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The Spanish Inheritance Tax (Guide & Advice)

spanish inheritance tax friendly investments …
Below, Robin Beven answers some of your questions related to investments well-suited to the inheritance tax laws in Spain.

Robin’s a fully qualified, independent financial advisor – you can read all about him on this page … and fill in the form there with any questions you may like answered.

As you’ll see, Robin’s company is properly regulated and authorised in Spain, plus other European countries.

So, let’s read his answers to your questions …


I’ve read that it’s possible to reduce my Spanish Inheritance Tax (IHT) by taking a mortgage out on my property. How does this work?


For some time there have been schemes available to reduce Spanish Inheritance Tax liability by creating a loan on Spanish property.

The schemes generally allow you to take a lump sum and/or additional income. This is then covered by the bulk of the money ‘borrowed’, which is then invested to cover the interest due on the loan.

There’s the theory.

Extreme caution needs to be taken with these schemes.

The investment could be a deposit account or it could be a higher risk share based fund.

There is no doubt that there is the potential for real gains if the rate of return exceeds the interest payable but, as with all investments, there are few guarantees that this will be the case.

The problem is increased if too much money is lent to spend as you like, and thus less invested to cover and repay the loan interest.

Another consideration is the UK IHT position.

The invested part of the loan is likely to be in an offshore account/fund.

As most UK expats will retain their UK domicile, they could be subject to UK IHT. If this fund takes them over the IHT allowance, tax could be chargeable. If there is a property in the UK valued at €300,000 or more, it could all be subject to UK IHT.

Equity release schemes in the UK are treated with kid gloves. Everyone is involved prior to agreeing to this type of scheme.

Although things appear to be a little more relaxed in Spain, these schemes should be treated with the same amount of vigilance.




Over the years we have had a number of life assurance policies. When we left the UK we cancelled them, either to take some cash or just that we thought we didn’t need them any more. We have a mortgage here and we are aware of the potential Spanish Inheritance Tax problem. How simple is it to organise life assurance in Spain?



There are plenty of Spanish insurance companies who could arrange a policy for you.

Likewise, a British life assurer could be the answer.

Firstly, the policy is in English. I appreciate that there many British expats who are competent in Spanish. There are more than many who are not.

Secondly, the premiums can be cheaper than their Spanish equivalents and some Spanish policies increase premiums each year, somewhat like buildings insurance policies.

Thirdly, the offshore policy is likely to be more tax efficient as the benefits need not automatically fall into Spanish Inheritance Tax calculations.

There are a number of reasons to have life assurance including mortgages, income protection and Inheritance Tax.

After many years of seeing those with and without cover, the beneficiaries of those with cover seem to me to have been the most appreciative.

     Robin’s a professionally-qualified financial advisor, his
company having some 40 regulated advisors throughout
the EU. If you’d like to ask him a question, or contact
him to discuss financial or investment matters in
confidence, please fill in the short form on this page.




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