The growing mobility of private individuals and families between Italy and Spain – driven by professional reasons, retirement, or real estate investment – requires legal and tax professionals to perform an in-depth analysis of cross-border dynamics. 

When an estate, family assets, or a corporate structure are split between the Italian and Spanish legal systems, one faces a significant tax and private law asymmetry. The main issue lies in an often-overlooked element: between Italy and Spain, there is no Double Taxation Convention in matters of inheritance and gift tax. 

To provide clarity, we have decided to analyze below the main operational points that lawyers and tax advisors must consider when advising clients with cross-border wealth. 

1. The double taxation trap on inheritances and gifts

Unlike income taxes (regulated by the Italy-Spain Convention ratified by Law 663/1980), inheritance and lifetime gifts lack a coordinating bilateral treaty. 

This leads to the simultaneous application of their respective national legislations: 

• In Italy: inheritance and gift tax applies on a worldwide basis (worldwide taxation) if the deceased (de cuius) or donor is resident in Italy at the time of death or transaction, with moderate rates (4%, 6%, 8%) and high tax-free allowances for direct line relatives (1 million euros). 
• In Spain: the Impuesto sobre Sucesiones y Donaciones (ISD / Inheritance and Gift Tax) taxes Spanish residents on any asset received worldwide (obligación personal / personal liability) and non-residents on assets located in Spanish territory (obligación real / real liability). 

2. Management of the tax credit

In the absence of an ad hoc treaty, the risk of double taxation is mitigated exclusively by unilateral internal tax credit mechanisms provided by the two legal systems (e.g., Art. 26 of the Italian TUSD and Art. 23 of the Spanish LISD). 

However, misalignments in tax taxable events, filing deadlines, and legal characterization of transactions often result in disputes or unrecoverable tax losses. 

3. Regional autonomies in Spain: a decisive variable

A fundamental aspect for tax advisors and lawyers is the strong territoriality of Spanish taxation. The ISD is a tax devolved to the Comunidades Autónomas (Autonomous Communities), which enjoy broad legislative authority to set tax reliefs and allowances (bonificaciones). 

Practical example: transferring a property located in Madrid or the Balearic Islands to a child residing in Italy (or vice versa) entails a radically different tax impact compared to the same transfer involving a property in Catalonia or the Valencian Community, where regional allowances and reductions follow different criteria. 

Furthermore, the case law of the Court of Justice of the EU (case C-127/12) and the subsequent reform of the LISD have aligned the treatment of EU/EEA residents who are non-residents in Spain, allowing them to apply the regulations of the Autonomous Community with which there is the strongest territorial connection. Properly identifying the connecting factor is therefore a key step. 

4. Applicable law to the succession: Art. 22 of EU Regulation 650/2012

On a strictly civil and notary level, Regulation (EU) No. 650/2012 constitutes the cornerstone for litigation management and estate planning. 

By default, the law applicable to the entire succession is that of the State in which the deceased had their habitual residence at the time of death (Art. 21). However, Art. 22 provides a fundamental planning tool (professio juris): 

Option to choose the national law

An Italian citizen residing in Spain can stipulate through a will that their succession be governed by Italian law. This option is particularly strategic to:

1. Derogate from the statutory forced heirship rules under Spanish civil law (which are particularly stringent in the common Civil Code and in certain regions such as Catalonia).
2. Maintain unity of the rules governing succession in cases where assets are spread across multiple countries.
3. Ensure legal certainty for the heirs regarding the interpretation of testamentary provisions.

5. Reconciliation among “Beckham Law”, Form 720, and corporate options

From the perspective of income and personal wealth planning for private relocating to Spain, the following must be taken into consideration: 

• Special regime for impatriates (so-calledBeckham Law, Art. 93 LIRPF): enables professionals and executives moving to Spain to opt to be taxed as non-residents (flat rate of 24% up to €600,000).
  • Point of attention: individuals under the “Beckham” regime are exempt from the requirement to submit Form 720 (Modelo 720 – declaration of overseas assets) and from Wealth Tax (Impuesto sobre el Patrimonio) regarding assets located outside Spain. 
• Real estate ownership (Individual vs. Company): choosing between holding Spanish real estate directly as Italian individuals or interposing corporate vehicles (e.g., Italian S.r.l. or Spanish S.L.) requires a careful prior evaluation, especially in light of rules on abuse of law, corporate tax residence (corporate inversion/foreign tax residence masking), and tax transparency. 

6. Conclusions

Legal and tax advice on the Italy-Spain axis cannot be based on the isolated application of individual national regulations. The lack of a bilateral treaty on inheritances and the coexistence of Spanish regional regimes require a multidisciplinary and integrated approach. 

For lawyers, the effective management of these cases requires three key actions: 

1. Preventive planning: inserting professio juris clauses [EU Reg. 650/2012] and structuring gifts prior to potential changes of residence. 
2. Real estate asset audit: mapping property locations to identify the relevant Spanish Autonomous Community. 
3. Full financial traceability: documenting cash flows between Italian and Spanish accounts to prevent disputes regarding indirect gifts or presumptions of undeclared income. 

Note: residence transfer operations, overseas property acquisitions, the establishment of cross-border corporate vehicles, and estate planning carry complex legal and tax implications, heavily influenced by the specific situation of the parties involved and the continuous evolution of regulations in both countries. 

Intervening ex post following disputes by the Tax Authorities (Italian or Spanish) or when a succession is already open significantly limits protection options and exposes parties to severe risks of double taxation or penalties. 

If you have assets, family, or business interests spread across Italy and Spain, we invite you to contact our Firm in advance by writing to: info@fiatlux.legal. Our professionals specializing in international law and cross-border taxation are at your disposal for a personalized analysis of your asset structure prior to initiating any transaction.