Spain is a multi-legislative jurisdiction in which several civil law systems coexist, combining the Spanish Civil Code with a number of regional (foral) regimes (Catalonia, the Basque Country, Navarra, Galicia, Aragon and the Balearic Islands). This pluralism is a defining cultural factor in succession planning. All Spanish civil systems recognise forced heirship rules that significantly limit freedom of testation and reflect a strong cultural emphasis on family protection and intergenerational wealth preservation; however, their legal configuration and practical impact differ significantly, with some regional regimes adopting notably more flexible approaches.

These divergences are also evident in matrimonial property regimes: while some regions provide for a statutory regime of community of property, other regions have opted to establish the separation of assets as the default regime (Catalonia and Balearic Islands).

In terms of broader cultural attitudes towards wealth distribution beyond the family sphere, philanthropy and charitable giving have been gradually gaining prominence. While traditionally secondary to family succession, there is an increasing trend among high net worth individuals to include charitable legacies in estate planning, often structured through direct bequests to public interest foundations or charities, reflecting a growing awareness of social impact alongside family wealth preservation. Private or family foundations are not possible in Spain.

A defining feature of wealth in Spain is the predominance of family-owned businesses, which constitute a substantial portion of the country’s economic landscape. Many of these entities were founded or significantly expanded during Spain’s economic liberalisation following the transition to democracy and remain under the control of the older generation, which is now approaching or entering retirement. Consequently, succession planning has become a strategic priority. This demographic transition has increased client awareness of the need for early and structured planning to ensure business continuity and to prevent family disputes.

From a tax perspective, Spanish law provides specific incentives designed to facilitate the preservation and intergenerational transfer of family businesses. At the state level, Spanish inheritance tax offers significant relief for the transfer of qualifying family owned and managed businesses, allowing for a reduction of the taxable base, subject to certain conditions. In addition, various Spanish regions – known as Autonomous Communities (Comunidades Autonomas)– have introduced further tax benefits such as 99% or100% tax relief for next-of-kin transfers.

From a private law perspective, the family charter (protocolo familiar) has emerged as a key governance instrument, serving as a framework agreement among family members with an interest in the business and its continuity across generations. Moreover, the Spanish Civil Code allows, in the interest of preserving the family business, the use of other planning mechanisms, including: (a) satisfaction of forced heirship entitlements in cash, even using assets outside the estate, as well as the deferral of forced heirship payments; (b) restrictions on division, imposing a period of undivided ownership with defined decision-making rules; and (c) the creation of different classes of shares, separating economic and voting rights.

The concept of domicile, as understood in common law jurisdictions, is foreign to the Spanish legal system. Traditionally, matters relating to personal law were determined by nationality. However, over recent decades, Spanish private international law – as a consequence of the progressive development of EU private international law regulations – has shifted from nationality towards the concept of habitual residence as the primary connecting factor, particularly in the fields of succession and family law.

This transformation is reflected at the European level, where habitual residence constitutes the predominant connecting factor across EU family law instruments. International jurisdiction for divorce and legal separation in Spain is primarily determined by Regulation (EU) 2019/1111 (Brussels IIb), which provides a series of alternative criteria determining jurisdiction for divorce or judicial separation proceedings. Other EU regulations govern international jurisdiction in related family matters, such as Regulation (EU) 2016/1103 for the jurisdiction and applicable law for the division of matrimonial property regimes, Regulation (EU) 2016/1104 for the jurisdiction and applicable law for matters of the property consequences of registered partnerships, and Regulation (EC) No 4/2009 for matters relating to maintenance obligations, including spousal maintenance.

In recent years, the case law of the CJEU has further clarified the criteria for determining habitual residence, particularly in situations where one or both spouses maintain personal, family and economic ties in more than one jurisdiction, and has declared that habitual residence corresponds to the place where a person has established, on a stable basis, the permanent or habitual centre of their interests (IB v FA, 2022, C-289/20).

With respect to matters of succession, jurisdiction is governed by Regulation (EU) No 650/2012 (the “EU Succession Regulation”). As a general rule, jurisdiction lies with the EU member state in which the deceased had their last habitual residence at the time of death. Where no member state has jurisdiction on that basis, the Regulation provides subsidiary grounds of jurisdiction, particularly in favour of the member state where estate assets are located, subject to certain connecting factors. If no court has jurisdiction under those subsidiary grounds, a further forum based on the location of the assets may apply, though limited to the assets situated in that member state.

Accordingly, habitual residence plays a central role in determining jurisdiction in both family and succession matters, making it a critical factor in cross-border estate and matrimonial property planning.

As regards the territorial scope of wills, the prevailing practice in Spain is to execute universal wills covering the entirety of the testator’s estate, irrespective of the location of the assets. Spanish authorities have expressed the view that the execution of multiple wills may give rise to practical and interpretative difficulties, especially if the principle of unity of the applicable law to the succession, as enshrined in the EU Succession Regulation, might not be respected. As a result, co-ordinated and carefully structured planning is required where cross-border estates and multiple wills are involved.

Similarly, the international connecting factor for taxation under Spanish Inheritance Tax (IHT) and Gift Tax (GT) – a recipient-base tax where the taxpayer is the heir – is the residency of the heir. Heirs who are tax resident in Spain – as defined in 2.2 Income Tax Residency, with the particularity that the 183-day threshold is calculated with reference to the 365 days preceding the date of death – are subject to IHT on a worldwide basis (ie, irrespective of the location of the assets or the tax residence of the deceased or donor). In contrast, non-tax resident heirs are subject to IHT on a territorial basis (ie, in respect of assets and rights deemed located in Spain).

IHT is a tax partly regulated at the level of the Spanish regions, which may, inter alia, establish their own tax rates, reductions, reliefs and exemptions. Non-Spanish tax resident heirs may opt (within the statutory filing deadline) to apply the regional tax rules instead of the central state rules. In practice, regional rules are generally more beneficial than the central state rules, particularly with regard to the tax reliefs applicable to next-of-kin transfers.

