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An overview of the legal tax deductions one can make upon receiving an inheritance in Galicia, Spain
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Inheritance Tax DeductionsIn Galicia
This presentation has been updated and is valid for 2014.
Inheritance Law in Galicia
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In Spain, inheritance law was originally controlled by the
central government alone.
But in 2001 the power to set inheritance tax rates and
deductions were devolved to the regional parliaments.
Inheritance Law in Galicia
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However, the tax laws enacted by the regional parliaments,
including deductions and exemptions, only apply to those
beneficiaries who have been resident in the region over the
balance of the previous five years.
Inheritance Law in Galicia
4
If you have been resident then when determining your
inheritance tax liability you must see if the regional
government has approved a deduction or exemption.
If not, you should apply the national deduction or exemption.
5
Inheritance Law in Galicia
The central government exemptions and deductions are not
as generous as the regional exemptions.
This has caused complaints that the inheritance tax laws in
Spain are discriminatory against non-residents.
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Inheritance Law in Galicia
The regional level deductions available in Galicia were
enacted by the parliament in Santiago de Compostela and in
their current form are specified in Law 9/2008.
The most important changes to State laws can be
summarised as follows:
Inheritance Tax Law in Galicia
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Spanish Inheritance law first assigns beneficiaries to groups according to the degree of kinship with the deceased:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents,
aunts and uncles
Group IV More distant relatives
Personal Exemptions
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These are the personal deductions as amended by regional law in Galicia. They are in addition to state exemptions:
Personal Exemptions
Deduction
Group I Deduction of €1,000,000 plus €100,000 for each year under the age of 21 up to limit of €1.5m
Group II Deduction of €900,000 if < 25 with €100,000 less for each year over 21 up to 24.Rest of group II – 18,000
Group III Deduction of €8,000
Group IV No deductions available
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Inheritance of Special Awards
For inheritance of special indemnities paid to victims of
toxic shock syndrome or victims of terrorism those awards
may be reduced by 99%
The reduction applies where such indemnities are not
subject to Income Tax
If the beneficiary is disabled:
If a beneficiary is disabled then they shall be entitled to a
deduction of €150,000 where the disability is classified as
greater than 33% or €300,000 if greater than 65%
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If the beneficiary is disabled cntd:
Where the beneficiary is disabled to a degree > 65% and is
a member of Group I or II a 100% exemption from
inheritance tax applies up to €3m
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Deductions in transfer of Family Business
A tax deduction of 99% of the value of a family business
may be deducted from any inheritance tax liability according
to the following rules:
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Deductions in transfer of Family Business
The participation of the deceased in the business must
have been at least 50% either individually or jointly with
family members.
The ownership requirement falls to 5% individually and
20% jointly if ‘Reduced Size Company’
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Deductions in transfer of Family Business
The business may not be sold for a period of no less than
5 years
The registered address of the company must remain in
Galicia for a period of 5 years
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Inheritance of the Family Home
A tax deduction is available on the value of the family home up
to the value of €600,000 according to the following bands:
Up to €150,000 – 99%
Up to €300,000 – 97%
Over €300,000 – 95%
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However, where the family home is inherited by the spouse then
the exemption is 100% up to a limit of €600,000
The home may not be sold for a period of 5 years following the
inheritance or the deduction is forfeited unless the proceeds are
used to purchase a new family home in Galicia.
Inheritance of the Family Home Cntd
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More distant relatives may also benefit from this exemption but
must be over the age of 65 and have been living with the
deceased in the property for a period of at least two years prior
to the date of death.
Inheritance of the Family Home Cntd
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Other Deductions:
As a general rule the following deductions may be made on any estate:
Funeral Expenses
Final Medical Expenses of the Deceased
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Other Deductions Cntd:
Debts held be the deceased that are evidenced by public
documents e.g. a mortgage
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Tax Rates in Galicia (Groups I & II)
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Taxable Sum
Tax Payable On This Sum
Any Remainder Up To
Applicable Rate on Remainder (%)
0 0 50,000 5
50,000 2,500 75,000 7
125,000 7,750 175,000 9
300,000 23,500 500,000 11
800,000 78,500 800,000 15
1,600,000 198,500 And above 18
Tax Rates in Galicia (Groups III & IV)
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Taxable Sum
Tax Payable On This Sum
Any Remainder Up To
Applicable Rate on Remainder (%)
0 0 7993,46 7,65
7993,46 611,5 7987,45 8,5
15980,91 1290,43 7987,45 9,35
23968,36 2037,26 7987,45 10,2
31955,81 2851,98 7987,45 11,05
39943,26 3734,59 7987,46 11,9
47930,72 4685,1 7987,45 12,75
55918,17 5703,5 7987,45 13,6
Tax Rates in Murcia (Groups III & IV)
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Taxable Sum
Tax Payable On This Sum
Any Remainder Up To
Applicable Rate on Remainder (%)
63905,62 6789,79 7987,45 14,45
71893,07 7943,98 7987,45 15,3
79880,52 9166,06 39877,15 16,15
119757,67 15606,22 39877,16 18,7
159634,83 23063,25 79754,3 21,25
239389,13 40011,04 159388,41 25,5
398777,54 80655,08 398777,54 29,75
797555,08 199291,4 And Above 34
Existing Wealth
Once the relevant tax rate has been applied the result is multiplied by a coefficient determined by the existing wealth of the beneficiary as well as the group to which they belong:
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Existing Wealth Groups
(In Euros)I & II III IV
From 0 to 402.678,11 1 1.588 2
402.678,11 to 2.007.380,43 1.05 1.668 2.1
2.007.380,43 to 4.020.770,98 1.1 1.747 2.2
Over 4.020.770,98 1.2 1.906 2.4
Existing Wealth
The Groups referred to consist of the following beneficiaries:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents,
aunts and uncles
Group IV More distant relatives
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Each year in Spain thousands of expats pay more
tax on inheritance than they should – simply
because they fail to follow some simple rules.
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To find out where to get expert advice, in English, about how
to reduce your liability for inheritance tax, go to:
Expert Probate Services in Galicia
Expert Probate Services in Galicia
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