | No relief | Differentiated treatment between Group I and Group II ascendants/spouse. |
| Valencia | 99% Group II | No relief | Includes spouse, adult descendants and ascendants. Group I also has relief. |
| Aragon | 65% descendants | No relief | Lowest relief among regions that apply one. Spouse: up to 99% with conditions. |
| Catalonia | Progressive: up to 99% Group I; decreasing Group II | No relief | Tiered system; mid-to-high value inheritances for Group II attract significant tax. |
| Basque Country | Foral scale: 1.5%–4% direct line | Own foral scale | Not a “relief” but a structurally low rate. Álava, Gipuzkoa and Bizkaia have minor differences. |
| Navarre | Foral scale: 0.8%–8% direct line | Own foral scale | Own foral regime; very low rates for direct-line relatives. |
Notes: Data updated as at May 2026. Reliefs may be subject to additional conditions not shown in this simplified table. Verification of current regional rules or consultation with a tax adviser is recommended for specific inheritances.
Multiplier Coefficients for Pre-Existing Wealth
Act 29/1987 provides that the gross liability calculated by applying the scale is multiplied by a coefficient that varies according to the kinship group and the heir’s pre-existing wealth. This mechanism can significantly increase the liability before regional reliefs are applied.
| Heir’s pre-existing wealth | Groups I and II | Group III | Group IV |
|---|---|---|---|
| Up to €402,678 | 1.0000 | 1.5882 | 2.0000 |
| €402,678 to €2,007,380 | 1.0500 | 1.6676 | 2.1000 |
| €2,007,380 to €4,020,771 | 1.1000 | 1.7471 | 2.2000 |
| Above €4,020,771 | 1.2000 | 1.9059 | 2.4000 |
In practice, the multiplier coefficient has little impact in regions with 99%–100% reliefs for Groups I and II, since the resulting liability is minimal in any case. But in Catalonia, Aragon or for Groups III and IV inheritances in any autonomous community, this coefficient can multiply the tax bill significantly.
Inter Vivos Gifts: Asymmetry with Inheritances
Gifts (gratuitous transfers during the donor’s lifetime) are taxed within the same ISD framework but under their own rules and, in general, with less generous regional reliefs.
| Autonomous Community | Gift relief (Groups I and II) | Difference vs inheritances |
|---|---|---|
| Madrid | 99% | On par with inheritances |
| Andalusia | Own reduction up to €1,000,000 per donor-donee | Favourable but with a cap |
| Canary Islands | 99.9% | On par |
| Galicia | Kinship reduction + relief | Own conditions |
| Catalonia | Limited regional reduction; mid-to-high rates | Worse than inheritance |
| Basque Country | Low foral rate | Own system; low taxation |
| Aragon | No general special relief | Worse than inheritance |
The decision between a lifetime gift and an inheritance depends on the autonomous community, the type of asset and the timing. In Madrid, both routes are fiscally almost equivalent. In other regions, the tax cost of a gift can be materially higher than that of an inheritance, which discourages transfers during the donor’s lifetime.
Numerical Case Studies
Case 1 — Inheritance of €500,000 to one child (Group II, aged 45, pre-existing wealth < €402,000)
Taxable base: €500,000 State Group II reduction: €15,957 → Net taxable base: €484,043
Applying the state scale under Art. 21 of Act 29/1987 to €484,043, the gross liability is approximately €88,520. Group II multiplier for low pre-existing wealth: 1.00.
| Autonomous Community | Relief | Approximate effective liability |
|---|---|---|
| Madrid | 99% | ~€885 |
| Andalusia | 99% | ~€885 |
| Canary Islands | 99.9% | ~€88 |
| Cantabria | 100% | €0 |
| Asturias | 100% up to €300K, scale above | ~€6,500 (only on excess above €300K) |
| Aragon | 65% | ~€30,900 |
| Catalonia | Progressive decreasing Group II | ~€28,000–€35,000 |
| Basque Country (Gipuzkoa) | Foral rate ~3% | ~€15,000 |
Case 2 — Gift of €200,000 from mother to child (Madrid vs Aragon vs Canary Islands)
| Autonomous Community | State gross liability | Applicable relief | Effective liability |
|---|---|---|---|
| Madrid | ~€28,000 | 99% | ~€280 |
| Canary Islands | ~€28,000 | 99.9% | ~€28 |
| Aragon | ~€28,000 | No general gift relief | ~€28,000 |
This case illustrates why advance planning through gifts can be very costly in Aragon, while in Madrid or the Canary Islands it is almost cost-free.
