Last updated: October 2026. This is general information, not tax or legal advice. Rules and figures can change. Contact us to review your situation.
Do you expect to inherit or receive a gift in the Valencian Community? A home, money or shares can trigger Spanish Inheritance and Gift Tax (ISD).
Since a 2023 reform, close family pay almost nothing. This guide explains how the tax works and who qualifies.
What is Inheritance and Gift Tax?
ISD is paid by the person who receives the assets. Not by the estate, and not by the person giving the gift.
It applies in two cases: inheritance, when someone dies, and gifts made during a person’s lifetime.
It is a national tax, but each region sets its own rebates. That is why the bill in Valencia differs from Madrid or Catalonia. For the general rules across Spain, see our page on inheritance tax in Spain.
The 99% relief explained
Law 6/2023 raised the rebate for close relatives from 50% to 99%. It took effect retroactively from 28 May 2023.
In practice, a spouse, child or parent pays only 1% of the usual tax.
The rebate covers both inheritances and gifts for Group I and Group II relatives. It also covers people with a recognised disability.
Who qualifies: the four kinship groups
Spanish law sorts beneficiaries into four groups by their relationship to the deceased or donor. The group decides both the allowances and the rebate.
- Group I: children and descendants under 21, including adopted.
- Group II: children and descendants aged 21 or over, spouses, and parents. Registered partners (parejas de hecho) usually count as spouses.
- Group III: siblings, aunts, uncles, nieces, nephews and in-laws.
- Group IV: cousins, distant relatives and unrelated people.
The 99% rebate applies to Groups I and II. Groups III and IV pay far more.
Allowances and reductions
Before tax applies, you deduct a personal allowance from the value received.
- Group I: €100,000, plus €8,000 per year under 21, up to €156,000.
- Group II: €100,000.
- People with a disability: an extra €120,000 or €240,000, depending on the degree.
There are also reductions for the main home and the family business.
The remaining amount is taxed on the state scale, from 7.65% to 34%. The 99% rebate then applies for Groups I and II.
Inheritance vs. gift: key differences
Both enjoy the 99% rebate for close family. But the rules are not the same.
Gifts must be signed in a public deed before a notary to qualify. For gifts of money, the deed must state where the funds come from. You can read more in our guide to donations in Spain.
Inheritances are declared after death, based on the will or the legal order of heirs. That is why it is worth having a Spanish will for your assets in Spain.
Lifetime gifting can help now that the rebate is 99%. It has other effects too, so take advice first.
A worked example
A daughter inherits her parent’s home in Alicante, worth €300,000, with no other assets.
As a Group II heir, she deducts the €100,000 allowance. That leaves €200,000.
Before rebates, the tax would be around €30,000 to €35,000. With the 99% rebate, she pays about 1% of that.
Every case is different, so this is only an example.
Deadlines and how to file
- Inheritance (Form 650): file within 6 months of the death. You can request a further 6 months within the first 5 months.
- Gifts (Form 651): file within 30 business days of the gift.
Missing a deadline can mean surcharges and interest. It can also delay registering the property in your name.
Non-residents: what you need to know
Many of our clients live outside Spain. If you inherit or receive Spanish assets, you are taxed on those assets here.
Thanks to EU case law, non-residents can use the regional rules. Even clients living outside the EU.
If the asset is in the Valencian Community, you can claim Valencia’s 99% rebate, just like a resident.
Non-residents usually file with the national tax office and often need a Spanish tax representative. This is where good advice pays off. If your family is in the UK, see also inheritance in Spain for UK families.
Frequently asked questions
Do spouses really pay almost nothing?
For assets in the Valencian Community, yes. A surviving spouse in Group II gets the 99% rebate.
Does it apply to unmarried partners?
Registered partners (parejas de hecho) usually count as spouses, if the partnership is properly registered.
What about brothers, sisters or friends?
Groups III and IV do not get the 99% rebate. They will normally pay tax.
Can the 99% rebate change?
Yes. Regional rebates can be modified. This guide reflects 2026 under Law 6/2023.
Need help?
Our English-speaking lawyers in Alicante handle the whole process. Valuation, Forms 650 and 651, deadlines and Land Registry.
We help both residents and non-residents. Contact us for a consultation.