The applicable regional tax rules for IHT purposes are determined by intra-regional connecting factors. If the deceased was tax resident in Spain, the applicable rules are those of the Spanish region in which the deceased spent the greatest number of days during the five years preceding the date of death. If the deceased is a non-Spanish tax resident, the heir may elect to apply the rules of the Spanish region where the majority of the assets and rights located in Spain are situated. If no assets are located in Spain, the rules of the Spanish region corresponding to the heir’s own habitual residence in Spain may apply.

Spain has entered into very few inheritance tax treaties, and therefore its taxing rights are rarely limited. Treaties currently in force are with Greece, Sweden and France.

The international connecting factor for taxation under Spanish income tax is the residency of the individual, as defined below. Spanish tax law does not provide a concept of domicile. Spanish tax resident individuals are subject to tax on a worldwide basis while non-Spanish tax residents are only subject to Spanish income tax on a territorial basis.

As a preliminary comment, it is worth noting that, in Spain, the tax year coincides with the calendar year (January to December) and there is no split-tax-year treatment. Thus, an individual is either resident or non-resident for the whole calendar year. In this regard, Spain has included an observation to Article 4 of the OECD Commentaries on the Model Tax Convention on Income and on Capital.

Under Spanish domestic tax laws, an individual is Spanish tax resident if: (a) he or she remains in Spanish territory for more than 183 days within the calendar year (“183-day test”); or (b) he or she has, directly or indirectly, his or her centre of economic interests in Spain (“centre of economic interests test”).

What constitutes a day of permanence in Spanish territory under the 183-day test is undefined. According to the position of the Spanish tax authorities, any presence (ie, no minimum amount of time is required) during a day constitutes a day of permanence in Spanish territory for the purpose of the 183-day test.

In addition, days of sporadic absences outside Spain are generally counted as days of presence in Spain when the individual has a significant presence (again, an undefined concept) in the country, unless the taxpayer can demonstrate tax residence in another jurisdiction. The Spanish Supreme Court has confirmed that, where a taxpayer has a legal and continuous residence of more than 183 days in another country, such absence from Spain cannot be regarded as sporadic. The centre of economic interest test is an undefined and flexible concept, generally understood as the location where the majority of the individual’s wealth is held, where his or her business activities are situated, or from where he or she manages his or her assets.

Additionally, Spanish tax legislation establishes a rebuttable presumption of tax residence in Spain where, pursuant to the above criteria, the taxpayer’s spouse (not legally separated) and dependent minor children are Spanish tax residents (“family rebuttable presumption”).

According to the EU Succession Regulation, the law applicable to succession is that of the last place of habitual residence, unless the testator expressly made a choice of law in favour of his or her nationality in his or her last will and testament.

Therefore, Spanish intestate succession rules apply where a person dies without a valid will and having his or her last habitual residence in Spain.

Spain does not have a single uniform succession regime. Several Autonomous Communities (Galicia, the Basque Country, Navarra, Aragon, Catalonia and the Balearic Islands) have legislative competence in civil matters and have enacted their own succession rules.

Under the Spanish Civil Code, intestate succession laws follow a hierarchical order: (1) descendants; (2) in their absence, ascendants; (3) in their absence, the surviving spouse; and (4) thereafter, collateral relatives, but limited to the fourth degree of kinship. In the absence of entitled relatives, the estate passes to the state. These rules apply similarly in the Balearic Islands and in Galicia.

Under Catalonian laws, the surviving spouse or surviving registered partner has priority over the ascendants in intestate succession. Aragon, the Basque Country and Navarra distinguish between bienes troncales (family assets linked to a specific lineage) and other assets, with bienes troncales following a lineage-based order of succession.

Spain, like many other civil law jurisdictions, follows a system of forced heirship that significantly limits testamentary freedom. Certain close family members are entitled to a reserved portion of the estate that cannot be freely disposed of by the testator.

The scope of forced heirship varies depending on the applicable regional civil law, and, as with intestacy, the determination of the regional civil law will depend on the regional civil status known as vecindad civil, for Spanish nationals, or on the region of habitual residence, for foreigners.

Under the Spanish Civil Code, forced heirs are: (1) descendants; (2) in their absence, ascendants; and (3)the surviving spouse (provided that there is no legal or de facto separation). Where there are descendants, two-thirds of the estate constitute the forced share. The first third must be distributed equally among children (the “strict” forced share), while the second third may be allocated among descendants at the testator’s discretion. Only one-third of the estate is freely disposable.

The surviving spouse is a forced heir, but only with a right of usufruct over a part of the estate. The extent of the usufruct depends on the existence of descendants (usufruct over one-third of the estate) or ascendants (usufruct over one-half of the estate) and is frequently expanded in practice through testamentary planning. A common planning technique in favour of the surviving spouse is Socini’s clause (cautela socini), which allows the testator to bequeath the lifetime usufruct right of all the estate assets to the surviving spouse and imposes a condition whereby any heir who challenges this arrangement will be reduced to his or her share of the one-third strict forced share.

If a forced heir considers that his or her forced share has been infringed by the provisions of the will or by the manner in which the estate has been distributed, he or she may bring a judicial claim against the other heirs, legatees and, where appropriate, the executor, seeking partial annulment of the last will or compensation for the difference between the value of the forced share and the value of the assets actually received.

Other civil law rules in Autonomous Communities vary considerably:

• Catalonia and Galicia structure the forced share as a right of legal claim against the estate rather than a direct right over assets. The amount of forced heirship for descendants is one-quarter of the net estate.
• The Basque Country provides for a forced share of one-third, structured with greater flexibility in allocation.
• Aragon recognises a collective forced share of one-half of the estate and a broad widower’s/widow’s usufruct right.
• The Balearic Islands provide different solutions depending on the island. In Mallorca and Menorca, the forced heirship in favour of descendants is of one-third of the estate if there are three children or fewer, and one-half of the estate if there are four children or more.
• Navarra allows significantly greater testamentary freedom, as its forced share is largely formal in nature.

