Moving to Spain: The Financial Guide for British Expats
Key takeaways
The UK's 25% tax-free pension lump sum is not tax-free in Spain. Spain treats the entire withdrawal as employment income, and which country's treatment applies is fixed by where you are tax resident on the day you draw it. The withdrawal is a one-time event.
Your ISA keeps its name and loses its point. Spain does not recognise the wrapper, and many UK investment platforms will not keep an account whose owner lives abroad.
Spanish tax residency turns on 183 days in a calendar year, on where your economic interests are centred, or on where your spouse and minor children live. Any one of the three is enough, and there is no split tax year.
Where you live inside Spain changes the answer by an order of magnitude. Wealth tax and succession tax are set regionally, and neighbouring communities can be an order of magnitude apart.
Spanish succession tax is paid by the beneficiary, not the estate, at a rate that depends on their relationship to you and on their own existing wealth. An unmarried partner can pay more than double what a spouse would pay on the same inheritance, which makes registering a partnership one of the most valuable pieces of paperwork in this guide.
Leaving the UK does not close your UK file. Since 6 April 2025 UK inheritance tax follows long-term residence, not domicile, and it can reach you for up to ten years after you go.
Last reviewed: August 2026. Every figure below is year-stamped and linked to its published source. Spanish regional tax rules change several times a year, so check the current position for your community before acting on anything here.
Contents
The decisions that expire the day you become resident
When Spain starts counting you as resident
Your pension, the largest thing you are moving
Your savings and investments
Paid in sterling, living in euros
Your property, on both sides of the move
Your protection
Your estate, in two countries
Where you live in Spain changes the answer
If you are also a US person
What you have to declare, and what happens if you do not
The assumptions that cause the most trouble
1. The decisions that expire the day you become resident
Most of what is written for people moving to Spain is written about tax, and reads as if the move were a tax event. It is closer to the truth to say that moving to Spain is a financial planning event with tax consequences. The distinction matters, because the decisions worth the most money are not entries on a tax return. They are choices about a pension, a portfolio, a property and a partnership, and several of them expire the day you become Spanish resident.
Five are worth naming before anything else, because each has a deadline that arrives sooner than most people expect.
When to draw the 25% pension lump sum. Tax-free in Britain, employment income in Spain, and the withdrawal is a one-time event. Which treatment applies is decided by your residency position on the day you take it. Section 3.
Whether to realise investment gains before you go. A disposal falls on one side of the move or the other, and that decides which country's rules apply to it. Section 4.
Which calendar year you arrive in. Spain assesses residence over the whole calendar year, so arriving in July rather than August can change which year your worldwide income first becomes Spanish. Section 2.
Whether to register your partnership. An unmarried, unregistered partner sits in the harshest position Spanish succession tax has. Several communities treat a registered pareja de hecho like a spouse. Section 8.
The six-month work window. If you are moving for work rather than retirement, the special regime below has a non-extendable deadline that starts running when you register with Spanish Social Security.
Moving for work: the Beckham regime and its six-month window
Article 93 of the income tax act creates a special regime for people moving to Spain to work. It is universally known as the Beckham Law and widely misunderstood as a general expatriate tax break. It is a work-linked regime, and most retirees do not qualify.
What it gives: a flat 24% on qualifying income up to 600,000 euros a year, and 47% above that, for six tax periods, the year of arrival plus the following five.
Who qualifies, following the changes made by Ley 28/2022, the "startups law":
Employees under an employment contract, excluding professional athletes
Remote workers using exclusively digital means, the category that covers digital nomad visa holders
Company directors, subject to shareholding limits
Entrepreneurs with a favourable ENISA report certifying the activity as innovative
Highly qualified professionals serving startups or in R&D, with more than 40% of income from the qualifying activity
The prior-residence bar: you must not have been Spanish tax resident in the five tax periods before the move. Ley 28/2022 reduced this from ten.
The deadline, and it is unforgiving. The election is made on Modelo 149 within six months of registering with Spanish Social Security. The Agencia Tributaria describes the period as improrrogable, non-extendable. Miss it by a day and the regime is denied for the whole six years.
What is and is not sheltered. This is where secondary sources contradict each other, so here is the position with its sourcing.
Wealth tax and the solidarity tax: Spanish assets only. The Agencia Tributaria's own page states that taxpayers under the Article 93 regime are taxed for wealth tax purposes por obligación real, on their Spanish assets, not worldwide. This is a primary source and it settles a point that is reported inconsistently elsewhere.
Foreign employment income is NOT sheltered. Article 93 deems the totality of your employment income during the regime to be obtained in Spanish territory, including work physically performed abroad. It is caught by the 24%/47% scale.
Foreign investment income is generally outside scope, because the regime taxes you broadly on non-resident principles and those are territorial.
Where our sourcing stops. That last point is the consistent view of Spanish tax practitioners, but we could not confirm it against a single primary clause, so we mark it rather than assert it.
The dates that decide all of this sit in a fixed order, and most of them are not negotiable once they have passed. We have set them out as a year-by-year checklist, Spain: the decisions, and the dates they expire. No charge, and no obligation.
Sequencing those five decisions against your own dates is the first piece of work we do with anyone planning a move. Some of the windows will still be open for you and some will already have closed; the job is putting the rest in the right order. If you would like that map drawn before the first deadline arrives, start the conversation.
2. When Spain starts counting you as resident
Three tests, in Article 9 of Spain's income tax act, Ley 35/2006. Meeting any one of them is enough. They are not cumulative and they are not weighted.
