Carlos Baos – Tax Relief

Goodbye to Inheritance Tax and Gift Tax. 99% Tax Relief in the Valencian Community

Last week, Law 6/2023 of the 22nd of November came into effect, marking “the end” of Inheritance and Gift Tax in the Valencia Region. This week we explain the details of the new law; discuss its main changes, and review its impact on the tax burden for recipients of inheritances and gifts.

Inheritance Tax Reform

While the main deductions (up to €156,000 for kinship, 95% when inheriting the habitual residence of the deceased, etc) have not been modified, the tax reliefs have undergone a substantial modification. Close family members (parents, children, spouses, etc) will have a 99% tax relief. The same occurs with individuals with a disability exceeding 65% (physical or sensory) or 33% (when mental), that will also qualify for this rebate of 99% on the tax payable.

This implies that, in practice, Inheritance Tax will almost disappear. Let’s look at it through the following example. John, the sole heir of his mother’s state, inherits property valued at €190,000, a holiday apartment at €310,000, and a bank account with €40,000. Under the previous law, John would have faced an inheritance tax of approximately €26,000. After the law change, John’s tax liability reduces to a little over €500.

Gift/Donation Tax Amendments

The gift tax has also suffered considerable alterations that completely change the picture. Perhaps the most noteworthy point is the 99% rebate for parents, children, grandchildren, grandparents, or people with disabilities in the same terms as mentioned in the previous paragraph. In addition to the above, from now on:

– It will no longer be necessary that the recipient of the gift has assets of less than €600,000 to benefit from the reductions provided for in the law.

Spouses will be able to make gifts to each other, with a deduction of €100,000.

– Grandparents will be able to make gifts to their grandchildren, and benefit from the €100,000 deduction (up to €156,000 when the grandchild is a minor, depending on his/her age) without the need for the link between the two (father or mother) to have passed away previously (like under the previous law).

Is it true that if I received a donation or inheritance after 28.05.23 I can also benefit from these changes?

Yes, although the law came into force last week, its effects extend until May 28th, 2023. If you received a gift recently, or a loved one passed away after that date, and you paid Gift or Inheritance Tax… our firm can help you get most of the money paid back.

The Inheritance and Gift Tax modification is a game-changer in Valencia’s tax landscape. At White-Baos Lawyers, we specialize in Inheritance and Gift Law and Tax Planning. Contact us for expert advice on the matter.

You may be interested in the following services and articles:

Inheritance or gift: which is more tax beneficial? What are the advantages and disadvantages of each option? Legal advice.

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

Inheritance Tax in Spain. Tax consequences of the inheritance renunciation..

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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Written by

Carlos Baos (Lawyer)

Lawyer Carlos Baos has been advising on variety of expat-related legal issues for years and weekly column offers free weekly insights.

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