Inheritance Tax Mallorca 2026: The Post-Brexit Rules for British and Non-EU Owners

Why This Is Different From a Standard Succession Guide

Inheritance tax Mallorca planning looks different once the United Kingdom left the EU. British owners of Mallorca property are no longer bound by the EU's own succession framework, yet Spain still applies it to them — and the tax treatment of non-EU heirs has changed significantly in the last decade. This guide focuses specifically on where British and other non-EU owners now stand, rather than the general succession rules that apply to EU nationals.

Brussels IV Still Applies to You, Even Though the UK Opted Out

EU Regulation 650/2012, known as Brussels IV, determines which country's succession law governs your estate. The UK never adopted it and, after Brexit, still cannot opt in. That does not exclude British owners from its effects: Spain applies Brussels IV to every death connected to an EU member state, regardless of the deceased's nationality. If you are a British national habitually resident in Spain, Spanish notaries and courts will still apply Brussels IV to your Spanish estate. In practice this means you can still make a choice-of-law election, known as a professio iuris, naming English, Scottish or Northern Irish law to govern your succession instead of Spanish law. Without that election, the default rule takes over: the law of your habitual residence at death applies, which for most long-term Mallorca residents means Spanish law, including forced heirship.

Making the Election

The election has to be explicit, in a Spanish will, along the lines of: "I elect that the law of England and Wales shall govern the succession of my entire estate, in accordance with Article 22 of Regulation (EU) No. 650/2012." It should be mirrored in any UK will you hold, with both documents stating clearly that they do not revoke each other. The Spanish will should be signed before a Spanish notary and registered with the Central Registry of Wills in Madrid, so your heirs can locate it without delay. Since the UK left Brussels IV, British-issued documents around succession (like a Grant of Probate) still need to be used with an apostille for EU proceedings, because the European Certificate of Succession is not something UK authorities can issue — your heirs would instead rely on a Spanish notarial process to establish their entitlement.

The Tax Side Is Separate From the Legal Side — and This Is Where the Real Change Has Happened

Brussels IV only decides whose succession law applies. It has no bearing on how much inheritance tax is owed. That's governed by Spain's national Impuesto sobre Sucesiones y Donaciones (ISD), applied regionally, and it is here that non-EU heirs used to be at a real disadvantage. Until 2014, non-resident heirs — including anyone from outside Spain — were denied access to the favourable regional tax reductions that Spanish residents enjoyed, and were taxed instead under a much less generous national scale. A 2014 ruling from the Court of Justice of the European Union found this discriminatory for EU and EEA residents. A 2018 Spanish Supreme Court ruling then extended the same principle to residents of non-EU countries, on the basis that free movement of capital rules also apply to third countries. Law 11/2021 subsequently wrote this into Spanish legislation. The upshot for a British heir today: nationality and non-EU residence no longer block you from applying the same regional tax rules as a Spanish resident.

What That Means in the Balearic Islands Specifically

The Balearic Islands currently offer one of the most favourable inheritance tax regimes in Spain for close family. Since 18 July 2023, Group I and II beneficiaries — children, grandchildren, spouses and parents — have benefited from a 100% reduction on inheritance tax, meaning no tax is due at all on what they inherit. A further reform, Law 6/2025, took effect on 25 July 2025 and extended that same 100% exemption to lifetime gifts between the same close relatives, while also raising the reduction for Group III beneficiaries with no descendants of the deceased (siblings, nieces, nephews, aunts and uncles) from 50% to 60%, and for other Group III cases from 25% to 35%. Because of the 2018 Supreme Court ruling and Law 11/2021, a British heir living in London who inherits a Mallorca property from a parent can apply these same Balearic reductions — they are no longer restricted to Spanish residents. As a non-resident, you will also need to appoint a Spanish tax representative to file on your behalf and deal with the tax authority. It's worth noting that eligibility for the regional Balearic regime depends on specific residency and connecting-factor rules that a Spanish tax adviser should confirm for your particular situation, since the criteria are not always identical to the succession-law rules under Brussels IV.

A Separate Point: Wealth Tax, If Your Estate Is Larger

It's worth being clear that the Balearic Islands' generous treatment of inheritance is separate from Spain's ongoing wealth tax, which is a different, annual tax on net worth rather than a one-off tax on what's inherited. Spain's standard personal wealth tax allowance is €700,000, but the Balearic Islands have raised their own regional allowance to €3,000,000 per person, with a further €300,000 relief available on a main residence. This is relevant for larger estates: if you or your heirs hold significant assets in the Balearics, this separate wealth tax allowance — not the inheritance tax rules above — is what determines your annual liability while you're still alive, and it's worth reviewing alongside your succession planning rather than assuming the two systems work the same way.

What Happens if the Six-Month Deadline Is Missed

The inheritance tax declaration (Modelo 650) has to be filed within six months of death, and heirs cannot transfer or sell the property until it has been filed and any tax due has been paid. An extension of a further six months can be requested, but it must be applied for within the initial period. Missing the deadline without requesting an extension triggers the standard Spanish surcharge regime for late tax filings — a percentage penalty of the tax due that increases the longer the delay, plus interest — so it's worth building this into estate planning well ahead of time rather than leaving it to be discovered by heirs after the fact.

One Practical Upside Worth Knowing: The Capital Gains Step-Up

For heirs who may want to sell an inherited property rather than keep it, there's a genuinely helpful mechanic built into the system: the acquisition value used for future capital gains tax is the value declared for inheritance tax purposes at the date of death, not what the original owner originally paid decades earlier. In effect, the appreciation that built up during the previous owner's lifetime is not taxed again when an heir sells relatively soon after inheriting, which can make a real difference for property that has been held for a long time.

Practical Steps for British and Other Non-EU Owners

Get a Spanish will drafted with an explicit Brussels IV election if you want your national law, rather than Spanish forced heirship, to govern your estate. Coordinate it with any will in your home country so neither document conflicts with or unintentionally revokes the other. Separately, plan for the tax side: confirm your heirs' entitlement to Balearic reductions, budget for the six-month filing deadline, and note that property cannot be transferred or sold until that declaration is filed and any tax due is paid. Given how much has changed around non-resident tax treatment in the last few years, it's worth having a Spanish-qualified lawyer confirm your specific position rather than relying on older guidance.