Test one: 183 days
You are resident if you spend more than 183 days in Spanish territory during the calendar year. Not a rolling twelve months. The Spanish tax year is the calendar year and the count resets on 1 January.
The part people miss is what the same article says next. Sporadic absences count toward your 183 days unless you can prove tax residence in another country. Spain's tax authority does not simply subtract the fortnight you spent in Portugal. It adds it back unless you produce a certificate of tax residence from somewhere else. Established doctrine treats your period of presence as certified days, plus the days presumed between two certified presences, plus sporadic absences. Your intention to stay or go is irrelevant.
Test two: the centre of your economic interests
You are resident if the main nucleus or base of your activities or economic interests sits in Spain, directly or indirectly. This test has no day count. A person who is careful never to spend 183 days in Spain, but whose business, income and assets are centred there, is Spanish tax resident on this limb alone.
Test three: the family presumption
If your spouse, not legally separated, and your dependent minor children habitually reside in Spain, you are presumed to be resident too. It is a rebuttable presumption, so it can be displaced by evidence, but the burden is on you.
There is no split year
This is the structural difference from the UK, and it catches almost everyone.
The UK Statutory Residence Test has split-year treatment. In defined circumstances the UK tax year is divided and you are taxed as a resident for only part of it. Spain has no equivalent. Residence is determined for the whole calendar year. If you cross the line in November, Spain treats you as resident for that entire year, and worldwide income you received in February, while you were still living and working in Britain, comes into a Spanish return.
Where our sourcing stops. This follows from Article 9's whole-calendar-year framing and is the unanimous position among Spanish tax practitioners. We could not find an Agencia Tributaria page stating the principle in exactly those words, so we say so rather than imply a citation we do not have.
Two rules people conflate, and should not
The 90/180 Schengen rule | The 183-day tax test | |
|---|---|---|
What it governs | How long a non-resident visitor may stay | Whether you owe Spanish tax on worldwide income |
Who enforces it | Border authorities, across the Schengen area | The Agencia Tributaria |
The period | Any rolling 180 days | The calendar year |
Consequence of breach | Immigration penalty, entry ban | A Spanish tax return on worldwide income |
They are different rules, different authorities, different clocks. A holiday-home owner tracking one and not the other can comply with immigration law and still become tax resident, or the reverse.
The padrón is evidence, not a trigger
Registering on the padrón municipal at your town hall does not make you tax resident, and failing to register does not make you non-resident. Tax residence is decided by the three tests above. The padrón is one piece of corroborating evidence among several. It carries weight in a dispute without settling anything on its own.
While the move is still ahead of you, the date you cross this line is one of the few things in this guide you can choose rather than inherit, and choosing it well is planning work: which calendar year to arrive in, and what is better settled before you go. We help people plan that calendar, and the earlier the conversation happens, the more of it is still open. We are here when you want to have it.
3. Your pension, the largest thing you are moving
For most British movers the pension is the largest single asset that crosses the border, and it is the one where the timing of a single decision moves the most money. Nothing else in this guide turns so completely on a date.
The 25% lump sum
Under UK rules, most people can take a quarter of a defined contribution pension as a Pension Commencement Lump Sum, free of UK income tax. It is one of the best-known features of the UK pension system, and it is very widely assumed to travel.
Spain does not recognise the UK's tax-free lump sum. The Dirección General de Tributos, Spain's tax authority, addressed this directly in binding consultation V0982-19 of 8 May 2019. A Spanish tax resident drew on a UK pension scheme. The ruling held that under Article 17 of the UK-Spain double tax treaty the UK has no taxing right at all, and that the entire amount is rendimientos del trabajo, employment income, under Article 17.2.a) of Spain's income tax act. It goes into the general tax base in full. The ruling is explicit that no part is treated as a return of capital and no part is exempt.
So the same £100,000 that is tax-free in Britain lands in Spain on the general income scale, on top of whatever else you earned that year, at rates that reach into the forties.
There is one narrow transitional relief, a 40% reduction that applies to the portion of benefits built from contributions made before 31 December 2006. The DGT confirmed in the same 2019 ruling that it can apply to a foreign scheme. In practice it rarely helps a UK case much, because UK schemes do not track pre-2007 contributions the way Spanish planes de pensiones do, and because the window is measured from the date of the contingency rather than the date you withdraw.
The date decides this. A lump sum drawn while you are still UK tax resident is a UK event, taxed under UK rules. Drawn after you become Spanish resident, the same withdrawal from the same pension produces an entirely different bill. Spain's lack of a split tax year, section 2, is what makes that date so much harder to control than it looks.
Your pension income, and the NT code
Under Article 17 of the 2013 UK-Spain treaty, private and occupational pension income is taxable only in your country of residence. For a Spanish resident that means Spain, and it means the UK should not be deducting tax at all.
To stop UK deduction at source you obtain a certificate of tax residence from the Agencia Tributaria, submit form Spain-Individual to HMRC with it, and HMRC instructs your provider to apply an NT code so the pension is paid gross. Without it you pay twice and reclaim, which takes as long as it sounds.
Putting the NT code in place, the certificate, the form and the follow-up with HMRC and your provider, is work we do for clients rather than a process you have to run yourself.
Speak with us about obtaining your NT Code
The exception: government service pensions
Under Article 18(2), a pension for service to the UK government stays taxable in the UK only. Spain then applies exención con progresividad: the pension is excluded from your Spanish taxable base but its amount is still used to work out the rate applied to everything else. It is not taxed twice, but it does push your other income up the scale.
