Inheritance tax is the chapter most international buyers never plan until it is too late. For a EUR 14 million estate, the difference between getting it right and getting it wrong can run into millions, and the planning window typically closes years before the event.
Spanish ISD: the autonomous community map
Spain administers the Impuesto sobre Sucesiones y Donaciones (ISD) at the autonomous community level. The headline national rates scale up to 34 per cent for direct-line transfers with multipliers for distant heirs, but in practice regional rebates have eviscerated the tax in some communities and left it largely intact in others. Madrid applies a 99 per cent rebate to direct-line successions. Andalusia has effectively eliminated direct-line ISD. Cantabria and La Rioja have moved to similar positions.
The 2024 Balearic reform
The most material recent reform was the Balearic Government's 2024 introduction of a near-total bonificación for direct-line heirs, putting the islands broadly on the same footing as Madrid and Andalusia. Pre-2024, Mallorca-resident families faced meaningful ISD exposure that compromised the long-term succession case for the island. Post-2024, that exposure is essentially eliminated for direct-line transfers. For a EUR 14 million Mallorcan estate transferred to direct-line heirs, the position is now near-zero, against the pre-reform figure of EUR 400,000 to EUR 1.2 million depending on bracket and reductions.
Where Spanish ISD still applies
Catalonia continues to apply meaningful ISD on prime estates, with a scaling rebate that diminishes as asset value rises. Valencia introduced a 99 per cent bonificación for direct-line successions in 2023. The critical point: Spanish real estate is non-portable. A Mallorca villa held by a London resident pays Balearic ISD on death. A Marbella villa pays Andalusian ISD. The choice of region at purchase is, whether or not the buyer realised it at the time, a succession planning decision.
Andorra: the absence of succession tax
Andorra has no inheritance, gift, wealth or estate tax. It never developed a substantial succession tax regime and the absence is now codified. Property passes to heirs at the original acquisition cost basis. The administrative process is notarial, fast by Spanish standards, and the documentary requirements are manageable. The cost is essentially notary fees and the small land registry charge. For a family with Andorran residency and Andorran property, succession passes through more cleanly than in almost any other European jurisdiction.
Monaco IHT: the relationship ladder
Monégasque inheritance tax operates by relationship to the deceased rather than estate value. Direct-line transfers (spouse, children, parents) pay 0 per cent. Civil partners pay 4 per cent. Siblings pay 8 per cent. Uncles, aunts, nephews and nieces pay 10 per cent. Other collateral relatives pay 13 per cent. Non-relatives pay 16 per cent. There are no value-based brackets and no reductions of the kind that complicate the Spanish position. For most family-office estates, the 0 per cent direct-line position makes Monaco the simplest succession jurisdiction in Europe.
The UK overlay most buyers miss
The end of the UK non-domicile regime in April 2025 reset the UK inheritance tax position for UK-resident families with European prime property. The new long-term resident regime brings worldwide assets back into UK IHT scope for individuals who have been UK-tax-resident for at least ten of the prior twenty years. For a family that holds Spanish, Andorran or Monégasque property while remaining UK-resident, the UK IHT exposure now applies regardless of where the property sits or where the family is tax-resident at the time of death. Planning the UK exit is the precondition to planning the European succession.
The structuring that actually works
Three patterns recur in well-planned estates: a clean UK exit before the ten-year long-term resident threshold bites, with formal evidence of the centre of vital interests transition; ownership at the destination in a vehicle that minimises succession friction (Monégasque SCI for Monaco; direct personal ownership or a Sociedad Limitada for Spain depending on the autonomous community; direct personal ownership for Andorra); and an EU Succession Regulation (Brussels IV) election where the applicable law selection materially improves the estate position.
Source: Agencia Tributaria — Inheritance and Gift Tax (general)
Source: Agencia Tributaria — Inheritance and Gift Tax (non-residents)