The determination of the matrimonial property regime is a fundamental element of succession planning, as it directly affects the composition of the estate and the division of assets upon dissolution of the marriage, whether by death or divorce.

Matrimonial Property Regime During Life

The applicable regime is determined by the conflict-of-law rules set out in Regulation (EU) 2016/1103 for marriages concluded after its entry into force (29 January 2019), and by Spanish domestic private international law (namely, the Spanish Civil Code) for marriages celebrated prior to that date. As in succession law, several Autonomous Communities have enacted their own matrimonial property legislation.

Under the Spanish Civil Code, the default matrimonial property regime is community of property. All assets acquired during the marriage, as well as income generated from separate property, are deemed community property. The administration and disposition of community property requires the joint participation of both spouses, and neither may dispose of such assets unilaterally. Gratuitous transfers of community property carried out without the consent of both spouses are void.

Spouses may voluntarily contribute separate assets to the community estate, in which case those assets become subject to the general rules governing community property. Furthermore, irrespective of the applicable matrimonial property regime, spouses are free to enter into agreements between themselves, which are valid and enforceable under general civil law principles, provided that they comply with mandatory rules and public policy.

Claw-Back Rules for Lifetime Transfer

Forced heirship provisions, as described in 3.2 Forced Heirship, may be protected against lifetime transfers through claw-back actions brought against the donee. Such actions seek either the reduction of lifetime gifts that infringe the forced heirship quotas or their inclusion in the estate for the purposes of calculating the reserved portion.

Claw-back provisions apply both to interspousal gifts and to transfers to third parties. The relevant value is the value of the gift at the time it was made, although this value must be updated to reflect its value at the time of the succession. Notably, there is no time limitation on the claw-back of gifts; therefore, in principle, all lifetime gifts may be brought into account for the purposes of succession.

Under Spanish law, spouses are free to choose their matrimonial property regime. The main regimes available are:

• community of property (sociedad de gananciales);
• separation of property (separación de bienes); and
• participation in gains (régimen de participación en ganancias).

The choice is made through a matrimonial property agreement (capitulaciones matrimoniales), which must be executed before a Spanish notary public and registered with the Civil Registry in order to be effective against third parties. These agreements may be entered into either before or after the celebration of the marriage.

If concluded after the marriage, the spouses dissolve the previously applicable matrimonial property regime. They may choose either to liquidate and distribute the existing assets at that time or to defer liquidation, depending on their planning objectives.

In addition to selecting a specific matrimonial property regime, spouses may also choose the law applicable to their matrimonial property regime pursuant to Regulation (EU) 2016/1103. The applicable law may be that of the nationality of either spouse or of the habitual residence of either spouse at the time the agreement is concluded. The choice may have prospective or retroactive effect, although retroactivity may not prejudice the rights of third parties.

Spanish law also recognises prenuptial and postnuptial agreements in anticipation of a potential marital breakdown. There is broad contractual freedom between spouses, and the case law of the Spanish Supreme Court has consistently upheld the validity and enforceability of such agreements in judicial proceedings, provided that they do not contravene mandatory rules or public policy. For example, the Spanish Supreme Court has recognised the validity with regard to payment of maintenance obligations between spouses, both in the sense of the determination of the spousal maintenance and in the sense of total waiver of any maintenance obligation between spouses. Nevertheless, other agreements regarding custody of children and maintenance in favour of minors are considered against public order.

From a comparative perspective, prenuptial and postnuptial agreements typical of common law jurisdictions would generally be respected in Spain as contractual arrangements between spouses governing the patrimonial consequences of separation or divorce. However, they would not automatically qualify as a valid choice or modification of the matrimonial property regime unless they expressly comply with the formal and substantive requirements applicable to matrimonial property agreements, including notarial execution and, where relevant, registration. Therefore, in cross-border scenarios involving both civil law and common law jurisdictions, a co-ordinated dual approach is advisable, combining a formally valid matrimonial property agreement (including an express choice-of-law clause) with a prenuptial or postnuptial agreement tailored to the requirements of the relevant common law system, in order to enhance legal certainty and prevent inconsistent outcomes.

General Remarks on the Tax Treatment of Lifetime Transfers

The lifetime transfer of an asset made with animus donandi (ie, with the intention to make a gift and without consideration) gives rise to two separate taxable events:

• A capital gain in the hands of the donor, calculated as the difference between the acquisition value and the market value of the asset at the time of the transfer, subject to Spanish income tax. When the donor is a Spanish tax resident (see 2.2 Income Tax Residency), this capital gain is subject on a worldwide basis (irrespective of the location of the asset). When the donor is non-resident, the capital gain is subject on a territorial basis (ie, only in respect of Spanish-situs assets).
• An inter vivos acquisition by way of gift in the hands of the donee, subject to GT. When the donee is a Spanish tax resident, the lifetime transfer is subject on a worldwide basis (regardless of the location of the asset), whereas if the donee is non-resident, taxation applies on a territorial basis (ie, only in respect of Spanish-situs assets).

The donee acquires the asset with a tax basis equal to the market value at the time of the transfer, which effectively results in a step-up in tax basis for the purposes of any future disposal. Lifetime transfers made with animus donandi are not subject to transfer or stamp duty, as these taxes are only levied on transfers carried out for consideration.

In addition, in the case of a transfer of real estate, municipal tax on the increase in land value (Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana) may also arise. This tax levies the increase in the value of the land over the period of ownership and is payable upon the transfer, irrespective of whether the transaction is inter vivos or by inheritance.