Where our sourcing stops. Practitioner sources genuinely disagree on whether NHS pensions fall under Article 18 as government service, or under Article 17 and so are taxable in Spain. We could not resolve it against an HMRC primary source. If your pension is an NHS one, get scheme-level confirmation rather than relying on any general guide, including this one.
Where pension income lands on the Spanish scale
Pension income goes into Spain's general tax base, alongside employment and rental income. The general scale has two halves: a state scale set by central government, and an autonomous community scale that each of the seventeen regions sets independently. Your marginal rate is the two added together, so the rate on the same pension differs depending on which community you live in.
The rates usually quoted in English-language guides, running to the high forties at the top, are the combined figure for a community that broadly mirrors the state defaults. They are not the state half on its own, and adding a regional scale to them would double-count. If you are comparing regions, compare the combined rate for each, and take the figures from each community's own published scale rather than from a summary.
We are deliberately not naming a single "highest region". Widely-published summaries contradict each other on which community tops the table and by how much, which is itself the reason to go to the source.
The QROPS door that closed in 2024
Transfers to a Qualifying Recognised Overseas Pension Scheme attract a 25% Overseas Transfer Charge unless an exclusion applies. The main exclusion is being resident in the same country as the scheme.
There used to be a wider exclusion covering the EEA and Gibraltar, which is what made Malta QROPS a common route for European expatriates. It was removed for transfers made on or after 30 October 2024, with transitional protection only for transfers requested before that date and completed before 30 April 2025.
So in 2026, a Spanish resident transferring to a Malta QROPS is not resident where the scheme is, the exclusion does not apply, and the 25% charge bites. That is a quarter of the fund, on a route that was routine two years ago.
Neither route is right in general. Which one fits depends on the scheme, the fund, your age and where you intend to be in ten years. The two routes, and what October 2024 did to the comparison between them, are set out in SIPP or QROPS.
Pensions and your estate, from 2027
A further UK change follows in 2027, bringing unused pension funds inside the UK inheritance tax estate. For anyone whose plan assumed the pension would pass outside it, that assumption needs rechecking, and we have covered it separately in pensions inside the estate from 2027.
Every decision in this section can be reviewed before a date makes it for you: what your scheme allows, and what the timing of the lump sum would decide. A cross-border pension review puts that on one page for your own scheme, with the treaty treatment and the Spanish scale included. It is a review of what you hold, not a commitment to move anything.
4. Your savings and investments
A Spanish tax resident is taxed on worldwide income. A non-resident is taxed only on Spanish-source income. Everything in section 2 is deciding which of the two you are, and this section is what the answer does to the savings and investments you already hold.
The ISA that stops being an ISA
An ISA is a creature of UK law. Spain does not recognise the wrapper. For a Spanish resident, income and gains inside an ISA are taxable in Spain as ordinary savings income on the scale set out below, and the holding is reportable if the relevant category passes the foreign asset reporting threshold, section 11. The account keeps its UK name and loses its point.
There is a second, quieter change: once you are no longer UK resident, you can generally no longer pay new money into an ISA. The wrapper you leave with is the wrapper you have.
The same logic reaches Premium Bonds. NS&I prizes are tax-free in the UK. That is a UK statutory exemption, and it does not travel.
The account itself: platforms and a foreign address
Before Spain taxes anything, there is a plainer problem, and it arrives earlier. Many UK investment platforms and stockbrokers will not keep a client whose address is outside the UK.
Some close the account and ask you to transfer out. Some freeze new purchases and leave you able only to sell. Others carry on until a review notices the address. This is provider policy rather than law, it varies by firm and it changes, so the only answer that counts is the one your own platform gives you in writing before you move.
What Spain actually taxes: the savings scale
Interest, dividends, capital gains and certain insurance income are taxed on one nationwide scale, not varied by region.
Savings income band | Rate |
|---|---|
Up to 6,000 euros | 19% |
6,000 to 50,000 euros | 21% |
50,000 to 200,000 euros | 23% |
200,000 to 300,000 euros | 27% |
Above 300,000 euros | 30% |
2026 rates, confirmed against the Agencia Tributaria's practical manual. The top band rose from 28% to 30% with effect from 1 January 2025 and is unchanged for 2026.
Selling before you go
The same logic that fixes the lump sum date in section 3 applies to a portfolio with gains in it. A disposal made while you are UK tax resident is a UK event, within UK capital gains tax and its allowances. The same disposal made after you become Spanish resident belongs to the scale above. Which side of the move a sale falls on decides which country's rules apply to it, and unlike most of what is in this guide, that timing is entirely within your control until the year you leave.
This section is where we spend most of our time with people moving to Spain. We review what you arrive holding, the ISA, the platform account, the general portfolio, and how each is treated once Spain is the country doing the taxing, and we build portfolios arranged for where you actually live rather than where you used to. If your savings are still set up for a life in Britain, that review is the place to start.
How Spain taxes investment wrappers
A recurring question from people arriving in Spain is what happens to an investment held inside a wrapper: an ISA, an offshore bond, or a unit-linked life policy.
The general principle is that Spain taxes according to what a thing is under Spanish law, not according to what it is called in the country it came from. A UK ISA is not a recognised wrapper in Spain, so the income and gains inside it are taxed as ordinary savings income on the scale above, and it is reportable if the relevant category passes the foreign asset threshold.
