Carlos Baos – Inheritance and Gift Tax

Imminent changes to Inheritance and Gift Tax in the Valencian Region. Everything we know so far. Expert legal advice by White-Baos Lawyers.

It is common to find the Valencian region at the top of the lists and rankings of the most expensive areas in Spain to receive a gift or an inheritance. However, this was not always the case. There was a time when inheriting or gifting a property, money, etc in Valencia, had almost no financial impact on the pockets of its citizens. In this week’s article, we would like to inform our readers about an imminent change in the Inheritance Tax and Donations Tax, that has been announced by the new government, and that most likely will enter in force before the end of 2023.

This tax reduction is expected to revert the current situation and turn the payment of Inheritance Tax and Gift Tax in our autonomous community into something anecdotical. However, it is important to underline that this modification will only affect the Valencian Community. The reason is simple: despite being a state tax, all the allowances, reductions, etc of both the Inheritance Tax and Gift Tax are established by the regional governments (in Valencia, thought Law 13/1997).

Although there is still no certainty about the scope of this new modification, it seems that the amendments will be as follows. Inheritances from parents to children (or from children of parents), between spouses, etc will only pay 1% of the tax. Let’s look at a simple example and assume that the tax liability of Peter is €5,000. The government is planning that, from now on, 99% of it is tax free. Therefore, Peter would only pay 50€.

The same will occur in donations or gifts between the aforementioned relatives. In this case, the legislator plans to go one step further. Grandchildren and grandparents are expected to be included among the relatives that won’t pay (almost) gift tax when receiving a gift.

Inheritance Tax is one of the most worrying issues, both for potential heirs (who often have to face a significant tax bill when inheriting) and for elderly people who do not wish to leave a high tax burden to their relatives. The modification of the tax foreseen by the new government promises to radically change the paradigm. As soon as it has been definitely approved, we will brief you in detail. At White-Baos, we are experts in inheritance law, tax planning, etc. Do not hesitate to contact us and visit our website: https://www.white-baos.com/en/ for expert advice on this and other legal issues.

You may be interested in the following services and articles:

Inheriting from a Step-parent. How does it affect the Inheritance Tax?. Kinship by affinity. Inheritance Tax in Spain. Supreme Court. Inheritance lawyers in the Costa Blanca.

Processing an inheritance and probate when the heir is a minor or disable. Sale of inherited assets. Foreigners in Spain.

Inheritance Tax. Interests. Penalties. Payment of the tax after the deadline. Legal advice.

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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