Inheritance tax deductions valencia
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Inheritance tax deductions valencia

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Find out how to reduce your inheritance tax liability in Valencia, Spain.

Find out how to reduce your inheritance tax liability in Valencia, Spain.

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Inheritance tax deductions valencia Inheritance tax deductions valencia Presentation Transcript

  • Inheritance Tax Deductions In Valencia
  • There are special regional tax deductions and exemptions passed by the local government in Valencia that only apply to those beneficiaries who have been resident in the region. Inheritance Law in Valencia 2
  • If you have NOT been resident in the Valencia region then, when determining your inheritance tax liability, you may only apply the deductions and exemptions approved by the CENTRAL government. Inheritance Law in Valencia 3
  • Click On The Following Link For Ideas on How to Reduce Your Inheritance Tax: 8 Steps That Could Dramatically Reduce Your Spanish Inheritance Tax Bill 4
  • 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. 5 Inheritance Law in Valencia
  • The regional level exemptions available in Valencia were enacted by the Valencia parliament and in their current form are specified in Law 13/1997. Inheritance Tax Law in Valencia 6
  • 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 7
  • The following are the personal exemptions available in Valencia : Deduction Group I Exemption of €40,000 plus €8,000 per year under the age of 21 up to a maximum of €96,000. A further reduction of 99% for this group if residents as per legal definition. Group II Exemption of €40,000. A further reduction of 99% for this group if residents as per legal definition. Group III No deductions available Group IV No deductions available 8
  • If the beneficiary is disabled: An exemption of €240,000 additional to any personal exemption if mental disability > 33% or physical > 65%. A discount of 99% is applied to any inheritance tax payable by any beneficiary with a physical disability > 65% or mental disability > 65% 9
  • Deductions in transfer of Family Business Tax exemption of 95% of the value of the business Should be children or spouse to inherit to benefit from the deduction 10
  • Deductions in transfer of Family Business If no child or spouse any relative 'to third degree of consanguinity' may benefit from exemption Must maintain business for a period of no less than 5 years 11
  • State Level Exemptions As there are no regional exemptions for the inheritance of a property classified as the family home or income from life insurance policies in Valencia recourse must be had to the State Level exemptions 12
  • Inheritance of the Family Home – State Deduction: Exemptions exist for child, parent and spouse of the deceased with a value up to 95% of value up to max of €122,606 per beneficiary The exemption requires that the property cannot be sold for a period of 10 years after the inheritance 13
  • State Level Tax deductions on income from Life Insurance: An exemption of all tax on income from a life insurance policy up to €9,195,45 Available where the beneficiary is the spouse, parent or descendent or adopted descendent 14
  • State Level Tax deductions on income from Life Insurance: The exemption is available to each beneficiary but only once regardless of number of life insurance policies 15
  • Other Deductions: As a general rule the following deductions may be made on any estate: Funeral Expenses Final Medical Expenses of the Deceased 16
  • Other Deductions Cntd: Debts held be the deceased that are evidenced by public documents e.g. a mortgage 17
  • Once the final amount of tax payable is determined then it is necessary to apply the relevant rate: Tax Rates in Alicante 18
  • 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 7668,91 8,5 15662,38 1263,36 7831,19 9,35 23493,56 1995,58 7831,19 10,2 31324,75 2794,36 7831,19 11,05 39155,94 3659,7 7831,19 11,9 46987,13 4591,61 7831,19 12,75 54818,31 5590,09 7831,19 13,6 Tax Rates in Valencia 19
  • Tax Rates in Valencia Taxable Sum Tax Payable On This Sum Any Remainder Up To Applicable Rate on Remainder (%) 62649,5 6655,13 7831,19 14,45 70480,69 7786,74 7831,19 15,3 78311,88 8984,91 39095,84 16,15 117407,71 15298,89 39095,84 18,7 156503,55 22609,81 78191,67 21,25 234695,23 39225,54 156263,15 25,5 390958,37 79072,64 390958,37 29,75 781916,75 195382,76 En adelante 34 20
  • 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: Pre-existing Wealth Groups In Euros I y II III IV From 0 a 390.657,87 1 1,5882 2 From 390.657,87 to 1.965.309,58 1,05 1,6676 2,1 From 1.965.309,58 to 3.936.629,28 1,1 1,7471 2,2 More than 3.936.629,28 1,2 1,9059 2,4 21
  • 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 22
  • To find out how to get expert advice, in English, about how to reduce your liability for inheritance tax, go to: Expert Probate Services in the Valencia Region Expert Probate Services in Alicante 23