Spanish law also sets conditions under which certain life-assurance-based investment structures are taxed on a different timetable, with the tax point falling when money is taken out rather than year by year. The conditions are specific, and a structure either meets them or it does not; where it does not, it is taxed as an ordinary holding. Structures that meet them are commonly described as "Spanish compliant".
That term needs care. "Compliant" describes whether a structure meets a set of Spanish statutory conditions. It is a technical description rather than a quality rating, and it says nothing about cost, investment content or suitability for any particular person. Whether any wrapper is appropriate for an individual depends entirely on that person's circumstances, their region, their other assets and their plans.
A guide cannot settle that, and it is not meant to: it is settled by a review with Paratus of your own position, taken with advice in the country where you are resident.
5. Paid in sterling, living in euros
A Spanish tax return is filed in euros, so sterling interest, dividends and gains have to be converted before they are declared, and the same applies to a UK pension paid into a UK account. That is a mechanical step rather than a tax one, but it recurs every year.
The return is the smallest part of it. A UK pension paid monthly into a UK bank account, rent from a UK property, dividends from a UK portfolio: for as long as you hold them, sterling keeps arriving on one side of the exchange rate and life keeps being paid for on the other. What was a one-off transfer at the point of the move becomes a permanent feature of the household finances, and it is where a lot of people first notice that moving money between sterling and euros has become part of the household admin rather than a decision they took once.
None of this decides where anything should be held. It is simply a cost line that most guides leave out because it is not a tax, and it recurs more often than any tax in this guide.
It is also a cost you can arrange deliberately. Which account the pension lands in, and whether the rate you get is a decision or a default: both have alternatives, and comparing them takes less of an afternoon than anything else in this guide. It is often the first conversation people have with us, because it is the easiest one to start: get in touch.
6. Your property, on both sides of the move
The UK property you keep
Non-residents must report and pay UK capital gains tax on disposals of UK property within 60 days. The treaty does not override this: under Article 13, gains on immovable property are taxed where the property is. Spain then gives credit for UK tax paid under Article 22. (Rates move with each Budget; check gov.uk for the current year.)
If you keep the property and let it, the rental income stays within UK self-assessment as UK income, and it also enters your Spanish return as worldwide income, with treaty credit relief doing the reconciliation. One property, two returns.
The Spanish property you buy, even if you never let it
If you own a Spanish property you do not let out and do not live in, Spain still taxes you on imputed income, declared on Modelo 210. Not letting it out is not the same as owing nothing.
The rate is a notional 2% of the cadastral value, reduced to 1.1% where that value was revised by a general collective valuation procedure taking effect after 1 January 2012. Where no cadastral value has been notified, 1.1% is applied to half the acquisition value instead. No expenses are deductible against it, and the return is due by 31 December of the following year.
Check the year in whatever else you read on this. Almost every English-language source still gives the cut-off as 1994. It has been moved twice, most recently by Real Decreto-ley 16/2025 of 23 December, published in the BOE on 24 December 2025, amending the fifty-fifth additional provision of the income tax act. A source repeating 1994 is describing a rule that has changed under it.
A deadline change is coming. For income accrued in 2025, filed in 2026, the window is the full calendar year. For income accrued from 2026 onward, the window opens later, on 1 April of the following year. If you have filed in January for years, that habit stops working for the 2026 return.
The filings here belong to your gestor and your accountant. Where we come in is the planning around the property: what keeping the UK house does to the estate position in section 8, and what a sale falling on one side of the move or the other would mean. If property is the largest line in your position, say so when you get in touch, and the conversation will start there.
7. Your protection
Protection is the part of a financial plan that is easiest to forget in a move, because nothing about it appears to change on the day you land. The policy keeps existing and the premiums keep collecting. What changes is whether it still does what it was set up to do.
A UK life policy written in trust was usually arranged that way for UK inheritance tax reasons. Spain is a civil law country and does not have the UK's concept of the trust, and a payout to a beneficiary who is resident in Spain generally falls within the Spanish succession and gift tax system described in section 8, rather than sitting neatly outside the estate the way the UK arrangement intended. Whether a particular policy still achieves what it was set up for is a policy-by-policy question, answered from the actual documents rather than from a general rule.
Some UK insurers also restrict cover, or the ability to alter a policy, once the life assured is habitually resident abroad. As with investment platforms in section 4, that is provider policy rather than law, it varies, and the answer that counts is the insurer's, in writing.
Health cover is the other half. Most Spanish residency routes for non-EU citizens require proof of full private health cover as a condition of the visa, and a UK state pensioner can register a UK-issued S1 form to access the Spanish public system with the UK meeting the cost. Which of those applies depends on your route and your age, and it is worth settling before the move rather than after, because it is a condition of the paperwork, not a preference.
Reviewing what you already hold, and what a move does to it, is part of protection, alongside the pension and investment work in the sections above. If a policy was written in trust for UK reasons, bring the documents; whether it still does its job is the first question we ask.
8. Your estate, in two countries
Two systems reach the estate of a Briton living in Spain, they work on entirely different principles, and neither switches off just because the other applies.
The UK does not let go quickly
On 6 April 2025 the UK replaced domicile with a long-term residence test for inheritance tax. You are a long-term resident once you have been UK resident for at least 10 of the previous 20 tax years, and a long-term resident is within UK inheritance tax on worldwide assets.
Leaving does not switch it off immediately. There is a tail, and it scales with how long you were there: a minimum of three years for someone with 10 to 13 years of UK residence, rising by one year for each additional year, to a maximum of ten years for 20 years or more. (HMRC's Inheritance Tax Manual, IHTM47020.)
