Succession planning for Spain–UK businesses requires alignment of two distinct legal and tax frameworks.
Without proper planning, business owners risk avoidable tax exposure, disputes between heirs and disruption to day-to-day operations.
Used correctly, the EU Succession Regulation, often referred to as Brussels IV, and Spanish family business reliefs can help preserve continuity and value across generations.
The Cross-Border Challenge: Spain Meets the UK
For businesses with interests in both the UK and Spain, passing ownership or control involves more than signing a standard Will.
Overlapping legal and tax regimes mean decisions in one jurisdiction can have unintended consequences in the other.
Spain’s Forced Heirship Rules and English Testamentary Freedom
A key issue in Anglo-Spanish succession planning is the contrast between testamentary freedom in England and Wales and Spain’s forced heirship (legítima) rules.
In broad terms, Spanish law can reserve a significant part of an estate for close family members, particularly children, which may conflict with a business owner’s intended succession strategy.
For English and Welsh nationals with assets or residence in Spain, the EU Succession Regulation can be an important planning tool. A properly drafted Will can include a choice of law clause electing for the law of nationality to govern succession, rather than the default law of habitual residence.
Coordinated Wills and advice in both jurisdictions are essential to ensure that this election is effective and does not create unintended conflict between documents.
Spanish Family Business Relief
Many business owners assume passing company shares to the next generation will be straightforward and tax efficient. In Spain, however, family business relief is highly conditional. Spanish Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones, or ISD) can provide a substantial reduction for qualifying transfers, but only with careful preparation and evidence.
Although requirements vary and regional rules may improve the position, typical conditions include:
- Genuine economic activity: the company should be carrying on a genuine trade or business, rather than merely holding passive investment assets.
- Minimum shareholding: the relevant individual or family group must meet the applicable ownership threshold.
- Management involvement and remuneration: a member of the family group will usually need to carry out management functions and receive remuneration that satisfies the relevant income test.
If these conditions cannot be demonstrated at the relevant time, relief may be reduced or lost. Heirs may also need to retain the shares and satisfy conditions for a prescribed period after the transfer.
In England and Wales, broadly comparable inheritance tax relief may be available through Business Relief, often still called Business Property Relief. The scope, conditions and operation differ from Spain’s regime, so both should be considered together in any cross-border succession plan.
Navigating Double Taxation
There is no UK–Spain double taxation treaty specifically covering inheritance tax.
The UK generally taxes by reference to the estate, while Spain generally taxes the individual beneficiary. Without careful planning, the same asset may fall within both systems.
Where the same asset is taxed in both countries, UK unilateral relief may be available, subject to the statutory conditions and evidence of the foreign tax paid. The availability and value of relief should be checked asset by asset.
To minimise exposure, business owners should compare lifetime gifting (inter vivos) with inheritance on death (mortis causa), taking into account UK tax consequences, Spanish state rules and the rules of the relevant autonomous region.
Conclusion: Protecting Value Across Generations
Succession planning between Spain and the UK is not simply administrative. It requires a coordinated strategy that joins two legal and tax systems and anticipates how decisions in one jurisdiction may affect the other.
For owners and families with assets in both countries, early planning can reduce forced heirship disputes, unexpected tax liabilities and business disruption. A Brussels IV choice of law election, properly structured corporate assets and coordinated Wills can make a significant difference.
A well-executed cross-border plan does more than protect wealth. It helps preserve control, support continuity and pass value to the next generation with confidence.
Please contact Yolanda Perez Berges at yolanda.perez@theburnsidepartnership.com for tailored cross-border legal and tax advice.
The Burnside Partnership combines specialist UK and Spanish legal expertise to help individuals, families and business owners protect their assets, plan confidently and navigate complex cross-border matters with clarity.
This article is for general information only and should not be relied upon as legal or tax advice. Rules are subject to change and may vary significantly between Spain’s autonomous regions.