Important notice: This article is for general information only and does not constitute legal or tax advice. Every tax situation is unique — contact Jacob Salama for personalised advice.
The Challenge: Two Legal Systems, One Estate
When an Israeli national owns property in Spain — whether as a holiday home, investment property or primary residence — their estate sits at the intersection of two distinct legal systems. Spanish succession law applies to Spanish-situated assets by default, bringing with it both the legítima (forced heirship) rules and the Impuesto sobre Sucesiones y Donaciones (ISD). The good news is that careful planning — particularly using the EU Succession Regulation — can significantly mitigate both the legal constraints and the tax burden.
The EU Succession Regulation (Brussels IV) and the Israeli National
EU Regulation 650/2012, commonly referred to as Brussels IV, came into force on 17 August 2015. It establishes a single set of conflict-of-laws rules for succession in EU member states. Its most important feature for non-EU nationals is the nationality election: a person may elect in their will that the law of their nationality — rather than the law of their habitual residence — governs their entire succession.
For an Israeli national owning property in Spain, this means:
- Without an election: Spanish succession law (Código Civil) applies to Spanish-situated property, including the legítima forced heirship rules.
- With a proper Brussels IV election of Israeli law: Israeli succession law governs the entire estate, including the Spanish assets.
Critical limitation: The Brussels IV election governs succession law — who inherits and in what proportions. It does not affect tax law. Spanish ISD will still apply to Spanish-situated assets regardless of which succession law is elected. The election eliminates the forced heirship constraint; it does not eliminate the tax.
Spanish Forced Heirship: The Legítima
Under the Spanish Código Civil, the legítima (forced portion) divides the estate into three equal thirds:
- Tercio de legítima estricta: One-third that must pass in equal shares to all surviving children (or to grandchildren if a child has predeceased). This portion is non-negotiable under Spanish law.
- Tercio de mejora: One-third that can be allocated to any descendant (not necessarily equally), giving some flexibility to benefit a particular child.
- Tercio de libre disposición: One-third that can pass to anyone — a friend, charity, or non-family member — at the testator's full discretion.
If there are no descendants, ascending relatives (parents, grandparents) have a forced portion of one-half of the estate. A surviving spouse also has usufruct rights over a portion of the estate, varying depending on whether children survive.
By electing Israeli law under Brussels IV, an Israeli testator can side-step the legítima entirely and distribute their Spanish property as Israeli law permits. Israeli succession law does not impose mandatory forced heirship proportions in the same way, giving the testator substantially more freedom.
Spanish Inheritance Tax (ISD): Rates and Regional Variations
ISD is regulated at the national level by Ley 29/1987 but administered and collected by the autonomous communities, which may apply their own reductions and bonifications. The national progressive scale ranges from 7.65% (on the first €7,993) to 34% (above €797,555), before applying a multiplier based on the heir's kinship group and pre-existing wealth. The effective rates can substantially exceed 34% for distant relatives or large inheritances.
Kinship Groups
| Group | Who | National Reduction |
|---|---|---|
| Group I | Children under 21 | €15,957 + €3,991 per year under 21 |
| Group II | Children 21+, spouses, parents | €15,957 |
| Group III | Siblings, aunts/uncles, nieces/nephews | €7,993 |
| Group IV | All others (cousins, friends, unrelated) | None |
Andalusia: The Most Favourable Region for Israeli Property Owners
Andalusia — which encompasses the Costa del Sol, Marbella, Málaga, Granada and Seville — introduced a 99% bonificación on ISD for Group I and Group II heirs in 2022. This effectively reduces the inheritance tax to near zero for children, spouses and parents inheriting from an Andalusian-domiciled estate. This is a transformative planning consideration: Israeli buyers who own property in Andalusia benefit from a substantially more favourable inheritance tax environment than those who purchase in Catalonia, Valencia or the Balearic Islands.
Madrid applies a similar 99% reduction for Groups I and II. The Balearic Islands and Catalonia have less generous regimes, though they still offer meaningful reductions for direct descendants.
Non-Resident Heirs: The TJUE Ruling of 2014
Before 2014, non-resident heirs were required to apply the national ISD scale — without access to the more favourable regional bonifications. The Court of Justice of the EU (TJUE) ruled in Case C-127/12 that this discrimination was incompatible with EU law. Spain subsequently amended its rules to allow non-resident heirs (including those from non-EU countries, following further legal developments) to apply the regional bonifications. Today, a non-resident Israeli heir inheriting Spanish property can access the Andalusia 99% reduction on the same basis as a Spanish resident heir.
The Practical Process for Israeli Heirs
When a Spanish property owner dies — whether they were a Spanish resident or a non-resident — the heirs must follow a defined procedural sequence:
- Obtain death certificate and apostille: The Israeli death certificate must be apostilled (Hague Convention) and officially translated into Spanish by a sworn translator.
- NIE numbers for heirs: Each heir who does not already hold a NIE must obtain one before the estate can be formally accepted.
- Locate the Spanish will: If a Spanish will exists, it will be registered in the Registro Central de Últimas Voluntades. An Israeli will may also be recognised if it satisfies formal validity requirements under private international law.
- Notarial deed of acceptance: The heirs (or their representatives under power of attorney) appear before a Spanish notary to execute the escritura de aceptación de herencia.
- File Modelo 650 and pay ISD: The ISD return must be filed within six months of the date of death. A six-month extension can be applied for within the first five months. The property cannot be registered in the heirs' names until the tax has been paid or a deferral granted.
For Israeli families where the heirs are also in Israel or the diaspora, coordinating these steps requires careful planning. A Spanish lawyer with powers of attorney can manage the entire process in Spain while the heirs remain abroad. See our guide on making a will in Spain as an Israeli citizen for pre-mortem planning steps.
Israeli Estate Planning for Spanish Assets
Jacob Salama advises Israeli families on inheritance planning for Spanish-situated assets — from Brussels IV elections and dual-will strategies to ISD compliance for non-resident heirs.
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