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Inheritance Tax Deductions
in the Valencia Region
This presentation has been updated and is valid for 2017.*
*Advocate Abroad does not accept responsibility for losses of any type consequent upon reliance on the
information contained in this presentation. Please consult a lawyer before taking any action.
Inheritance Law in the Valencia Region
2
In 2001 the Spanish government devolved the power to set
inheritance tax rates and deductions to the regional
parliaments.
Inheritance Law in the Valencia Region
3
Most regions enacted tax laws that applied generous
deductions only to those beneficiaries who were resident in
the region over the balance of the previous five years.
Inheritance Law in the Valencia Region
4
Recently, on September 3rd 2014, the European Court of
Justice ruled that such laws were discriminatory and contrary
to European Law.
5
Inheritance Law in the Valencia Region
Accordingly, the Spanish government has enacted new
legislation (Ley 26/2014) which makes any deductions that
may be applied to residents also available to non-residents
who are EU citizens.
6
Inheritance Law in the Valencia Region
The main impact of the new legislation is as follows:
1) If the deceased was a non-resident, living in another
European country then the beneficiary may apply those
deductions and exemptions provided by the regional
government in which the majority of the inherited assets
are located.
7
Inheritance Law in the Valencia Region
2) If none of the assets to be inherited are located in Spain,
then the resident beneficiaries should apply the legislation
enacted by the regional government where they are normally
resident.
8
Inheritance Law in the Valencia Region
3) If the deceased was resident in one of the Spanish regions
and the beneficiaries were non-resident, and living in another
European Union country, then they may apply those
deductions and exemptions available to residents of the
region in which the deceased was resident.
9
Inheritance Law in the Valencia Region
The regional level exemptions available the Valencia Region
were enacted by the Valencia parliament and in their current
form are specified in Law 13/1997.
Inheritance Tax Law the Valencia Region
10
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
11
The following are the personal exemptions available in the
Valencia Region :
12
Deduction
Group I Exemption of €100,000 plus €8,000 per year under the age of 21 up
to a maximum of €156,000.
Group II Exemption of €100,000
Group III No deductions available
Group IV No deductions available
If the beneficiary is disabled:
An exemption of €120,000, rising to €240,000 additional to
any personal exemption if mental disability > 33% or
physical > 65%, with gravity of disability increasing on a
scale from 0% up to 100%.
13
Inheritance of the Family Home
Exemptions exist for child, parent and spouse of the
deceased with a value up to 95% of value up to max of
€150,000
14
Deductions: 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
15
Deductions: 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
16
Additional Discounts
A 75% discount shall be applied to any resulting tax
payable by those beneficiaries who are in Group I.
Similar discount for those with physical disabilities > 65% or
psychological > 33%.
17
Additional Discounts
A 50% discount shall be applied to any resulting tax
payable by those beneficiaries who are in Group II.
Similar discount for those with physical disabilities > 65% or
psychological > 33%.
18
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
descendant or adopted descendant
19
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
20
Other Deductions:
As a general rule the following deductions may be made on
any estate:
Funeral Expenses
Final Medical Expenses of the Deceased
21
Other Deductions Cntd:
Debts held be the deceased that are evidenced by public
documents e.g. a mortgage
22
Once the final amount of tax payable is determined then it
is necessary to apply the relevant rate:
Tax Rates the Valencia Region
23
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 the Valencia Region
24
Tax Rates the Valencia Region
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
25
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
26
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
27
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 Valencia
28

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Inheritance Tax Valencia Region

  • 1. Inheritance Tax Deductions in the Valencia Region
  • 2. This presentation has been updated and is valid for 2017.* *Advocate Abroad does not accept responsibility for losses of any type consequent upon reliance on the information contained in this presentation. Please consult a lawyer before taking any action. Inheritance Law in the Valencia Region 2
  • 3. In 2001 the Spanish government devolved the power to set inheritance tax rates and deductions to the regional parliaments. Inheritance Law in the Valencia Region 3
  • 4. Most regions enacted tax laws that applied generous deductions only to those beneficiaries who were resident in the region over the balance of the previous five years. Inheritance Law in the Valencia Region 4
  • 5. Recently, on September 3rd 2014, the European Court of Justice ruled that such laws were discriminatory and contrary to European Law. 5 Inheritance Law in the Valencia Region
  • 6. Accordingly, the Spanish government has enacted new legislation (Ley 26/2014) which makes any deductions that may be applied to residents also available to non-residents who are EU citizens. 6 Inheritance Law in the Valencia Region
  • 7. The main impact of the new legislation is as follows: 1) If the deceased was a non-resident, living in another European country then the beneficiary may apply those deductions and exemptions provided by the regional government in which the majority of the inherited assets are located. 7 Inheritance Law in the Valencia Region
  • 8. 2) If none of the assets to be inherited are located in Spain, then the resident beneficiaries should apply the legislation enacted by the regional government where they are normally resident. 8 Inheritance Law in the Valencia Region
  • 9. 3) If the deceased was resident in one of the Spanish regions and the beneficiaries were non-resident, and living in another European Union country, then they may apply those deductions and exemptions available to residents of the region in which the deceased was resident. 9 Inheritance Law in the Valencia Region
  • 10. The regional level exemptions available the Valencia Region were enacted by the Valencia parliament and in their current form are specified in Law 13/1997. Inheritance Tax Law the Valencia Region 10
  • 11. 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 11
  • 12. The following are the personal exemptions available in the Valencia Region : 12 Deduction Group I Exemption of €100,000 plus €8,000 per year under the age of 21 up to a maximum of €156,000. Group II Exemption of €100,000 Group III No deductions available Group IV No deductions available
  • 13. If the beneficiary is disabled: An exemption of €120,000, rising to €240,000 additional to any personal exemption if mental disability > 33% or physical > 65%, with gravity of disability increasing on a scale from 0% up to 100%. 13
  • 14. Inheritance of the Family Home Exemptions exist for child, parent and spouse of the deceased with a value up to 95% of value up to max of €150,000 14
  • 15. Deductions: 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 15
  • 16. Deductions: 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 16
  • 17. Additional Discounts A 75% discount shall be applied to any resulting tax payable by those beneficiaries who are in Group I. Similar discount for those with physical disabilities > 65% or psychological > 33%. 17
  • 18. Additional Discounts A 50% discount shall be applied to any resulting tax payable by those beneficiaries who are in Group II. Similar discount for those with physical disabilities > 65% or psychological > 33%. 18
  • 19. 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 descendant or adopted descendant 19
  • 20. 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 20
  • 21. Other Deductions: As a general rule the following deductions may be made on any estate: Funeral Expenses Final Medical Expenses of the Deceased 21
  • 22. Other Deductions Cntd: Debts held be the deceased that are evidenced by public documents e.g. a mortgage 22
  • 23. Once the final amount of tax payable is determined then it is necessary to apply the relevant rate: Tax Rates the Valencia Region 23
  • 24. 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 the Valencia Region 24
  • 25. Tax Rates the Valencia Region 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 25
  • 26. 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 26
  • 27. 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 27
  • 28. 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 Valencia 28