The 75-year-old was held last week after the remains of Rosie Broadwell, 76, were found on wasteground near the town of Algorfa on the Costa Blanca.
The Guardia Civil and Mrs Broadwell’s family had been searching for her since she went missing last September.
The 4ft 8ins former playground assistant at St Andrew’s C of E primary school on Sutton Park in Hull had retired to the Spanish province of Alicante after her husband’s death more than a decade ago.
In an emotional post on Facebook a month ago her granddaughter Liza Webster said: “I don’t even know what to say anymore. It’s been five months and still nothing on the disappearance of my Grandma, Rosemary Broadwell.
“I miss her terribly, and not knowing is cruel. Someone somewhere must know something and it’s defies all that I’ve been taught, and known - to be so cruel. She’s my Grandma, a rock and my ally.”
The Foreign and Commonwealth Office said: “We can confirm the death of a British national, who was previously reported missing on September 14 2014 in Alicante. We are providing consular assistance to the family.”
They also confirmed the arrest of a British national on March 9 in San Miguel de Salinas, Alicante.