Special deferrals for Spanish Inheritance and Gift Tax

Clarify your doubts by consulting your particular case

Spanish Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones, ISD) is administered by the State or, where applicable, the competent Autonomous Community. The competent tax authority and applicable regional rules must be checked in each case. The following are special rules in the state legislation, in addition to the general rules on deferrals and instalments.

Inheritance-related tax assessments

For assessments issued by the tax authority as a result of a death, Article 38 of Law 29/1987 provides a special deferral of up to one year if the estate has insufficient cash or readily realisable assets and the application is filed before the statutory payment period expires. Late-payment interest applies. The special one-year deferral does not require security. The law also allows payment in up to five annual instalments under the same circumstances, subject to sufficient security, and in certain cases a deferral until the heirs or other successors are identified.

This special Article 38 regime must not be applied automatically to self-assessments. In judgment 1297/2025 of 15 October 2025 (ECLI:ES:TS:2025:4365), the Supreme Court held that Article 38 applies only where the tax is administered under the return-and-assessment system. Article 37 and the general collection rules apply under both that system and self-assessment. If a self-assessment is filed late, the Court held that a deferral or instalment application is treated as filed within the voluntary payment period only if it is submitted together with the late self-assessment; it may be rejected as inadmissible if it was not filed before or jointly with that self-assessment. The ruling also rejected the regulatory five-month limit for the case before it as contrary to the statutory deadline. The applicable filing route and deadline should therefore be checked carefully.

Family businesses and the main residence

Article 39 of Law 29/1987 allows an application made before the statutory payment deadline or, where applicable, the deadline to file the self-assessment to defer qualifying tax assessments for up to five years from the end of the payment period. It covers transfers by inheritance, legacy or gift of an individual business engaged in an industrial, commercial, craft, agricultural or professional activity, and qualifying shareholdings in entities eligible for the relevant exemption under the Wealth Tax Law. Sufficient security is required, but no interest is payable during the deferral. After the five-year period, payment may be spread over ten six-monthly instalments on the same conditions, with statutory interest.

The same regime applies to tax assessments resulting from inheritance of the deceased’s main residence when the successor is the spouse, an ascendant or descendant, or a collateral relative over 65 who lived with the deceased during the two years before death. There is a textual discrepancy between Article 39 of the current Law (five years and ten six-monthly instalments) and Article 85 of the Inheritance Tax Regulation, whose text still refers to three years and seven instalments. This page follows the Law; the competent tax authority should be consulted about the procedure.

Life insurance paid as an annuity

Where the deceased was the policyholder of an individual life policy or the insured under a group policy and the beneficiary receives the benefit as an annuity, the beneficiary may request payment by instalments of the corresponding tax: over the annuity’s term if it is temporary, or for up to 15 years if it is for life, provided the surrender right is not exercised. No security or late-payment interest is required. If the annuity ends, outstanding instalments cease to be payable, unless the surrender right is exercised.

Legal basis: Articles 37–39 of Law 29/1987 on Inheritance and Gift Tax; Articles 63, 81–85 bis and 90 of Royal Decree 1629/1991 (Inheritance and Gift Tax Regulation); Article 37 of the General Tax Law and the general collection rules. Case law: Supreme Court judgment 1297/2025, 15 October 2025, ECLI:ES:TS:2025:4365.