Tax Planning: Testator’s Residence and the Five-Year Rule
The autonomous community that collects ISD is that of the testator’s habitual residence during the period of greatest duration within the five years immediately preceding death (Art. 28.1.1.ª of Act 22/2009). It is not the residence in the year of death: it is the five-year average.
This rule has two fundamental practical implications:
For legitimate planning: A taxpayer with significant wealth who moves their effective residence to Madrid or the Canary Islands at least five years in advance, and maintains that residence genuinely (habitual home, daily activity, medical care, social relationships), will have their estate taxed under the new region’s reliefs. There is no legal obstacle to changing residence for tax reasons if the change is real.
To prevent abuse: The tax authority monitors whether the change of residence is genuine through analysis of electricity and utility consumption, medical history, banking arrangements, travel patterns and census registration. Formal census registration without genuine residence does not produce the intended tax effect and may be subject to an additional assessment with interest and penalties.
Special rule for real property: If the deceased was a non-resident and the inherited assets are property in Spain, jurisdiction goes to the autonomous community where the highest-value property is located (Art. 28.1.1.b of Act 22/2009).
Non-Residents and the Spanish ISD
Non-resident heirs who receive assets from Spanish testators, or assets located in Spain, are also subject to ISD. Until the CJEU judgment of 3 September 2014 (Case C-127/12), non-residents could only apply state rules, without benefiting from regional reliefs — which constituted discrimination contrary to the Treaty. Since the reform introduced by Act 26/2014:
- EU/EEA residents may opt for the rules of the autonomous community where the highest-value assets are located, the testator’s domicile, or the heir’s largest pre-existing wealth concentration.
- Non-EU/EEA residents remain subject to state rules without the regional option.
Additional FAQ
Why does Andalusia attract inheritances? Since 2019, Andalusia applies a 99% relief for Groups I and II. Combined with its climate, quality of life and lower property costs than Madrid, Malaga in particular has established itself as the preferred destination for retirees with wealth who want to optimise their succession tax position. The region competes directly with Madrid for this segment.
Does a nephew inherit under the same advantageous terms as a child in Madrid? No. Madrid’s 99% relief applies only to Groups I and II. A nephew belongs to Group III and is taxed under the state scale with the applicable multiplier coefficient, without significant regional relief. On an inheritance of €200,000, a nephew could pay between €30,000 and €50,000 of ISD even in Madrid.
What happens if the deceased had debts? Are they also inherited? Debts are deductible from the taxable base. The ISD taxable base is calculated on the net value of the estate (assets less debts and deductible expenses such as funeral costs). If liabilities exceed assets, heirs may renounce the inheritance, in which case they incur no ISD liability and do not assume the debts.
Does life insurance form part of ISD? Life insurance benefits received by beneficiaries on the death of the insured are taxed under ISD (not under IRPF), being added to the taxable base. Specific reductions apply for spouses, ascendants and descendants on the insurance amount (Art. 20.2.b of Act 29/1987).
BMC Guidance for Succession Planning
ISD is one of the Spanish taxes with the greatest scope for legal planning. The difference between a well-structured estate and one that has not been planned can amount to hundreds of thousands of euros for mid-to-large estates. The principal levers are the testator’s choice of residence, the prior structuring of assets (family business, holding company, business-use property), the timing of lifetime gifts and the drafting of the will.
At BMC, the tax department advises on comprehensive succession planning: analysis of the patrimonial situation, simulation of ISD costs under different scenarios, structuring of the family business to apply the 95% reduction under Art. 20.2.c of Act 29/1987, and coordination with the legal team for the drafting of wills and succession agreements where permitted by regional law.