So a Briton who lived in the UK for thirty years and retires to Alicante remains inside UK inheritance tax on their worldwide estate for a further ten years, while also being inside Spanish succession tax. Two regimes reach the same estate at the same time.
If you still use the word "domicile" for this, or you are reading something that does, it is out of date. We have set out the change itself, and who it reaches, in residence, not domicile.
Separately from the long-term residence test, UK-situated assets stay within UK inheritance tax regardless of where you live. UK land and buildings, and shares in companies whose share register is kept in the UK, remain in scope permanently. (Situs for shares follows where the register is kept, not where the company was incorporated: HMRC Inheritance Tax Manual IHTM27121, applying Att Gen v Higgins.)
Spanish succession tax works nothing like UK inheritance tax
Spanish succession tax is paid by each beneficiary, not by the estate. In the UK the estate is assessed and the executor settles before anything is distributed. In Spain there is no such entity. Each heir self-assesses on their own share, at a rate driven by their own circumstances, and generally has to pay before the assets are released. Banks are subsidiarily liable for tax on transfers of a deceased's deposits, which is why they will not release funds until tax is evidenced.
In Britain the money is cleaned before you get it. In Spain you have to find the money before you get the money.
The deadline is six months from the date of death. One further six-month extension is available, but the request must be filed within the first five months, not at the end. Extending avoids penalties and surcharges; late-payment interest still runs.
The group you fall into moves the bill further than anything else in this section. Ley 29/1987 sorts beneficiaries into four groups:
Group | Who | State reduction |
|---|---|---|
I | Children and adopted children under 21 | 15,956.87 euros plus 3,990.72 per year under 21, capped at 47,858.59 |
II | Children 21 and over, spouses, parents | 15,956.87 euros |
III | Siblings, aunts, uncles, nieces, nephews, in-laws | 7,993.46 euros |
IV | Fourth degree and more distant, and unrelated persons | None. Zero. |
Group IV includes unmarried partners and stepchildren who were never legally adopted.
Then the tax is multiplied. Article 22 applies a coefficient to the gross bill that depends both on the group and on the beneficiary's own existing wealth before they inherit:
Beneficiary's own pre-existing wealth | Groups I and II | Group III | Group IV |
|---|---|---|---|
Up to 402,678.11 euros | 1.0000 | 1.5882 | 2.0000 |
402,678.11 to 2,007,380.43 | 1.0500 | 1.6676 | 2.1000 |
2,007,380.43 to 4,020,770.98 | 1.1000 | 1.7471 | 2.2000 |
Over 4,020,770.98 | 1.2000 | 1.9059 | 2.4000 |
State scale and coefficients from Ley 29/1987, Articles 20, 21 and 22.
The two effects compound. A long-term unmarried partner gets no allowance at all, and then has the bill multiplied by up to 2.4, on an inheritance a spouse would have received from the same person in the same house.
British readers do not see this coming. UK inheritance tax has nothing resembling it: there is one estate, one nil-rate band, and the beneficiary's own wealth is irrelevant. And in Britain "partner" involves no registration step, so there is nothing to tell you that you have not done it.
Several communities treat a registered pareja de hecho as Group II. An unregistered cohabiting partner generally stays in Group IV. The difference between a registered and an unregistered partnership therefore changes the outcome more than most of what is written about Spanish tax planning, which is why it appears in section 1 as a decision, not just here as a fact.
Regional rules and beneficiaries resident outside Spain
For a beneficiary who inherits Spanish assets while resident outside Spain, the regional rules in section 9 matter a great deal, because the state default is far harsher than most regions.
The law here developed in three steps. In C-127/12, judgment of 3 September 2014, the European Court held that denying non-residents access to regional allowances breached free movement of capital. Ley 26/2014 responded by extending regional rules to EU and EEA residents, and explicitly did not reach beyond them. Then the Spanish Supreme Court, in judgment 242/2018 of 19 February 2018 and further rulings that March, held that third-country residents are covered too, because the free movement of capital provision protects capital movements with third countries generally. The claimant in that case lived in Canada.
On its face the reasoning is not confined to EU or EEA residents. The 2018 rulings were never framed as depending on EU membership, and Canada was already outside the EU. But we could not find a Spanish ruling or binding consultation from after 2021 that names UK residents specifically, so we are not going to state it as settled. Many published guides state it flat. Take specialist advice on the point rather than a webpage's word for it, ours included.
The will that chooses English law, and what that choice does not reach
Many British residents in Spain have made a will electing English law to govern their estate. The election is real and it is available: under Article 22(1) of EU Regulation 650/2012, a person may choose the law of the State whose nationality they hold to govern their succession as a whole. In Spain it displaces the forced-heirship rules that would otherwise reserve part of the estate for particular relatives.
It changes none of the tax set out above. Article 1(1) of the same Regulation says the Regulation does not apply to revenue matters. Succession law decides who inherits. Succession tax decides what each of them pays, and that is settled separately, by the group table and the coefficients. An estate can be distributed exactly as an English will directs and still produce a Group IV bill for the person receiving it.
That is the argument for a will that works across two jurisdictions, written with your Spanish notary and your UK solicitor rather than instead of them, so that the legal document and the tax position are looked at as one thing.
Where this leaves the position
Everything above is one estate with two ends, and most of the surprises come from reading about one end at a time. Our own work sits across that join: UK inheritance tax planning for people living abroad, cross-border retirement planning, and how investments are treated once you are resident.
