Inheritance Germany–Spain

Is inheritance on Mallorca taxed twice?

Mostly not — at least not in the way the worry suggests. There is no agreement between Germany and Spain on inheritance tax, so relief runs solely via the unilateral crediting of the Spanish tax against the German one. For children and spouses, no Spanish tax at all is usually incurred in the Balearics, so Germany bears the entire burden; for siblings, nieces and nephews, the credit generally applies in full. One group is genuinely burdened twice: distant relatives, friends and unmarried, unregistered partners. A remainder always stays, however, whenever the Spanish tax turns out higher than the share of German tax attributable to the Spanish assets — this can even affect siblings if the estate is small and entirely Spanish and the German allowances almost use it up. This relief, too, is tied to a condition: for real estate, the value declared in the Escritura pública — the notarial deed — may exceed the Valor de referencia (the cadastral reference value) by no more than a fifth, otherwise it is lost entirely (Art. 36.2 and 36 bis.2 Decreto Legislativo 1/2014). If it lapses, the Spanish tax rises — and because Germany credits it, the burden shifts between the two states without the total necessarily changing.

How the calculation works

The calculator works through both legal systems one after another, in the same order the tax office does. In doing so it assumes two things you should know: that as heir you are fully liable to tax in Germany — without this, not a single German allowance applies — and that the Spanish reference value of the property corresponds to its fair market value, which is what German law applies.

First the Spanish side: the inheritance tax (Impuesto sobre Sucesiones y Donaciones, ISD) on the assets located in Spain, including the Balearic tax reduction (bonificación), which deducts almost everything again for the closest family. This, too, requires that for real estate the value declared in the deed exceeds the reference value by no more than a fifth; otherwise it is lost. Then the German side: the total accrued assets — Spanish and German assets combined —, from which the estate liabilities and the flat-rate allowance for funeral and administration costs of €15,000 are deducted, which the calculator attributes in full to a single heir. From the remaining amount, the personal allowance is deducted: €500,000 for spouses and registered civil partners, €400,000 for children, and for anyone who is not family within the meaning of the law, only €20,000. What remains is rounded down to full hundred euros and taxed at the rate of its value bracket — the German tariff is a full-amount scale, so the rate applies to the entire acquisition, not just the part above the threshold. Directly beyond each value threshold, the tapering relief (Härteausgleich) cushions the jump.

Only after that does the credit come into play. It is capped: Germany only gives up the portion of its own tax that is mathematically attributable to the Spanish assets. The maximum amount is therefore the German tax multiplied by the share of taxable foreign assets in the total taxable estate. The smaller of the two amounts is credited — the Spanish tax actually paid or this maximum amount. Anything beyond that remains your burden; this is the credit shortfall, which the calculator shows as its own line.

Two subtleties decide this fraction, and both are easily overlooked. First, not everything Spanish counts as foreign assets: what matters is the catalogue of the Valuation Act, and a Spanish bank balance is not listed there. If the deceased was resident in Germany, the Spanish tax on the account is therefore not creditable — if they were not resident there, it is. The calculator asks this question rather than assuming it. Second, it distributes all deductions that cannot be assigned to either part — the lump-sum estate costs allowance, general estate liabilities — proportionally between foreign and domestic assets; otherwise the denominator would shrink without the numerator shrinking correspondingly, and the maximum amount could exceed the German tax.

The same applies to the personal allowance. The law does not specify how it is to be split between the foreign and domestic portions. We disclose our interpretation: the calculator distributes it proportionally, then it cancels out of the fraction, and the ratio is simply that of the asset values after deducting the respective associated debts. This is the only interpretation under which the share never exceeds one. The tax authorities may systematically handle this differently; in that case your maximum amount will turn out differently than here. A credit also requires that the German tax arose within 5 years of the Spanish tax arising.

Worked examples

We deliberately don't type out numbers here. The calculator above shows ready-made example cases that you can click on and then adjust field by field to your situation — the finca, the German assets alongside it, an outstanding mortgage, the degree of kinship. Each line of the result is labelled: Spanish tax, German tax before credit, maximum credit amount, amount actually credited, remaining double taxation. This way you see not only what ultimately has to be paid, but also at which point in the chain it arises.