Tax Treatment of Specific Planning Structures

Contractual succession agreements, although they may have effects during the lifetime of the transferor (ie, transferring ownership to the heir before the death of the testator), are treated under Spanish law as mortis causa transfers for the purposes of IHT and income tax. This is particularly relevant for income tax purposes, as mortis causa transfers do not create taxable capital gains. 6.1 Common Planning Techniques details the Spanish regions that allow succession agreements. Capital gains tax is also not triggered if the agreements are executed under the applicable law of another jurisdiction that recognises succession agreements.

If the transferor wishes to transfer assets while retaining some degree of control, a common estate-planning structure under Spanish law can be implemented either by gifting the bare ownership (nuda propiedad) to the beneficiary while retaining the lifetime usufruct right. This structure will be addressed in 6.1 Common Planning Techniques. For tax purposes, the transfer of the bare ownership or usufruct is subject to GT based on the value of the transferred right. Upon the transferor’s death, any retained usufruct is extinguished, and full ownership consolidates in the relevant party, potentially triggering IHT. The key advantage of constituting the usufruct is that it protects against future legislative changes and ensures the application of the next-of-kin transfer tax relief, even if the law has changed at the time of the demise of the transferor, because the relevant rules are assessed based on the law in force at the time the bare ownership is constituted.

Tax benefits are also available for the transfer of a family owned and managed business, which may allow under certain requirements up to 95% (or up to 99% depending on the Spanish region) exemption from IHT and GT on the value of the shares. The tax implications of the succession of family owned and managed businesses are explored in detail in 8.2 Legal and Tax Considerations.

Regional IHT and GT Law

As stated in 2.1 Determining Domicile, IHT and GT are taxes partly regulated at the level of the Spanish regions, which may, inter alia, establish their own tax rates, reductions, reliefs and exemptions. This is particularly relevant given that the central state legislation does not provide any significant tax reliefs; accordingly, the determination of the applicable regional tax law assumes greater importance.

In this regard, some Spanish regions have introduced significant tax relief for GT, such as the following, which have introduced a general 99% or 100% tax relief for next-of-kin transfers: Madrid, Andalusia, the Balearic Islands, the Canary Islands, Cantabria, Castile-La Mancha, Extremadura, Murcia and Valencia. These tax reliefs typically apply to transfers between spouses or between ascendants and descendants by consanguinity. Certain Spanish regions also provide more limited relief for transfers between collateral relatives (such as uncles and nieces/nephews) or relatives by affinity (such as step-parents).

It should be also noted that these reliefs generally require that the transfer is formalised in a public deed and includes a statement regarding the source of the funds. Some Spanish regions allow for the donation to be initially executed under a private contract and subsequently elevated to a public deed within the deadline. The law does not require the public deed to be executed before a Spanish notary, although this is recommended given that there may be no exact equivalence with other jurisdictions (particularly common law countries). In any case, the notary should expressly certify: (i) the identification of the parties; (ii) their legal capacity and identity; (iii) compliance with applicable law; (iv) that the notary performs functions equivalent to those of a Spanish notary; and (v) the authenticity of the transaction.

The determination of the competent authority and GT law applicable for lifetime transfers will depend on the nature of the assets (movable or immovable) and the place of habitual residence of the donee.

It is worth noting that the demise of the testator does not trigger any capital gains tax for the deceased’s estate. The assets are received by the heirs at market value, providing a tax-free step-up in tax basis for capital gains purposes.

There are material differences depending on the applicable regional legislation, as described in 6.1 Common Planning Techniques. The Spanish regions that have introduced tax relief under GT have also provided similar tax reliefs under IHT for next-of-kin transfers (including transfers between ascendants and descendants and among spouses).

Therefore, the determination of the competent authority and the applicable regional tax law for testamentary dispositions is relevant, and follows the rules described below:

• Where both the deceased and the heir are Spanish tax residents, the regional administration of the deceased’s place of residence has competence, and the applicable tax law is that of the same region.
• Where the deceased is resident, but the heir is non-resident, the state administration has competence, and the taxpayer has a right to opt between the application of the central state law or the regional law of the deceased’s residence.
• Where the deceased is non-resident and the heir is resident, the state administration generally has competence, with the applicable tax law being either central state law or, where assets of the estate are located in Spain, either the tax law of the region where the most value of the Spanish estate is located or, if no assets are situated in Spain, the law of the region where the heir is resident.
• Where both the deceased and the heir are non-residents, competence lies with the state administration, and the applicable tax law may be either the central state law or, where assets are located in Spain, the law of the region where the most value of the Spanish estate is located.

Estate planning involving Spain requires a careful analysis of the international and intra-regional connecting factors for taxation, in particular, the place of habitual residence of the testator and the heirs, as well as the place of location of the assets within Spain. Some common planning techniques are described below. The most common planning techniques for cross-border estates are described in 12. Cross-Border Succession Planning.

The determination of the competent authority and the applicable regional tax law under inheritance tax depends on the habitual residence of the deceased, as described in 5.2 Testamentary Dispositions.

Where a business owner or entrepreneur relocates to Spain while maintaining assets across multiple jurisdictions or with heirs residing in a common law jurisdiction, the co-ordinated use of a common law trust structure may be advisable. Although the trust is not a recognised domestic institution under Spanish law and Spain has not ratified the 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition, this does not prevent a trust from producing effects outside Spain where permitted by the applicable lex situs and the law governing the succession. From a Spanish perspective, the key issue is not the domestic validity of the trust, but proper tax planning, as Spanish authorities apply the principle of tax transparency of the trusts. This aspect is examined in detail in 9. Trusts, Foundations and Related Entities.