9. Where you live in Spain changes the answer
Two taxes are set regionally, and the tables below run from a 99.9% rebate to none at all. English-language summaries routinely leave this out, or put it behind a form.
Wealth tax
An annual tax on net assets, under Ley 19/1991, accruing on 31 December each year. It is a permanent tax, despite frequently being described as temporary.
The state defaults, which apply where a region has not legislated its own:
A state scale of eight brackets from 0.2% to 3.5%, the top bracket starting above 10,695,996.06 euros
A personal allowance of 700,000 euros
A main residence exemption of up to 300,000 euros
Residents pay on worldwide net assets. Non-residents pay on Spanish-situs assets only.
Regions can vary the allowance and can rebate the tax, and they have gone in opposite directions. Some rebate it to nothing. At least one sets a materially lower allowance than the state default and applies its own full scale.
The solidarity tax on large fortunes
A national tax introduced by Ley 38/2022 that sits on top, aimed at very large net wealth. Its design is what makes the regional rebates less generous than they look: it gives a credit for wealth tax actually paid to your region. So in a region that rebates wealth tax to zero, there is nothing to credit, and the solidarity tax collects for the state what the region waived.
The bands, from Article 3 of Ley 38/2022:
Net wealth above the allowance | Rate |
|---|---|
3,000,000 to 5,347,998.03 euros | 1.7% |
2.1% | |
Above 10,695,996.06 euros | 3.5% |
There is a 700,000 euro exempt amount, which puts the effective entry point at roughly 3.7 million euros of net wealth. Royal Decree-Law 8/2023 made the tax open-ended, extending it "so long as the review of wealth taxation has not taken place". It is not a two-year measure and it has not been allowed to lapse.
What the regions did next
We could not find this covered anywhere in the competitor set, and it changes who the rebates actually help.
The regions did not simply keep their rebates and let the state collect. Several rewrote the rebate itself as a variable amount equal to the solidarity tax you would otherwise owe. Madrid did this with effect from 1 January 2023. Andalucía runs a transitional version of the same mechanism. Murcia, as it turns out, has no flat 100% rebate at all: it has only the variable one. Galicia's 50% rebate is reduced by the solidarity tax liability for the same year, with a floor of zero.
The effect cuts the opposite way to the headline:
Below the solidarity tax threshold, you get full regional relief and pay nothing.
Above it, the regional rebate shrinks by exactly the amount the state is about to take, so the saving stops rather than growing with the estate.
So "Madrid has no wealth tax" is true for most people and materially incomplete for anyone with net wealth above roughly 3.7 million euros, which is the population most likely to have chosen their region on tax grounds in the first place. Any guide stating these as unconditional 100% rebates is overstating the benefit for exactly the readers relying on it most.
The regional comparison
Checked against primary sources on 13 August 2026: the BOE consolidated texts, each community's own tax authority, the Agencia Tributaria's Patrimonio manual, and the Ministry of Finance's compilation of regional measures. Regional rules change several times a year. Re-check before relying on any row.
Wealth tax
Community | Allowance | Relief | Note |
|---|---|---|---|
Madrid | State default | Variable, nets to 100% | Variable since 1 Jan 2023. Shrinks by the solidarity tax above the threshold |
Andalucía | State default | 100%, plus a transitional variable regime | The variable regime governs anyone who would owe the solidarity tax |
Región de Murcia | State default | Variable only | No flat 100% statute, unlike Madrid or Andalucía |
Galicia | State default | 50%, net of the solidarity tax | Reduced by that year's solidarity tax liability, floor of zero |
Illes Balears | 3,000,000 euros | None | Far above the state default. Ley 12/2023 of 29 December, effective 1 January 2024 |
Comunitat Valenciana | 1,000,000 euros | None | Raised from 500,000. Ley 5/2025 of 30 May |
Catalunya | 500,000 euros | None general | Below the state default. Top rate 3.48% above 20 million euros |
Canarias | State default | None | Full state scale |
Inheritance tax, for a spouse or an adult child (Group II)
Community | Position |
|---|---|
Madrid | 99% rebate |
Andalucía | A 1,000,000 euro reduction and a 99% rebate on what is left. The two stack |
Comunitat Valenciana | 99% rebate, backdated to 28 May 2023 |
Canarias | 99.9% rebate, and it reaches Group III as well |
Catalunya | The spouse alone gets a flat 99%. Everyone else tapers |
Asturias | A 300,000 euro reduction and no general rebate at all. Top rate 36.5% |
Catalunya and Asturias are the rows that most often catch a British reader out.
Catalunya is widely reported as giving 99% to spouses and children. It does not. Only the spouse or registered stable partner gets a flat 99%. Children under 21 taper from 99% down to 20% across a bracket scale, and adult children and other Group II beneficiaries taper from 60% to nothing at all above 3,000,000 euros. British buyers concentrate in Barcelona and along the Costa Brava, and an adult child inheriting a substantial Catalan estate is in a materially different position from the same child inheriting in Madrid.
Asturias has no general Group II rebate whatsoever. A 300,000 euro reduction, then the scale, to a top rate of 36.5%.
Not covered above: the remaining common-regime communities were not part of this verification pass and are deliberately absent rather than estimated. Navarra and the Basque Country run their own foral regimes entirely, with their own scales and allowances, and are outside this comparison altogether.
The same question asked one country west produces a different answer again, and Portugal's own regime has changed since most of what is written about it was published. We have covered that separately in Portugal after NHR.
