On Saturday, 31st of May 2025, the Official Gazette of the Generalitat Valenciana published Law 5/2025, of 30 May. This new “Law of Measures” introduces significant amendments to the regional regulation of several taxes, notably the Wealth Tax (IP), Inheritance and Donations Tax (ISD), and the Tax on Property Transfers and Documented Legal Acts (ITPAJD). Below, we summarise the main changes affecting taxpayers in the Valencian Community from 2026, which will make inheriting from a brother, uncle or nephew more cost-effective.
Changes to the Inheritance and Donations Tax (IHT)
One of the most noteworthy changes is the introduction of a new relief in the ISD applicable to mortis causa and inter vivos acquisitions by second- and third-degree collateral relatives. Until now, inheritances and donations between siblings, uncles, and nephews were not subject to any reductions, resulting in a high tax burden.
From 1 June 2026, a 25% reduction in the tax due will apply, increasing to 50% from 1 June 2027. This represents a substantial tax relief for those inheriting or receiving donations from these relatives, traditionally subject to higher taxation.
Existing 99% reductions for other family groups (spouses, children, grandchildren, etc.) remain in place.
Increase in the Wealth Tax (IP) Exemption Threshold.
Regarding the Wealth Tax, Law 5/2025 raises the exemption threshold for habitual residents in the Valencian Community from €500,000 to €1,000,000, effective 31 December 2025.
This means that tax returns for the 2025 fiscal year, filed in 2026, will benefit from this increased exemption, reducing the taxable base and, consequently, the tax payable.
Reductions in Property Transfers (ITP) and Stamp Duty Tax (AJD)
The law also provides for reductions in the ITP-AJD tax rates. From 1 June 2026, the rate on onerous property transfers will decrease from 10% to 9%. For example, on the purchase of a property valued at €240,000, the tax at the current 10% rate is €24,000. With the new 9% rate, this amount will drop to €21,600, saving the buyer €2,400. Likewise, the general rate for Documented Legal Acts will be reduced from 1.5% to 1.4%.
Phased Entry into Force of the changes.
Law 5/2025 stipulates that its provisions take effect the day after publication in the DOGV, that is, 1 June 2025. However, some tax measures will be implemented in phases. The reductions in ISD and ITPAJD will apply from 1 June 2026, and the increase in ISD relief for collateral relatives will take effect in 2027.
Conclusion.
The fiscal changes introduced by Law 5/2025 bring significant modifications to inheritance, donations, wealth tax, and property transfers in the Valencian Community. To make the most of these tax benefits, when inheriting from a brother, uncle or nephew, do not hesitate to contact us. We will review your case and provide expert legal and tax advice tailored to your needs.
The information provided in this article is not intended to be legal advice but merely conveys information relating to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
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