Thousands of families based in the UAE own a second home in Spain. Very few have thought about what their family would have to do if they died. The answer is usually more paperwork, more delay and more cost than people expect, but most of it can be planned away.
Which law decides who inherits
Spain applies the EU Succession Regulation. Its starting point is that the law of the country where you were habitually resident when you died governs your whole estate. For someone living in Dubai, that brings UAE succession law into the picture, and how Spanish notaries and courts apply it can be uncertain.
The regulation gives you a simple way to avoid that uncertainty: you can choose, in your will, for the law of your nationality to govern your succession. A British national can choose English law, for example, and leave the Spanish home as they wish rather than under Spanish forced heirship rules. This is why, for most foreign owners, forced heirship is not the real problem. Delay and paperwork are.
Worth checking. If you are a Spanish national, different rules apply based on your regional civil law. If you are a UAE national choosing UAE law, UAE fixed shares apply. Take advice on your own position.
Spanish inheritance tax for non-residents
Succession law decides who inherits. Tax is a separate question. Spanish inheritance tax is charged on the person who inherits, and heirs who are not Spanish residents are taxed on assets located in Spain, such as the property and any Spanish bank accounts.
For many years non-residents paid the higher state rates. Following a 2014 ruling of the Court of Justice of the European Union and later Spanish Supreme Court decisions, non-residents, including those outside the EU, can generally use the allowances of the Spanish region where the property is located. Several regions, including Andalucía and Madrid, offer very substantial relief for spouses and children, so the tax for close family can be much lower than people fear. Other heirs, such as siblings, nephews or friends, usually pay considerably more.
Separately, the town hall charges the municipal plusvalía on the increase in land value, and the heirs need a cadastral and market valuation of the property.
What your family will have to do
- Obtain the death certificate, apostilled and translated if issued outside Spain.
- Obtain a certificate from Spain's Registry of Last Wills to confirm whether you made a Spanish will.
- Each heir obtains a Spanish foreign identity number (NIE).
- If there is no Spanish will, have the foreign will translated, apostilled and supported by legal opinion, or obtain a declaration of heirs.
- Sign a notarised acceptance of inheritance in Spain, in person or through a power of attorney.
- File Spanish inheritance tax and plusvalía within six months of death, extendable by six months if requested in time.
- Register the heirs as new owners at the Land Registry, and only then sell or rent out the property.
Until this is done, Spanish bank accounts are usually frozen, and bills, community fees and local taxes still have to be paid.
Do you need a Spanish will?
It is not compulsory, but for most owners it is the single most useful step. A Spanish will covering only your Spanish assets, written so that it does not revoke your UAE or home-country will, lets a Spanish notary act without translations, apostilles and legal opinions. It is also the natural place to make an express choice of the law of your nationality.
Keep your wills consistent. A Spanish will, a DIFC or Abu Dhabi will for UAE assets and a home-country will can work well together if they are drafted with each other in mind.
When a holding structure makes sense
A will deals with who inherits. It does not stop the Spanish procedure. For people who are not Spanish tax residents and are buying a new Spanish home, holding it through a structure can remove that procedure altogether: if a RAK ICC Foundation owns a UAE company that owns the property, the founder's death does not transfer the Spanish property. The foundation's By-Laws set out who benefits, and its council carries on.
The limits matter. Spanish tax on rent and gains still applies. Payments from the foundation to beneficiaries who live in Spain can be taxed there as gifts. And moving a home you already own into a structure is treated as a disposal, which is usually expensive. Our guide to holding Spanish property through a UAE foundation explains the structure, the costs and who it suits.
A short checklist
- Make a Spanish will for your Spanish assets, with an express choice of the law of your nationality.
- Check your UAE and home-country wills are consistent with it.
- Keep the title deed, cadastral reference and Spanish tax records together, and tell your executors where they are.
- Consider giving a trusted person a Spanish power of attorney while you are alive.
- If you are about to buy, decide how to hold the property before you sign, not after completion.