Inheritance Tax Reductions in the Valencian Community. Expert legal advice by White-Baos Lawyers.

The inheritance tax is often in the eye of the storm. Although originally a state-tax, the different regions in Spain have been transferred the capacity to establish their own tax reductions, allowances and deductions. This means that it will be the autonomous communities, in practice, who will determine how much to pay for this tax. And for this reason, in similar situations (two children inheriting assets worth €50,000) the amount to be paid in Barcelona or Andalucia may differ considerably. In today’s article, we focus on the main reductions you can benefit from in the Valencian Community. 

Reduction for degree of kinship:

• Descendants or adopted minors under 21 years old can apply a reduction of €100,000 to which they could add a further €8,000 for each year they are under the age of 21 (The maximum to be reduced is €156,000.)
• Descendants over 21, surviving spouses or ascendants can deduct €100.000.

Reduction for physical, sensory or mental disability:

• Sensory or physical disability of more than 33% entitles to a reduction of €120,000. If higher than 65%, it will amount to €240,000.
• For mental disabilities over 33%, the reduction will also be €240,000.

Reduction for the acquisition of different kind of companies: The Valencian law also provides a reduction in cases where sole proprietorships, family businesses, agricultural holdings, etc. are inherited. Although each type of company has different requirements, they all have in common the need to maintain the business inherited for the next 5 years.

Reduction for the acquisition of the habitual residence of the deceased: Probably the most widely implemented reduction. Each heir may deduct 95% of the value of the habitual residence, up to a limit of €150,000.  In this case, the limitation of not selling the home during the following 5 years also applies.

Reduction for inheriting Valencian cultural heritage assets 

It has two requirements. First, the assets to be inherited must be registered in the General Register of Assets of Cultural Interest or the General Inventory of Cultural Heritage, etc. Second, the heirs must agree to a temporary cession of the assets to certain associations (universities, public entities, non-profit associations). The amount of the reduction will depend on the length of the cession.

Knowing and applying the deductions provided in the law can mean savings of several thousand euros. At White-Baos we are experts in inheritance proceedings. Do not hesitate to contact us. We will study your case and give you expert advice to minimise your tax bill. 

You may be interested in the following services and articles:

 Wills and inheritance of expatriates (British, Irish, etc.) in Spain. Some clarifications on the European Regulation 650/2012.

How to value properties for inheritance purposes in Spain, calculation of the minimum tax value of a real estate property.

Inherit from an heir who never accepted a previous inheritance. Save Tax in the case of double inheritances in Spain. Ius Delationis.

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