Brexit and Inheritances: Guide for British Citizens with Real Estate in Spain

Brexit, effective from 1 January 2021, generated uncertainty among the large British community living in Spain and owning property there. However, the United Kingdom never applied the EU Succession Regulation (EU) No 650/2012, and Spain was already applying it to the estates of British nationals before the UK left, so Brexit has not brought substantial changes to the succession rules for British citizens with assets in Spain.

Where Brexit does show is in the taxation of British owners who do not live in Spain. Since 2021 they pay Non-Resident Income Tax (Impuesto sobre la Renta de no Residentes) as residents of a third country: the general rate has gone up from 19% to 24% and they can no longer deduct rental expenses on Form 210 (Modelo 210).

According to the Annual Population Census of Spain’s National Statistics Institute (INE), 266,462 British citizens were living in Spain on 1 January 2025, the sixth largest foreign nationality. The majority concentrate their real estate assets in coastal autonomous communities such as Andalusia, Valencia, the Balearic Islands and the Canary Islands. Proper succession planning of these assets is essential to avoid legal conflicts, excessive tax burdens and delays in the transmission of family assets.

Regulation (EU) No 650/2012 of the European Parliament and of the Council of 4 July 2012 applies to the estates of persons who die on or after 17 August 2015 and established a common framework for determining the applicable law, jurisdiction and the recognition of decisions in matters of succession within the European Union.

Exclusion of the United Kingdom from the scope of application

Under recitals 82 and 83 of the Regulation, the United Kingdom and Ireland did not take part in its adoption, and neither did Denmark, so the Regulation does not bind them. English law also follows a scission system: it subjects immovable property to the lex rei sitae (the law of the place where the property is located) and movable property to the law of the deceased’s domicile, instead of the single habitual residence criterion established by the EU Regulation.

Practical consequences for British citizens

The fact that the United Kingdom is not bound by the Regulation does not stop it from applying to British nationals. The Regulation has universal scope: Spanish notaries, land registrars and courts apply it to the estate of anyone who dies on or after 17 August 2015, even if the deceased was British and the law it points to is that of a non-EU country.

This is why the UK’s departure from the EU has not changed the rules for the estates of British citizens, which are governed by the Regulation and not by articles 9 and 10 of the Spanish Civil Code. The Spanish Directorate General of Registries and Notaries applied it in this way in its decisions of 15 June and 4 July 2016, both concerning British nationals resident in Spain.

The determination of the applicable law constitutes the fundamental question that conditions the distribution of assets, the existence or not of forced heirship portions, freedom to make a will and the applicable tax regime.

British deceased resident in Spain

If a British citizen had their habitual residence in Spain at the time of death, Spanish law will generally govern their estate under Regulation (EU) 650/2012. This means the Spanish forced heirship system applies (articles 806 et seq. of the Civil Code), which reserves two-thirds of the estate to the children and other descendants and also protects parents and the surviving spouse. If they lived in a region with its own civil law, such as Catalonia or the Balearic Islands, that regional law may apply instead, with different forced heirship rules.

Exception: choice of law in the will (professio iuris)

However, the Regulation allows the deceased to expressly choose their national law (in this case, the law of England and Wales, Scots law or the law of Northern Ireland, as appropriate) by an express provision in their will. The choice must be stated clearly and unequivocally in the will, with a clause such as: “I choose the law of England and Wales to govern my succession”.

The choice of British law may be advantageous for the deceased, given that the British legal system grants greater freedom to make a will, without the rigid forced heirship system of Spanish Law, except for the limitations established in the Inheritance (Provision for Family and Dependants) Act 1975, which applies in England and Wales.

British deceased not resident in Spain with Spanish real estate

If the deceased habitually resided in the United Kingdom and possessed real estate in Spain, the situation presents greater complexity:

• Real estate located in Spain: under the British system of succession scission, real estate is governed by the law of the place where it is located (lex rei sitae). Spanish law will therefore apply to the succession of property located in Spain, because the Regulation accepts that referral back to the law of a Member State, unless the deceased made a professio iuris in favour of British law in a valid will.
• Movable property and money: governed by the law of the deceased’s domicile, in the English-law sense, which in these cases is usually British law.

This legal duality can generate practical complications, especially when there are forced heirs under Spanish law who would be left unprotected if British law were applied to the entire estate.

