Inheritance Germany–Spain

Is an inheritance in 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 through the unilateral crediting of the Spanish tax against the German one. For children and spouses, the Balearics regularly levy no Spanish tax at all, so Germany bears the whole burden; for siblings, nieces and nephews, the credit as a rule applies in full. The group that is genuinely taxed twice consists mainly of: distant relatives, friends, and unmarried partners without a registered civil partnership. A remainder always stays, however, whenever the Spanish tax turns out larger than the share of the German tax attributable to the Spanish assets — this can also affect siblings if the estate is small and entirely Spanish and the German allowances almost use it up.

How the calculation works

The calculator works through both legal systems one after another, in the same order the tax office follows. In doing so it assumes two things you should be aware of: that you, as the heir, are subject to unlimited tax liability in Germany — without this, no German allowance applies at all — 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. Then the German side: the total value received — Spanish and German assets combined — from which 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 subtracted: €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 the nearest hundred euros and taxed at the rate of its value band — the German tariff is a full-amount scale, so the rate applies to the whole acquisition, not just the part above the threshold. Directly above each value threshold, the hardship adjustment (Härteausgleich) cushions the jump.

Only after that comes the credit. It is capped: Germany gives up at most 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 the taxable foreign assets in the total taxable assets. Whichever of the two amounts is smaller 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 a separate line.

Two subtleties determine this fraction, and both are easily overlooked. First, not everything Spanish counts as foreign assets: what matters is the catalogue in the Bewertungsgesetz (Valuation Act), and a Spanish bank balance isn't listed there. If the deceased was resident in Germany, the Spanish tax on the account is therefore not creditable — if they weren't, it is. The calculator asks about this point instead of assuming it. Second, it apportions all deductions that can't be assigned to either part — the flat-rate estate costs allowance, general estate liabilities — proportionally between foreign and domestic assets; otherwise the denominator would shrink without the numerator shrinking along with it, and the maximum credit amount could exceed the German tax.

The same applies to the personal allowance. The law doesn't specify how it is to be split between the foreign and domestic portion. We're being transparent about our interpretation: the calculator apportions it proportionally, and it then cancels out of the fraction, so the ratio is simply that of the asset values after deducting the debts belonging to each. This is the only interpretation under which the share never exceeds one. The tax authorities may handle this differently as a matter of policy; in that case your maximum credit amount will come out differently than here. Crediting also requires that the German tax arose within 5 years of the Spanish tax arising.

Worked examples

We deliberately don't reproduce figures here. The calculator above shows ready-made example cases that you can click on and then adjust field by field to match your situation — the finca, the German assets alongside it, an outstanding mortgage, the relationship between the parties. Every line of the result is labelled: Spanish tax, German tax before crediting, maximum creditable amount, amount actually credited, remaining double taxation. This way you see not only what's payable at the end, 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 expressly recognises registers from other EU member states. A civil partnership registered in Germany therefore counts. 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 frameworks 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're treated as an unrelated third party, with the highest tax class and the smallest allowance. Because the Spanish tax then exceeds the German tax, a significant part of it finds no basis for crediting — the excess. The calculator lists both variants as separate options; compare them against each other before you write your will.

What the calculator deliberately doesn't cover

• Support allowance for spouses and children (§ 17 ErbStG): It depends on the capital value of the untaxed survivor's benefits, which no one knows without a pension notice. It can further reduce the German tax — so the calculator tends to overstate rather than understate here.
• Tax exemption for the family home (§ 13 ErbStG): It also applies to a property located in the EU, but requires that the deceased 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 aggregated with the inheritance. Anyone who has already transferred assets during their lifetime should factor this in.
• Reduction for multiple acquisitions (§ 19 Abs. 2 ErbStG): The provision requires a double taxation agreement that assigns only part of the assets to German tax. There is no such agreement covering inheritances with Spain, so the rule doesn't apply here.
• Plusvalía municipal — the municipal tax on the increase in land value, due whenever ownership changes — and the other Spanish incidental costs of the inheritance such as notary, land registry and translations. These do not fall under the offsetting rule of § 21 ErbStG and are not included here.

Deadlines and forms

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

Spain: Inheritance tax is declared via 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 request must be submitted in good time before the original deadline expires — if you miss it, the deadline simply runs out.

Germany: Here, initially no declaration obligation applies, but a notification obligation: You must notify the tax office of the acquisition within three months from the point at which you became aware of it (§ 30 ErbStG). The tax office will only request a tax return once it asks you to file one. For the offsetting, you'll later need the Spanish tax assessment 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 form the basis of the calculation:

• who is subject to unlimited tax liability at all, § 2
• how the taxable acquisition results from the accrual of assets and the deductible estate liabilities, § 10
• how the relationship is translated into tax classes, § 15
• what personal allowance follows from this, § 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 Valuation Act (Bewertungsgesetz) in its § 121.

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

And the foundation of the whole construction, namely the absence of a foundation: the double taxation agreement between Germany and Spain of 3 February 2011 (reference BOE-A-2012-10212) exhaustively lists in its Article 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 which version each individual figure is based on. The calculator does not replace tax advice — in an inheritance case spanning two legal systems, it's worth the money.

Frequently asked questions

Related calculators

If it's just about the Spanish side, it's better to calculate 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 is best advised to compare the result with what applies for a lifetime transfer — the figures are often closer together than you'd think.