Solicitor, Spanische Rechtsanwältin, Abogada
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Tf. 0034 952804464
The “Decreto-Ley 1/2019 on the 9th April “ was approbed in Andalusia on the 9th April, where the Estate and Gift Tax in Andalusia was significantly reduced for beneficiaries of “groups I and II” in a way that it´s been understood that this tax is almost extinct, because the results are minuscule compared to the ones before the last two reforms.
This new reform came into force on the 11th April 2.019 and cannot be applied retroactively, but only for estates generated since this date.
The main change according to this new regulation is that for heirs and donees included in Groups I and II ( descendants, -natural or adopted-, spouses, registered partner and ascendants – natural or adoptive) there is a new 99% tax relief on the tax liability ( tax base x tax rate ), what leads to minimum final payments.
Only for estates, but not for gifts, the reform of 2.018 included in “Decreto Legislativo 1/2018” is also applicable, acting both amendments of years 2.018 and 2.019 together, so that for inheritors included in the above mentioned groups, the variable reduction in the tax base of up to 1.000.000 € introduced in year 2.018 is mainteined (applicable only if the inheritors don´t have pre-existing assets with a valuation higher than 1.000.000 €).
As a result of the last reform in April 2.019, the final amount to be paid by descendants, ascendants, spouses or registered partners as beneficiaries of inheritances or gifts is only 1%, being 99% untaxed.
Following examples can illustrate the application of the tax allowances of the last two reforms of Succession and Gift Tax in Andalusia:
- For a heir included in groups I and II who does not have a pre-existing patrimony higher than € 1.000.000, receiving an inheritance of € 900.000, the tax to be paid is 0 euros after applying the variable tax deduction up to € 1.000.000 if the inheritor does not have a preexisting heritage higher than € 1.000.000 €.
- On the other hand, if the same heir is receiving an estate of € 1.500.000 and under the same economic circumstances in case A, firstly we would apply the reduction of € 1.000.000 to the tax base, secondly we´d apply to the outstanding € 500.000 the tax rate and finally the 99% tax relief to the tax liability, resulting a final due of around € 1.100 to be paid.
And it´s very important to stress that this refom of year 2.019 affects not only inheritances, but also donations, what means a sensible change for transfers of assets between these close relatives included in the above mentioned Groups I and II while living.
Bearing it in mind, many clients who had been interested during last years in donating to spouses or children some assets in Spain are now benefited by this important reform, as well as Andalusia has become a highly interesting place to invest because inheritance and gifts between close relatives is not a serious concern any more for those ones interested in investing in Andalusia.
However, it´s essential to highlight that the Andalusian legal regulation for the Succession and Gift Tax is “in principle” applicable to the citizens residing in a EU or EEA country. This is particularly relevant for the citizens of UK, as in case they would be interested in donating to a close relative, they should initially do it before the date of Brexit. I wrote “in principle”, because it is at this moment changing and although it´s mostly understood that citizens of other countries out of EU or EEA would not benefit from the Andalusian ( or other regional regulations ) tax deductions, according to the last judgements by the Spanish Supreme Court of years 2018 and 2019, the regional regulation of the Succession and Gift Tax should be also applicable to citizens of countries out of the UE and EEE area, because according to the prohibition of restriction of free movement of capital in article 56.1 of the European´s Union Constitutional Treaty, this freedom of movements includes also third countries, what means that these tax deductions should also be applicable to UK citizens after BREXIT.
It´s certainly a very interesting and open thema, that cannot be approched in this summarized article, but according to the judicial interpretation, should be understood that way.
Finnally, to end this overview of the last reform of Succession and Gift Tax in Ansalusia, I would like to briefly refer that in addition to the Succession and Inheritance tax, whenever there is a transfer of a real estate, either onerous or free, another local tax has to be paid in all towns in Span, the known as “plusvalía municipal”, the Tax on Gains in Value of Urban Land, which depends on the period of time owing the property, on the cadastral valuation of the land and on the local regulation of this tax, just to briefly mention it.
Should you have further questions, please don´t hesitate to arrange an appointment with us in Estepona, Marbella, Malaga or any other place if necessary, as well as per Skype (maria-bhabogados), Telephone or Email. We´d be pleased to organize a meeting after receiving a telephone call ( +0034 952 80 44 64) or an email at firstname.lastname@example.org , sending always all estimate of fees in advance.