Taxation on Mortis Causa Trust in Spain (for non‑residents)

The concept of a Mortis Causa Trust in Spain often confuses families who come from common‑law countries where trusts are routine estate‑planning tools. Spain is a civil‑law jurisdiction and does not create trusts under domestic law, yet Spanish notaries and courts routinely give effect to foreign instruments and, more importantly, allow you to replicate many trust‑like outcomes using Spanish mechanisms. This long‑form explanation clarifies the legal context, sets realistic expectations about recognition and limits, explores the Spanish tools that mimic control and protection, and highlights the tax and practical issues that arise when beneficiaries live in Spain or when Spanish assets are involved. If you want the benefits associated with a Mortis Causa Trust in Spain, you can often achieve them with the right mix of instruments and careful drafting.

Start with the legal reality: there is no home‑grown trust statute in Spain. That does not mean your planning goals are impossible; it simply means you must translate them into civil‑law language. A classic solution is the usufruct/bare ownership split, where the surviving spouse receives a life usufruct over a home while children receive the bare ownership, aligning use and protection much like a life‑interest trust. Wills can include conditional legacies, substitutions, and powers that stage distributions over time or tie them to events such as a child reaching a certain age, again producing trust‑like control without a domestic trust. These instruments are familiar to Spanish notaries and registries, which makes execution and asset registration comparatively fluid.

Recognition of a foreign trust is possible when it is validly constituted under its governing law and presented with the right formalities: apostilles or legalizations, sworn translations, and documents that clearly identify the settlor, trustees, protectors (if any), beneficiaries, and powers. Spanish authorities will still apply mandatory local rules such as those designed to protect certain heirs in some scenarios. This means that while a foreign trust can be recognized as to form, the way it distributes Spanish assets must not violate local rules. Mapping these interactions in a bilingual memorandum attached to your will or trust paperwork helps banks, registrars, and heirs understand the plan, speeding up administration at a difficult time.

Tax consequences require particular care. If beneficiaries are Spanish tax residents, distributions they receive from a foreign trust may be taxed depending on their legal nature—some payments resemble income, others look like capital transfers more akin to inheritances or gifts. If Spanish real estate sits inside a foreign trust, additional steps are needed at the Land Registry, and many families choose to hold Spanish property directly with usufruct structures instead of through a trust to avoid registral complexity. None of this prevents you from reaping the core benefits of a Mortis Causa Trust in Spain; it simply means you should align legal design and tax reporting from the outset.

Practically, the best projects are the ones that document the entire mechanism for Spanish institutions. Provide a summary of the governing law, copies of the deed and any letters of wishes, trustee appointment and resignation mechanics, and a distribution schedule. Explain in plain terms how the arrangement works in Spain: who signs at the notary, who pays which taxes, and how heirs evidence their rights. By doing so, you reduce friction at banks and registries and ensure the foreign instrument lives comfortably alongside Spanish procedures. With this preparation, families achieve the intended control and protection of a Mortis Causa Trust in Spain without procedural surprises.

Design a Mortis Causa Trust in Spain strategy that actually works under Spanish law and practice. Speak to a lawyer today: our contact page • Email: taxlegalspain@gmail.com • Tel: +34 ‪644121802‬ . Submit your case at our contact page