Reading these tables against your own numbers, with the earlier sections in the same picture, is what we sit down and do with people deciding where in Spain to live, and with people who decided years ago and have not looked since. If a row in either table surprised you, it is worth a conversation.
10. If you are also a US person
Everything above assumes one passport that matters. If you are a US citizen or green card holder living in Spain, there is a third system in the room, and it follows citizenship rather than residence, so moving does not switch it off.
The American filing regime runs on its own calendar regardless of where you live, and none of the Spanish declarations in section 11 displace it. Our worked example of how the two sit together is set in Madrid: Americans living in Spain have a second filing regime.
The exposure runs the other way too: a US person does not leave the US estate tax system by being resident in Spain, and a non-US person holding US-situs assets can be inside it without ever having lived there. It runs alongside the Spanish and UK positions in section 8 rather than replacing either: US estate tax exposure.
This side of our work is handled by the Paratus Wealth US team. If this section is you, say so when you get in touch, and the conversation starts in the right place.
11. What you have to declare, and what happens if you do not
Modelo 720
An informational return of overseas assets. It raises no tax by itself. Three categories: foreign bank accounts, foreign securities, rights, insurance and income, and foreign property. The threshold is applied per category at 50,000 euros, not to the total, and once you have filed you file again when a category grows by more than 20,000 euros.
The window is 1 January to 31 March for the previous year.
Modelo 720 has not been abolished. A great deal of what is written online says or implies it was. What actually happened is narrower.
In C-788/19, judgment of 27 January 2022, the European Court struck down Spain's penalty regime as disproportionate: the 150% proportional fine, the fixed penalties, and the rule that let the authorities act with no time limit at all, reopening years that were otherwise closed. Ley 5/2022 of 9 March 2022 removed them.
The filing obligation survived untouched. Non-compliance is now penalised under the ordinary regime for informational returns, Articles 198 and 199 of the General Tax Law, the same treatment as any other informational filing. That is very much less severe, and it is still an obligation.
Modelo 721 does the same job for virtual currencies held abroad, on the same threshold logic and the same January-to-March window.
The exit tax, if you leave again
Article 95 bis catches people leaving Spain who have been resident for 10 of the previous 15 tax periods and hold shares worth either more than 4,000,000 euros in total, or more than 1,000,000 euros in a company where they hold over 25%. The unrealised gain is brought into the final Spanish return.
Moving to another EU or EEA state defers it. The charge only crystallises if within ten years you sell, lose EU/EEA residence, or stop meeting the reporting conditions. Survive the ten years and it lapses entirely.
More than one calendar
Between Modelo 720, the property return in section 6 and a UK self-assessment that may not have stopped when you left, most people arriving in Spain end up with more than one filing calendar to keep. Ours is a service that keeps track of Spanish and UK filing obligations together rather than one at a time.
Six filing dates run through this guide, and they do not fall in the same month as each other or as the UK's. They are on one page, with the decisions they depend on, in Spain: the decisions, and the dates they expire. No charge, and no obligation.
12. The assumptions that can cause the most trouble, in the order they arise
Assuming the UK's 25% tax-free treatment survives Spanish residency. It does not. Section 3.
Assuming there is a split year. There is not. Arriving in November can pull the whole calendar year into Spanish scope. Section 2.
Counting days and ignoring the other two tests. Economic interests and the family presumption each stand alone.
Subtracting trips abroad from the 183 days. Sporadic absences count against you unless you can certify tax residence elsewhere.
Confusing 90/180 with 183. Different rules, different authorities, different clocks.
Missing the Modelo 149 window. Six months, non-extendable, and it costs six years. Section 1.
Assuming an unmarried partner is treated as a spouse. An unregistered partner sits in Group IV: no state allowance, and a multiplier of up to 2.4. Section 8.
Believing "domicile" still governs UK inheritance tax. It has not since 6 April 2025.
Assuming a Malta QROPS still works from Spain. Not since 30 October 2024. Section 3.
Reading a guide that does not say when it was written, including this one once a year has passed. The review date is at the top for that reason.
If you want to check where you actually stand
Most of the ten above are decided by facts you already know: which years you were UK resident, which community you live in, whether a partnership was registered, when a pension was drawn. None of them can be worked out from a webpage, because a webpage does not know any of that.
You can see how a cross-border pension review works, or speak to someone about your own position and about the Spanish and UK professionals it makes sense to have alongside us.
Either way, the first conversation is a conversation, not a recommendation: get in touch.
The dates in this guide, on one page, in the order they arrive. Spain: the decisions, and the dates they expire. No charge, and no obligation.
Frequently asked questions
Does the 25% tax-free pension lump sum stay tax-free if I move to Spain?
No. Spain does not recognise it. Binding consultation V0982-19 of 8 May 2019 held that the entire withdrawal is employment income under Article 17.2.a) of the Spanish income tax act, with no return-of-capital element and no exempt slice. The UK's tax-free treatment applies only while you are UK tax resident.
Can I keep my ISA if I move to Spain?
The account can usually stay open, but once you are no longer UK resident you can generally not add new money to it, the UK tax shelter means nothing to Spain, and income and gains inside it become taxable in Spain as ordinary savings income.
Will my UK investment platform keep my account?
Possibly not. Many platforms restrict or close accounts once the owner's address is outside the UK; some allow sells only. It is provider policy rather than law, so ask your own platform in writing before you move.
How many days can I spend in Spain before I become tax resident?