Why make a Spanish will with a choice of law?

At Martínez-Cardós Abogados, a Madrid law firm specialising in advice for non-residents (tax, inheritance and corporate law), inheritance and tax law, we often see British estates in Spain become complicated because the will does not say which law should apply. That is why we recommend making a Spanish will with an express choice of the applicable law. This preventive step avoids disputes over the applicable law, speeds up the succession process and allows tax planning for the transfer of assets.

The Spanish will must be coordinated with the British will to avoid tacit revocations. It is advisable to include a clause of non-revocation of the foreign will and to limit the Spanish will exclusively to assets located in Spain.

Taxation under Spanish Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones, ISD) is one of the main concerns of British heirs to assets located in Spain, especially after Brexit.

Regulatory evolution: from discriminatory treatment to tax equality

Until 2014, there was blatant tax discrimination between resident and non-resident heirs in Spain. Non-residents could not apply regional tax reliefs and reductions, being taxed according to state regulations, significantly more burdensome.

CJEU Judgment of 3 September 2014 (Case C-127/12)

The Court of Justice of the European Union declared that Spain violated the principle of free movement of capital enshrined in article 63 of the Treaty on the Functioning of the European Union (TFEU) by fiscally discriminating against heirs not resident in Spanish territory but resident in other Member States of the EU or the European Economic Area.

Spanish Supreme Court Judgments of 2018

The Spanish Supreme Court, in judgments of 19 February 2018 (STS 242/2018), 21 March 2018 and 22 March 2018, extended the criterion of non-discrimination to non-EU heirs, including British citizens resident in third countries, considering that the free movement of capital has global scope in accordance with article 63.1 TFEU.

Law 11/2021, of 9 July

Law 11/2021, on measures for the prevention and fight against tax fraud, definitively amended Additional Provision Two of Law 29/1987, on Inheritance and Gift Tax, legally consolidating equal tax treatment between residents and non-residents, regardless of their country of residence.

Which regional rules can non-resident heirs apply in 2026?

Situation 1: Deceased not resident in Spain

When the British deceased was not resident in Spain, the heirs (resident or non-resident) have the right to apply the regional regulations of the Autonomous Community where the greatest value of the inherited assets located in Spain is found.

Situation 2: Deceased resident in Spain

If the British deceased resided in a Spanish Autonomous Community, non-resident heirs may apply the regional regulations of said Autonomous Community, on equal terms with resident heirs (Second Additional Provision of Law 29/1987).

Error 1: Not making a Spanish will

Many British citizens rely exclusively on their British will. This generates complications, since foreign wills must be recognised through specific notarial procedure, requiring sworn translation, apostille and, occasionally, reports of foreign Law regarding its validity and content. This process significantly delays succession procedures and increases costs.

Solution: Grant a Spanish will before a notary, limited to assets located in Spain, with a clause of non-revocation of the British will.

Error 2: Not expressly choosing the applicable law

The absence of professio iuris in the will generates uncertainty regarding the applicable law, potentially leading to litigation between heirs regarding the distribution of assets, especially when forced heirs according to Spanish law concur who would be passed over under British law.

Solution: Include an express clause in the will such as: “I declare that I choose as the law applicable to my succession the law of England and Wales, in accordance with Regulation (EU) 650/2012”.

Error 3: Being taxed according to state regulations

Some non-resident heirs are unaware of their right to apply regional tax reliefs, settling ISD according to pure state regulations, with rates of up to 34% and multiplying coefficients of up to 2.4, while in several regions the relief reaches 99% of the tax due.

Solution: Specialised tax advice prior to settlement. If already settled according to state regulations, there is a 4-year period to claim the refund of undue payments to the AEAT, in accordance with article 66.c) of Law 58/2003, General Tax Law.

Error 4: Failing to meet the 6-month deadline

Filing late without a prior request from the tax authorities triggers late-filing surcharges of 1% plus a further 1% for each full month of delay during the first year, and 15% after 12 months, plus late-payment interest from that point. If it is the tax authorities who detect the failure to file, penalties of 50% to 150% of the unpaid tax may also apply (articles 191 et seq. of the General Tax Law, LGT).

Solution: Request extension within the first 5 months or, where appropriate, late filing without prior requirement to minimise surcharges.