Special cases

Registered civil partner or partner without a register entry

This is the case where things really get expensive, and it hinges on a single formality. The Balearics explicitly treat a registered civil partnership (pareja estable) the same as a spouse — for the deductions, for the group classification, for the pre-existing wealth coefficients and for the tax reduction. However, the provision requires registration in a public register, and it explicitly recognises registers of other EU member states. A civil partnership registered in Germany therefore counts as well. Germany treats it the same as marriage anyway, with the same tax class and the same allowance.

If the register entry is missing, the same person falls through both grids at once: in Spain they end up in the least favourable group, with the highest pre-existing-wealth coefficient and without any tax reduction. In Germany they count as an unrelated third party, with the highest tax class and the smallest tax-free allowance. Because the Spanish tax then exceeds the German one, a considerable part of it finds no offsetting basis left — the surplus. The calculator runs both variants as separate options; weigh them against each other before you write your will.

What the calculator deliberately does not cover

• Maintenance allowance for spouses and children (§ 17 ErbStG): It depends on the capital value of the untaxed survivor's benefits, which nobody knows without a pension notice. It can lower the German tax further — so the calculator tends to run too high here rather than too low.
• Tax exemption for the family home (§ 13 ErbStG): This also applies to a property located within the EU, but requires that the deceased actually lived in it themselves and that you continue to live in it yourself for ten years.
• Aggregation of earlier acquisitions (§ 14 ErbStG): Gifts from the same person within the ten-year period are added together with the inheritance. Anyone who has already transferred assets during their lifetime should bear this in mind.
• Reduction for multiple acquisitions (§ 19 para. 2 ErbStG): This provision requires a double taxation agreement that allocates only part of the assets to German tax. There is no such agreement covering inheritances with Spain, so the rule has no effect here.
• Plusvalía municipal — the municipal capital-gains tax on land value, due on every change of ownership — and the other Spanish incidental costs of the inheritance such as notary, land registry and translations. These do not fall under the credit provided for in § 21 ErbStG and are not factored in here.

Deadlines and forms

The two countries demand different things, and the deadlines are regularly confused.

Spain: Inheritance tax is declared using Modelo 650 — the Spanish inheritance tax return — with the ATIB (Agència Tributària de les Illes Balears), the Balearic tax authority. The deadline is six months from the date of death. It can be extended by a further six months, but the application for extension must be submitted in good time before the original deadline expires — if you miss it, the deadline simply lapses.

Germany: Here, initially no declaration obligation applies, but a duty to notify: you must notify the tax office of the acquisition within three months of the point at which you learned of it (§ 30 ErbStG). The tax office will only require a tax return once it asks you to submit one. For the credit you will later need the Spanish tax assessment notice and proof of payment; keep both, along with a translation.

Legal basis and status

On the German side, the ErbStG applies, the German law on the taxation of inheritances and gifts. These six provisions from it carry the calculation:

• who is unrestrictedly liable to tax at all, § 2
• how the taxable acquisition results from the accrual of assets and the deductible estate liabilities, § 10
• how the degree of kinship is translated into tax classes, § 15
• what personal allowance follows from that, § 16
• how the tariff is calculated and when its hardship adjustment applies, § 19
• under what conditions the tax paid abroad may be credited, § 21

The question of what actually counts as foreign assets is not answered by this law, but by the Bewertungsgesetz in its § 121.

Spanish side: the Balearic Decreto Legislativo 1/2014 with the autonomous deductions, coefficients and tax reductions, including the equal treatment of registered civil partnerships in its Artikel 60.

And the basis of the whole construction, namely the absence of a basis: the double taxation agreement between Germany and Spain of 3 February 2011 (reference BOE-A-2012-10212) lists exhaustively in its Artikel 2 the taxes covered — income and wealth taxes of both states. Neither the Spanish ISD nor the German inheritance tax is included. Inheritances are therefore not covered by the agreement, and so only unilateral crediting remains.

All amounts and rates in the calculator come from a maintained legal-status register; below the result you can see on which status each individual figure is based. The calculator does not replace tax advice — in the case of an inheritance spanning two legal systems, it is worth the money.

Frequently asked questions

Related calculators

If it's only about the Spanish side, you're better off calculating it directly there: what inheritance tax costs in the Balearics, with all the deductions and reductions of the island regulation. And anyone considering passing on the property during their lifetime should compare the result with that of what applies to a transfer between living persons — the figures are often closer together than one might think.