More than 183 days in a calendar year makes you resident, but the day count is only one of three tests. You can be resident on fewer days if the main base of your economic interests is in Spain, or if your spouse and minor children habitually live there.
Does Spain have a split tax year like the UK?
No. Residence is determined for the whole calendar year. If you become resident partway through, Spain looks at your worldwide income for that entire year.
Do trips out of Spain reduce my day count?
Generally not. Sporadic absences are added back into the count unless you can prove tax residence in another country, normally with a certificate from that country's tax authority.
Is Modelo 720 still required?
Yes. The European Court struck down the penalty regime in January 2022 and Ley 5/2022 removed it, but the obligation to file was untouched. Non-compliance is now penalised under the ordinary rules for informational returns rather than the old special regime.
Can I use the Beckham Law if I am retiring to Spain?
Almost certainly not. It is a work-linked regime for employees, remote workers, directors, certified entrepreneurs and qualifying highly-skilled professionals. Retirement income does not qualify a person for it.
I am a British citizen living in Spain. Am I still exposed to UK inheritance tax?
Very possibly. Since 6 April 2025 the test is long-term residence: 10 of the previous 20 tax years brings your worldwide estate into UK inheritance tax, and after you leave that status persists for between three and ten years depending on how long you were resident. UK-situated assets stay in scope permanently regardless.
My partner and I are not married. Does that matter in Spain?
Enormously, and far more than in Britain. An unmarried, unregistered partner falls into Group IV for Spanish inheritance tax: no allowance at all, and a multiplier of up to 2.4 applied to the bill. Several autonomous communities treat a registered pareja de hecho as Group II. Whether a partnership is registered, and in which community, changes which group applies.
Who actually pays Spanish inheritance tax?
Each beneficiary, on their own share, at a rate set by their relationship to the deceased and their own existing wealth. Not the estate. And generally before the assets are released, which is a liquidity problem rather than a paperwork one.
Can I still transfer my UK pension to a Malta QROPS from Spain?
You can, but since 30 October 2024 the 25% Overseas Transfer Charge applies. The EEA and Gibraltar exclusion was removed on that date and the remaining same-country exclusion does not help you, because you are in Spain and the scheme is in Malta.
Is my NHS pension taxed in the UK or in Spain?
This one is genuinely unsettled in the available guidance. Government service pensions stay UK-taxable under Article 18 of the treaty, and sources disagree about whether all NHS pensions qualify. Get confirmation for your specific scheme rather than relying on a general answer.
Sources
Spanish law and guidance: Ley 35/2006 (income tax), Articles 9, 93 and 95 bis, and the fifty-fifth additional provision as amended by Real Decreto-ley 16/2025 of 23 December (BOE, 24 December 2025); Ley 19/1991 (wealth tax), Articles 1, 4, 28 and 30; Ley 29/1987 (inheritance and gift tax), Articles 20, 21 and 22; Ley 38/2022 (solidarity tax) and Real Decreto-ley 8/2023; Ley 5/2022; Ley 28/2022; the consolidated text of the non-resident income tax act, Articles 24.6 and 25.1.a); Agencia Tributaria practical manuals and published guidance on residence, the Article 93 regime, Modelo 720 and Modelo 210; Dirección General de Tributos binding consultation V0982-19.
European and UK: Regulation (EU) No 650/2012 on succession, Articles 1(1) and 22(1); Court of Justice of the European Union, C-788/19 and C-127/12; Tribunal Supremo 242/2018; the UK-Spain Double Taxation Convention 2013, Articles 4, 10, 11, 13, 17, 18 and 22; HMRC Inheritance Tax Manual IHTM47020 and IHTM27121; HMRC form Spain-Individual; HMRC Pensions Tax Manual on the Overseas Transfer Charge; UK government guidance on healthcare in Spain (the S1 arrangement). The passages on platform, insurer and visa practice describe provider policy and administrative arrangements, carry no figures, and say so in the text.
Related guides
UK inheritance tax: residence, not domicile What changed on 6 April 2025, and who it reaches.
SIPP or QROPS The two routes for a UK pension, and what October 2024 changed.
Life after NHR: Portugal The same questions, a different country.
Our own pages on the two pension routes: how the Overseas Transfer Charge works and keeping a UK pension in a SIPP.
Paratus Wealth does not offer services to UK residents.
This guide explains how published rules work. It is not tax, legal or financial advice, and no action should be taken on it without advice specific to your circumstances.
Neither Paratus Wealth nor its Senior Partners provides tax, accounting or legal advice.
Spanish regional tax rules change frequently; figures are stated as at August 2026 and should be re-checked before you rely on them.
Paratus Wealth US team members act as investment adviser representatives of Beacon Global Advisor Network, LLC (BGAN), an investment adviser registered with the US Securities and Exchange Commission.
Paratus Wealth is not itself registered with the SEC as an investment adviser. Review BGAN's relationship summary (Form CRS) and learn more at Investor.gov/CRS. This article is information and general education only. It is not tax, legal or investment advice, and it does not establish any advisory relationship. Reporting duties, thresholds and penalties depend on individual circumstances and change over time; a qualified US tax professional should assess any specific situation.
Disclaimer: Some of the content of this communication was provided by third parties of Paratus. We have not verified the information contained herein, but we believe the content is reliable. None of this content should be construed as legal, accounting or tax advice. Tax laws are complex and often have highly-individualized requirements, you should seek the advice of a competent tax professional if you have specific tax questions.
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