On the 28th of May of 2023, municipal and autonomic elections were held in Spain, resulting in a new regional government in the Valencian Community. Among the first measures of the new president of the Generalitat Valenciana is a substantial modification to the Inheritance Tax and Gift Tax. What can we expect from this upcoming change in the law? Do we know when will this reform come into force? We answer these and other questions in this week’s article.
Inheritance Tax in the Valencian Community: How does it work?
Although Inheritance and Gift Tax are a state taxes, each region of Spain is free to set the deductions, allowances, and tax rebates that they deem appropriate. This is why, for instance, inheriting in Catalonia (where inheritance tax is quite high) is not the same as inheriting in Andalusia (where hardly any inheritance tax is paid).
In the Valencian region, for many years, almost no Inheritance and Gift Tax was paid. Until 2013, this tax had a 99% reduction. In other words, receiving an inheritance or making a gift hardly had any impact on the pockets of citizens (out of every 100€ to be paid to the taxman, only 1€ was paid). However, from 2013 onwards, the Valencian Region suppressed this reduction and became one of the most expensive regions in Spain to inherit or receive a gift. Until now.
What does the modification to the Inheritance Tax and Gift Tax consist of?
The change of Law 13/1997 that the new government intends to approve is very simple: to re-apply the rebate of 99% of the tax liability. Both in mortis causa acquisitions (inheritances) and inter vivos acquisitions (gifts/donations). Although it is not official yet, this tax rebate is expected to apply only to close family members: parents, children, spouses (and in the case of gifts, also grandparents and grandchildren).
When will the modification to the Inheritance Tax and Gift Tax be finally approved?
At the beginning of August, the draft bill was published in the Official Gazette of the Generalitat Valenciana (DOGV). This marked the beginning of the public consultation period of 15 days during which any citizen could present allegations. The Valencia government is currently studying the allegations. The next step will be to present the law to the Consell of the Generalitat which, subsequently, will send the law to the Valencian Parliament, where it will be definitively approved.
Conclusions.
The modification to the Inheritance Tax promises to place the Valencian Community as one of the regions in Spain with the lowest tax burden in inheritances and gifts. As soon as the final modification is approved, we will inform our readers in detail. At White-Baos Lawyers we are experts in Inheritance Law, planning and advice on Inheritance and Gift Tax. If you have any questions about this or other issues, please do not hesitate to contact us. We will offer you expert legal advice.
The information provided in this article is not intended to be legal advice, it simply conveys information related to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
White & Baos 2023 – All Rights Reserved.
My wife has just inherited £280K following the death of her parents who died within 3 months of each other at the end of December last year. We applied for an extension to probate here as it was obvious that this wasn’t going to be settled within the six months allowed. Although there was no inheritance tax to pay in the UK it has been suggested that she would have to pay around €28K here that was after the solicitors costs in the UK and the fact we have lived here legally for 30 years and always paid our taxes were taken into account. What else can be offset against tax if this figure is correct as although she knows she will have to pay some tax, nobody likes to pay anymore than is necessary. I take it when the funds are in Spain his is something you can help us with.
Thank you for your email.
Yes, we can assist you.
If the heir is tax resident in Spain, must pay in Spain IHT for the inheritance outside Spain also.
The concepts and amounts to be offset as passive (debts, etc.) of the estate for the IHT depends on the Spanish IHT Law.
THe taxes must be paid even if the funds have not been received.
Please contact us at info@white-baos.com or + 966426185
Regards