Domestic lifetime or anticipated succession planning generally relies on private law institutions such as inter vivos gifts, usufruct arrangements, matrimonial property planning, corporate holding structures (particularly in the context of family owned and managed businesses, including differentiated classes of shares) and insurance contracts. The application of regional tax law plays a decisive role, as it will determine the application of next-of-kin tax reliefs under IHT and GT. In addition, the access to the family owned and managed business exemption is a primary factor in estate planning, and most of the domestic estate planning strategies are designed to benefit from this regime.

Lifetime gifts can be governed by the law freely chosen by the donor and donee under Regulation (EC) No 593/2008 (Rome I). Within Spanish law, gifts may take various forms.

Conditional gifts are particularly frequent in family contexts. A common form imposes an obligation on the donee to care for the donor in the event of disability or need. These arrangements are enforceable under Spanish civil law and allow older generations to ensure personal care while transferring wealth. The characterisation of such gifts can, however, be controversial, particularly where the donor retains significant control over the gifted asset or the unilateral power to revoke the donation, as in such cases it may be argued that the gift has no real effect and that the asset, in practice, never leaves the donor’s estate.

An alternative widely used in civil law jurisdictions is the donation of bare ownership while the donor retains a lifetime usufruct (usufructo vitalicio). This structure allows the donor to continue receiving income and using the asset while transferring bare ownership to the next generation. Upon the extinction of the usufruct, full ownership consolidates in the donee, avoiding additional succession procedures. This mechanism is common for real estate assets but is also used for corporate shares, with the usufructuary retaining entitlement to income distributions.

Certain Spanish regions also permit contractual succession agreements, which allow the transfer of assets mortis causa with effect during the lifetime of the testator. Contractual succession agreements are particularly prevalent in the Balearic Islands, where they can include extensive conditions, and which may be irrevocable. These agreements are available to individuals with Balearic vecindad civil or to foreign residents with habitual residence in the Balearic Islands region. They provide families with the ability to structure complex wealth transfers in advance.

In addition to inter vivos gifts, unit-linked life insurance has increasingly been used as an estate planning tool in recent years, effectively serving as a substitute for trust structures in Spain. These insurance policies allow for the designation of contingent beneficiaries and the deferral of the transfer of underlying assets until the beneficiary reaches a specified age. They also permit restrictions on the surrender of premiums, subject to the authorisation of a third-party protector, offering a high degree of flexibility in succession planning.

Finally, Spain has introduced the concept of a protected estate (patrimonio protegido) for individuals with disabilities, creating a pool of assets separate from the donor to serve the interests of the beneficiary. While lacking the flexibility and planning advantages of a trust, a protected estate allows designated assets to be segregated from the personal assets of the donor and subject to a specific regime of administration and oversight, ensuring that the needs of the person with a disability are met.

The Spanish Tax Administration is vested with broad general anti-abuse rules (GAAR) that should be carefully considered in succession and estate planning. First, it could recharacterise transactions where the legal form adopted does not reflect the underlying economic or legal reality of the arrangement. It may also declare the existence of a sham where the parties intentionally disguise the true transaction by means of an apparent legal structure. In addition, it may apply GAAR where arrangements are formally valid and reflect the parties’ intent but have been entered into in an artificial manner, without valid economic or legal substance beyond the tax benefit.

An example of GAAR risk arises where a taxpayer implements a step transaction designed to secure a tax advantage that would not be available under a direct transfer, such as structuring donations to ensure that beneficiaries fall within the relevant group of relatives eligible for next-of-kin tax relief – for example, by aggregating multiple interrelated transfers rather than making a direct transfer to relatives who do not qualify. Such an arrangement could be treated as a single transaction and recharacterised by the Spanish Tax Administration with no entitlement to the next-of-kin transfer relief.

In addition, Spanish tax law provides for a number of specific anti-abuse rules that apply in particular situations. From an estate and succession planning perspective, the most relevant include the following:

• The possibility of relocating to another Spanish region with more favourable IHT rules is limited by the definition of habitual residence for IHT purposes, which is determined by reference to where the deceased spent the greatest number of days during the five years preceding death; therefore, a change of residence shortly before demise, with the intention that a more favourable regional tax regime would apply, will generally have no effect.
• In addition, although Spanish personal income tax residence is determined on a calendar-year basis (as described in 2.2 Income Tax Residency), for IHT purposes tax residence of the heir/donor (and therefore, the worldwide basis for taxation) is assessed by reference to the 183-day test within the 365 days preceding the date of death or the lifetime transfer. As a result, an heir’s or a donee’s departure from Spain shortly before the demise or the lifetime transfer will generally not prevent exposure to Spanish IHT and GT on a worldwide basis.
• As noted in 5.1 Lifetime Transfers, contractual succession agreements may allow the transfer to occur during the transferor’s lifetime without triggering immediate taxation of capital gains. However, it should be noted that no step-up in tax basis is granted to the beneficiary for five years following the execution of the arrangement. This rule is specifically designed to prevent the use of succession agreements as a mechanism for obtaining an untaxed step-up prior to an immediate sale.

Digital succession in Spain must be understood as the projection of classical inheritance law onto intangible assets such as data, blockchain-based tokens, online accounts, electronic identities and platform-hosted content. The EU Succession Regulation provides a sufficiently flexible framework to accommodate these assets without creating new connecting factors, provided that its provisions are interpreted functionally and systematically.

Digital assets may qualify as patrimonial goods when they possess economic value and are legally transferable. While the lex successionis governs the acquisition of the estate as a whole, the transferability of each digital asset depends on its specific material regime, including contract law, intellectual property and data protection rules. Spanish law requires careful co-ordination between succession law and Spain’s Organic Law on Data Protection (LOPDGDD), particularly concerning post-mortem access to personal data and the protection of third parties’ rights.

Jurisdiction and applicable law are primarily determined by the deceased’s habitual residence at the time of death (Arts. 4 and 21 of the Regulation). Although “digital residence” or electronic identity are not autonomous connecting factors under the Regulation, they may serve as evidentiary elements in identifying the centre of the deceased’s personal and economic interests. The principle of unity of succession ensures that digital assets form part of the estate under a single applicable law, thereby avoiding fragmentation based on the physical location of servers or the corporate seat of digital platforms.

