Excess Adjudication in Spanish Inheritance: ISD vs ITPO — When It Is Not a Donation

TSJ Galicia ruling 111/2026 clarifies that excess adjudication compensated across two hereditary estates is not a donation. Key implications for expats inheriting property in Spain.

When multiple heirs divide the assets of a deceased parent, the resulting shares rarely match perfectly. One heir may receive property worth more than their legal share — an "excess adjudication" (exceso de adjudicación). The critical question is: does Spain's tax authority treat that surplus as a taxable donation or as something else entirely?

A landmark ruling by the Tribunal Superior de Justicia (TSJ) of Galicia — Judgment 111/2026 of 12 February 2026 (Appeal 15428/2025) — has provided important clarity on this issue, with significant implications for anyone inheriting property on the Costa Blanca.

The Facts: Two Estates, Two Communities

Two siblings inherited from both parents. The father died in 1998 and the mother in 2019, creating two separate hereditary communities (comunidades hereditarias). In a single notarial deed titled "partial adjudication of inheritance," the siblings divided assets from both estates simultaneously.

The daughter received property from the father's estate worth more than her 50% share — an excess of €50,838.80. The Galician Tax Agency (ATRIGA) classified this surplus as a donation subject to Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones — ISD), arguing it was not compensated in cash.

The Court's Decision: Reciprocal Compensation Negates Donation

The TSJ of Galicia overturned ATRIGA's assessment. The court acknowledged that each estate must be analysed independently — you cannot simply merge the inheritance quotas from two different successions. However, the court found a crucial element:

The daughter compensated her brother by ceding her share in the mother's estate. The siblings sought parity between the total value received from both successions. This reciprocal arrangement, the court held, negated the *animus donandi* (intent to donate) that is essential for Gift Tax to apply.

The Legal Framework

Two key provisions are at play:

  • Article 7.2.B) of Royal Decree Legislative 1/1993 (ITP/AJD): Declared excess adjudications are subject to Transfer Tax (ITPO) unless they arise from the indivisibility provisions of the Civil Code (Articles 821, 829, 1056.2, 1062.1).
  • Article 3.b) of Law 29/1987 (ISD): Gift Tax applies to acquisitions of assets by donation or any other gratuitous inter vivos transaction.