Error 5: Not coordinating inheritance with the British tax regime

The United Kingdom applies its own Inheritance Tax (IHT) at 40% on the excess over £325,000, a threshold frozen until April 2031. Since 6 April 2025 the test is no longer domicile but long-term residence: anyone who has been UK resident for at least 10 of the previous 20 tax years is subject to IHT on their worldwide estate, and that exposure continues for 3 to 10 years after leaving.

Solution: Coordinated international tax planning. The Convention between Spain and the United Kingdom to avoid double taxation of 14 March 2013 does not include Inheritance Tax, so there is a risk of real double taxation that must be mitigated through deduction of what was paid in one country when being taxed in the other, in accordance with internal legislation.

Brexit has not substantially altered the succession regime of British citizens who own real estate in Spain, but the inherent complexity of international successions requires rigorous planning and specialised advice.

The fundamental aspects to consider are: (i) granting of a Spanish will with express choice of applicable law, coordinated with the British will; (ii) knowledge of the right of non-resident heirs to apply regional tax reliefs since Law 11/2021; (iii) strict compliance with the 6-month deadline to settle ISD, requesting extension if necessary; and (iv) international tax coordination to avoid or mitigate double taxation between Spain and the United Kingdom.

Recent case law and regulatory evolution have eliminated the historical tax discrimination against non-residents, equalising their position to that of residents. This equalisation makes Spain a fiscally competitive destination for the holding of real estate by British citizens, especially in autonomous communities with 99% tax reliefs.

If you are a British citizen with property in Spain, or you are going to inherit from a British relative, at Martínez-Cardós Abogados we review your will, the law applicable to the succession and your Spanish inheritance tax return as a non-resident. Contact our firm to discuss your case.

Has Brexit changed the rules on inheritances of British citizens in Spain?

No. The United Kingdom never applied the EU Succession Regulation 650/2012 and Spain applies it to all estates, including those of British nationals, so leaving the EU has not changed the succession rules. What has changed is the taxation of their Spanish property under Non-Resident Income Tax, where they are now taxed as residents of a third country.

Can I continue to inherit as a non-resident British citizen with regional tax reliefs?

Yes. Since Law 11/2021, all non-resident heirs, regardless of their nationality or country of residence (EU, EEA or third countries such as the United Kingdom), have the right to apply regional tax reliefs on equal terms with residents.

What deadline do I have to settle Inheritance Tax?

The general deadline is 6 months from the death of the deceased. An extension of another 6 months may be requested, submitting the application within the first 5 months of the initial period.

Do I need to make a will in Spain if I already have a British will?

Although not mandatory, it is highly advisable. The Spanish will expedites succession procedures, avoids costly procedures for recognition of foreign wills and allows tax planning of inheritance by expressly choosing the applicable law.

What happens if my British father died more than 6 months ago and we have not settled the tax?

You can file the self-assessment late, paying the applicable surcharges and, after 12 months, late-payment interest. The tax authorities have four years to assess the tax, counted from the end of the six-month filing period. Even if the tax is time-barred, to register the inheritance at the Land Registry you must still submit the deed (escritura de aceptación de herencia) to the tax office claiming the limitation period.

Can I claim if I have already paid Inheritance Tax without applying regional tax reliefs?

Yes. You have four years to request the correction of the self-assessment and a refund of the overpaid tax from the National Tax Management Office (Oficina Nacional de Gestión Tributaria), counted from the day after the filing deadline if you paid within it, or from the day after payment if you paid later. You must show that you are entitled to the regional reliefs under Law 11/2021 and Supreme Court case law.

Does the Spanish forced heirship system apply to my inheritance as a British citizen?

It depends. If you habitually resided in Spain at the time of death and did not make a choice of law in the will, Spanish law applies with the forced heirship system. If you expressly chose British law in the will, said law will apply, which grants greater freedom to make a will.

Where do I file Inheritance Tax as a non-resident British heir?

You must file Form 650 (Modelo 650) with the National Tax Management Office of the Tax Agency (headquarters in Madrid), selecting the option to apply the corresponding regional regulations according to the location of the inherited assets.

Article written by Mario Martínez-Cardós Bada, Spanish lawyer specializing in tax and inheritance law.