The mechanism of adaptation under Article 31 of the Regulation acquires particular importance in relation to crypto-assets and blockchain-based tokens, which may not have precise equivalents within traditional property categories of Spanish law. In this context, the notarial function is essential in translating technologically complex assets into legally cognisable rights capable of integration into domestic patrimonial structures.

From the systematic analysis of digital succession under the EU Succession Regulation and its interaction with Spanish law, several legal planning techniques have emerged to ensure the orderly transmission of digital assets upon death.

Testamentary planning remains the central instrument. Digital assets should be expressly included within the estate inventory. Although the principle of unity of succession ensures that digital assets form part of the estate, explicit reference in a will reduces uncertainty, particularly where contractual restrictions or platform policies may affect transmissibility. Specific clauses may designate heirs for digital assets or appoint an executor with authority to manage, access or liquidate them.

Professio iuris under Article 22 of the Regulation constitutes a powerful stabilising mechanism in cross-border digital contexts. Given the inherent delocalisation of digital assets and the potential complexity in determining habitual residence, choosing the law ofa particular nationality enhances predictability and coherence, especially where digital activities are dispersed across jurisdictions.

Structuring digital assets through identifiable legal categories facilitates later adaptation under Article 31 of the Regulation. For instance, crypto-assets or blockchain tokens should be documented in a manner that allows their economic function to be clearly established, enabling Spanish authorities to translate them into equivalent domestic property categories.

Co-ordination with data protection law (Art.3 of LOPDGDD) is essential. The testator may issue specific instructions regarding post-mortem access to personal data, limiting or authorising heirs’ access to avoid conflicts between succession rights and privacy protections. Such instructions can prevent potential public policy objections or disputes with service providers.

Planners must also anticipate the distinction between succession law and contract law. While the lex successionis determines who inherits, platform terms of service may affect whether an account is transferable. Legal planning may therefore include maintaining detailed records of digital holdings, private keys and contractual arrangements, possibly through secure custodial or fiduciary mechanisms.

Succession planning for family owned and managed businesses in Spain is largely conditioned by the special tax regime applicable to qualifying entities. This regime, which allows for an exemption for Wealth Tax and IHT and GT, provides substantial relief where certain ownership, management and activity requirements are met. These requirements are outlined in 8.2 Legal and Tax Considerations.

As a result, legal structuring decisions – whether corporate, matrimonial or succession-related – are typically designed not only to ensure governance continuity but also to preserve eligibility for these tax benefits. The succession of a family business requires a co-ordinated approach combining succession law, corporate law and private law considerations.

Founding entrepreneurs must address a range of legal and governance issues, including whether senior management positions should be occupied exclusively by family members, how decision-making authority is transferred when moving from one generation to the next, and how to structure compensation for family members actively involved in the business. In addition, the matrimonial property regimes of family members may affect the integrity of the business, as divorce or separation of spouses could fragment ownership or control.

To address these challenges, Spanish families commonly use family charters (protocolos familiares), which provide a contractual framework to define governance structures, decision-making rules, succession procedures, dividend policies, and mechanisms to resolve disputes. These charters act as strategic roadmaps, aligning ownership, management and long-term business objectives.

Complementary to the use of a charter, corporate structuring tools such as dual-class shares or golden shares allow separation of economic and voting rights, concentrating management control in designated successors while allowing other family members to retain economic participation. These mechanisms facilitate orderly succession, reduce the risk of deadlock or fragmentation, and protect the business from unintended effects arising from personal circumstances, including marital or inheritance disputes.

The combination of charters and share structuring provides a robust framework to manage intra-family dynamics, align long-term objectives, and ensure that the family enterprise remains operationally and legally coherent across generations. This legal groundwork forms the basis upon which tax-efficient transfers, such as lifetime gifts or usufruct arrangements, can subsequently be structured.

In addition to the next-of-kin tax relief that certain Spanish regions have introduced, the so-called “exemption for family owned and managed businesses” under IHT and GT has also been addressed by the Spanish regions that have relaxed the requirements or broadened the scope of the central-state-level exemption.

At the central state level, the family owned and managed business exemption may allow up to 95% exemption from IHT and GT on the value of the shares (or the business in the case of an individual entrepreneur), provided that the company meets certain conditions. These include the following:

• The transferor holds at least a 5% shareholding in the company or, together with next-of-kin (including the spouse), holds at least 20% of the company’s share capital.
• The transferor or next-of-kineffectively performs management functions in the directly held entity and receives compensation exceeding 50% of his or her total worldwide professional or employment income.
• The majority of the company’s assets are employed in an economic activity. Holding companies may also qualify if they hold more than 5% in subsidiaries, provided that the majority of the subsidiaries’ assets are used in an economic activity.
• Beneficiaries are generally required to maintain the value of the shares received in their wealth for a period of ten years.

If the transfer is carried out by way of an inter vivos transfer, it is additionally required that the donor is at least 65 years old or in a situation of disability and, if the donor performed management functions within the entity, that he or she ceases to carry out such functions.

At a regional level, certain Spanish regions have further regulations that relax these requirements; such as: (a) eliminating the minimum age requirement for the donor; (b) reducing the maintenance period; or (c) increasing the exemption from 95% to 99%.

Where these conditions are met, the transfer is not subject to capital gains tax for the donor, although the tax basis of the shares is carried over for future disposals.

Both the common law trust and the private interest foundation are unknown legal institutions in the Spanish legal system.

In particular, the trust has no direct equivalent under Spanish civil law. Its core structure, based on the division of ownership between the trustee’s legal title and the beneficiary’s equitable interest, is conceptually alien to civil law systems and is difficult to transpose into Spanish law.

Spain has not ratified the 1985 Hague Convention on the Law Applicable to Trusts and on their Recognition and, at present, there are no indications that ratification is forthcoming. Accordingly, Spain cannot be regarded as a trust-friendly jurisdiction and foreign trust structures may face difficulties when holding Spanish assets, particularly immovable property, as the fiduciary ownership may not access the Land Registry as such.

The establishment of private interest (often family) foundations constitutes another form of lifetime wealth structuring. Such vehicles are available in a limited number of jurisdictions, subject to varying degrees of supervision and regulatory control, although they are more commonly encountered in offshore centres where restrictions tend to be less stringent. This model stands in contrast to systems such as Spain’s, which recognise only foundations pursuing purposes of general or public interest.

Consequently, foreign private interest foundations are not recognised in Spain and cannot be registered in the Spanish Registry of Foundations, not even through a delegation. In particular, the Spanish Dirección General de Seguridad Jurídica y Fe Pública (formerly the Dirección General de los Registros y del Notariado) (the “Directorate-General”) has explicitly confirmed that private foundations cannot be registered as owners of real estate in Spain, on the basis that holding property constitutes the pursuit of a permanent activity in Spain, and it would require a prior registration in the Registry of Foundations, which is not possible.

By contrast, Spanish authorities have shown more flexibility in permitting the establishment in Spain of foreign non-profit corporations. In particular, the Directorate-General has admitted UK non-profit corporations to be registered in the Spanish Companies Registry by means of a secondary establishment.

From a Spanish tax perspective, there are no specific rules or case law that regulate the tax treatment of either foreign private foundations or trusts.

The only guidance available to date is that issued by the Spanish Tax Administration through binding rulings, which are binding on the tax office but not on the taxpayer, according to which the legal title held by the trustee under foreign law must be disregarded for Spanish tax purposes and the trust fund should, as a general rule, be attributed to the settlor while he or she is still alive, or to the beneficiaries once the settlor has passed away. This matter is analysed in further detail in 10.2 Taxation of Trusts.

In relation to private foundations, the separate legal personality of the vehicle may be respected, with the result that the assets contributed are, in principle, owned for tax purposes by the foundation and thus outside the estate of the founder. Distributions made by private foundations to Spanish tax resident beneficiaries are, in the view of the Spanish Tax Administration, subject to IHT and GT as transfers between unrelated parties to which the tax reliefs provided for next-of-kin transfers would not be applicable and thus potentially taxable at effective tax rates up to 80%.

However, where, in light of the foundation’s characteristics, the founder retains formal or de facto control or maintains economic rights over the assets or income, the foundation may be treated as akin to a company.

Recent developments in Spain continue to reflect a substance-over-form approach by the Spanish Tax Administration and the courts in relation to wealth and succession planning structures.

A particularly recent development concerns the treatment of contributions made to the matrimonial property regime by one of the spouses. The Spanish Supreme Court rejected the administrative interpretation under which the contribution by one spouse of a private asset to the community property regime for no consideration could be subject to either GT or transfer tax. The Court held that such a contribution is not subject to transfer tax and cannot be taxed under GT in the hands of the community property estate, as only individuals or entities expressly provided for by law may qualify as taxable persons, and no such provision exists in respect of the community property regime as a separate patrimony. The Court further clarified that this situation must not be confused with a lifetime transfer made directly by one spouse in favour of the other spouse.

In the context of private foundations, two recent binding rulings from the Spanish Tax Administration on private interest foundations establish that distributions from foundations to beneficiaries are subject to GT, a position already established in administrative doctrine (as described in 9.1 Choice of Planning Vehicle). However, the rulings clarify that such taxation requires the existence of animus donandi, which must be demonstrated. This interpretation may allow for distributions to be subject to income tax instead of GT, which can be less burdensome – and in certain cases even non-taxable under special tax regimes applicable to individuals.

As common law trusts are an unknown legal institution in Spain, there is no licensing regime applicable to trustees as such.

Unlike some other civil law jurisdictions (eg, Italy), there is no specific tax legislation in relation to trusts under Spanish tax laws. Neither the general Spanish tax rules nor principles are fully adapted to the particularities introduced by a trust and the rights and obligations that derive from it. In the absence of such specific legislation, it is impossible to establish beyond doubt The only guidance available to date is that provided by the Spanish Tax Administration in its (published) answers to consultations made by taxpayers. The general position of the Spanish Tax Administration is that the legal title of the trustee under foreign law ought to be disregarded for Spanish tax purposes and that the trust fund should be assigned preferably to the settlor, where still alive, or the beneficiaries, where not.

Therefore, from a Spanish tax perspective, the settlement of assets in trust is a non-event for tax purposes since assets in trust are still considered to be owned by the settlor. Consequently, distributions made to the settlor of the trust as beneficiary are also considered a non-event for tax purposes.

The settlement of assets in trust may be considered as deemed transfer of assets for Spanish tax purposes between the settlor and a beneficiary – other than the settlor – only when the beneficiary is also the trustee, andit is clear from the particular terms of the trust that the settlement was irrevocable, the settlor cannot benefit from the trust nor does he or she have any degree of influence or control, and the beneficiary’s rights over the trust’s assets are similar to those of an owner. In such a case, the settlement of assets in trust may be considered in itself an outright gift for Spanish tax purposes from settlor to beneficiary.

Whenever the trust fund is assigned for Spanish tax purposes to the settlor, it is also important to consider that upon his or her demise there would be a deemed transfer of assets by way of inheritance to the beneficiaries which may be subject to IHT if the beneficiaries are resident in Spain or if within the trust fund there are Spanish-situs assets or rights. The fact that the trust is discretionary is not enough from the point of view of the Spanish Tax Administration to consider that the point of taxation under IHT should be deferred until actual distributions are made.

Spanish law generally adopts an inclusive approach to family structures, although important regional and public policy nuances remain.

Same-Sex Spouses

Spain legalised same-sex marriage in 2005, granting full equality with opposite-sex spouses in all areas of family law, including adoption, matrimonial property and succession. For estate planning purposes, same-sex spouses are treated identically to any married couple under Spanish private and tax law. Same-sex marriage in Spain is available regardless of nationality, meaning that its validity does not depend on whether the spouses’ national laws recognise same-sex marriage.

Non-Marital Partners

Spain does not have a unified regime for cohabiting partners. Family and succession rights depend largely on regional legislation. In Autonomous Communities with civil law competence (ie, Catalonia, the Basque Country, Galicia, Aragón, Navarra and the Balearic Islands), cohabitation may produce family and succession effects similar to marriage. In the rest of Spain, registration only provides administrative recognition and does not automatically grant family or inheritance rights. For IHT and GT purposes, most Autonomous Communities equate registered partners with spouses.

Children

Spanish law recognises full equality of filiation. Children born out of wedlock and adopted children enjoy the same succession and forced heirship rights as marital or biological children. Adoption generally extinguishes legal ties with the biological family and fully integrates the child into the adoptive family for succession purposes. However, inheritance rights vested prior to adoption remain unaffected.

Surrogacy and Posthumous Conception

Surrogacy agreements are null and void under Spanish law on public policy grounds. Parentage based on foreign surrogacy arrangements is not recognised in Spain.

Posthumous conception is permitted under Spanish law, subject to certain requirements, the main one being that the parent has expressly provided for it in a will or public deed, in accordance with the provisions of the Spanish Law on Assisted Reproduction Techniques. Foreign situations may create recognition gaps, potentially affecting succession rights unless parentage is validly established under Spanish law.

In Spain, public policy (orden público internacional) as a corrective mechanism vis-à-vis foreign legal systems has manifested itself most visibly in cases involving Islamic family and succession law. Spanish authorities have drawn a clear boundary where foreign norms conflict with constitutionally entrenched principles of equality, particularly gender equality under Article 14 of the Constitution. Thus, the rule of differential inheritance shares – whereby a male heir receives twice the portion of a female heir (the principle of tafadul) – has been expressly rejected by the Directorate-General in cases of intestate succession, on the ground that its application would contravene fundamental constitutional values. By contrast, practices such as polygamy and unilateral repudiation (talaq), which are structurally incompatible with the Spanish conception of marriage as monogamous and grounded in formal equality between spouses, cannot be constituted within Spanish territory. Nevertheless, Spanish private international law has adopted a nuanced approach when such legal situations have been validly established abroad and have produced consolidated legal effects. In such circumstances, limited recognition may be afforded for specific purposes: for example, co-wives may share entitlement to a Spanish survivor’s pension or accident compensation, and a repudiation may be acknowledged insofar as it evidences the dissolved marital status of the woman and thus her capacity to enter into a subsequent marriage in Spain.

The Directorate-General, together with the jurisprudence of the Spanish Supreme Court, have adopted a position of categorical non-recognition with respect to surrogacy arrangements carried out abroad, insofar as such arrangements are incompatible with the foundational principles of the domestic legal order. Under Spanish law, gestational surrogacy contracts are null and void, and this normative prohibition operates as an expression of international public policy that precludes the direct production of legal effects within Spain, even where parentage has been formally established in a foreign jurisdiction. Consequently, the intended Spanish mother cannot secure automatic recognition of maternity on the basis of the foreign birth registration or judicial decision but must instead resort to adoption proceedings in Spain to establish a filial relationship. Similarly, the intended father may initiate ordinary judicial proceedings for the recognition of paternity only where he can substantiate a biological link to the child.

For a general description of the lifetime transfer implications, please refer to 5. Tax Treatment of Lifetime Transfers and Testamentary Dispositions, and for a description of the testamentary dispositions, to 6. Lifetime Succession Planning Mechanisms.

First, it should be noted that the relocation of the testator to Spain does not, per se, create immediate tax implications, as the relevant connecting factors for IHT purposes are the tax residence of the heirs and/or the existence of Spanish-situs assets within the estate. Should the heir become subject to IHT, the Spanish region to which the testator relocates may nonetheless be relevant, as it determines the applicable regional tax law. This is particularly significant given that certain regions provide substantial tax relief for transfers to next-of-kin, as described in 6.1 Common Planning Techniques.

Conversely, the relocation to Spain of the heirs or members of the next generation – even if for educational purposes – may create material tax exposure, especially where residence is established in regions that do not grant relevant tax relief for next-of-kin transfers (eg, Catalonia). In such cases, the effective tax burden may be significant. One planning mechanism consists of structuring inheritances subject to a term so that the taxable event does not occur until a later date, allowing for co-ordinated planning.

It is also important to note that where the testator is non-resident the relevant intra-regional connecting factor for determining the applicable regional legislation is the location of the majority of the assets of the estate in Spain (unless there are no Spanish-situs assets in which case the applicable regional tax law will instead be that of the region of residence of the heir). Consequently, advance planning as to the Spanish region in which wealth and investments are located is essential. Where Spanish-situs assets are located in a region with a potentially high IHT or GT burden (or wealth tax), consideration should be given to financing the acquisition of such assets through debt, as debts used in the purchase may be deductible from the taxable base.

A further recurring issue concerns members of second, third and subsequent generations of Spanish entrepreneurial families who relocate to common law jurisdictions such as the United Kingdom or the United States, where the trust constitutes a core estate planning instrument to mitigate estate tax exposure and protect the continuity of the family business. However, for Spanish tax purposes, trusts are generally disregarded and do not produce the full legal effects attributed to them under common law. This mismatch frequently necessitates changes in ownership structures and requires proper planning in order to avoid adverse inheritance, wealth or income tax consequences.