Inheritance Tax Deductions
In Murcia
This presentation has been updated and is valid for 2016.*
*myAdvocate Europe Ltd does not accept responsibility for losse...
In 2001 the Spanish government devolved the power to set
inheritance tax rates and deductions o the regional
parliaments.
...
Most regions enacted tax laws that applied generous
deductions only to those beneficiaries who were resident in
the region...
Recently, on September 3rd 2014, the European Court of
Justice ruled that such laws were discriminatory and contrary
to Eu...
Accordingly, the Spanish government has enacted new
legislation (Ley 26/2014) which makes any deductions that
may be appli...
The main impact of the new legislation is as follows:
1) If the deceased was a non-resident, living in another
European co...
2) If none of the assets to be inherited are located in Spain,
then the resident beneficiaries should apply the legislatio...
3) If the deceased was resident in one of the Spanish regions
and the beneficiaries were non-resident, and living in anoth...
The regional level deductions available in Murcia were
enacted by the parliament in Cartagena and in their current
form ar...
Spanish Inheritance law first assigns beneficiaries to groups
according to the degree of kinship with the deceased:
Group ...
These are the personal deductions as amended by regional
law in Murcia. They are in addition to state exemptions:
Personal...
Deductions in transfer of Family Business
● Tax deduction of 99% of the value of the business
● Must be a sole trader or '...
Deductions in transfer of Family Business
● The participation of the deceased in the business must
have been at least 10% ...
Deductions in transfer of Family Business
● The business may not be sold for a period of no less
than 5 years
● The regist...
Inheritance Destined to Set-up a Business
● Beneficiaries of cash and life insurance policies shall
have a deduction of 99...
State Level Tax deductions
As these are the only special deductions that have been created
by the region of Murcia it is n...
State Level Tax deductions on income from Life
Insurance:
An exemption of all tax on insurance policies up to €9,195,45
Av...
State Level Tax deductions on income from Life
Insurance cntd:
The exemption is available to each beneficiary but only onc...
State Level Tax deductions on Family Home
If the main, habitual family home is inherited there is a deduction
of 95% up to...
State Level Tax deductions on Family Home
cntd
The property may not be sold for a further 10 years after the
inheritance.
...
State Level Tax deductions on Family Home
cntd
More distant relatives may also benefit from this exemption but
must have b...
Other Deductions:
As a general rule the following deductions may be made on
any estate:
● Funeral Expenses
● Final Medical...
Other Deductions Cntd:
● Debts held be the deceased that are evidenced by
public documents e.g. a mortgage
24
Tax Rates in Murcia
Taxable
Sum
Tax Payable On
This Sum
Any Remainder Up
To
Applicable Rate on
Remainder (%)
0 0 7993,46 7...
Tax Rates in Murcia Cntd...
Taxable
Sum
Tax Payable On
This Sum
Any Remainder Up
To
Applicable Rate on
Remainder (%)
63905...
Existing Wealth
Once the relevant tax rate has been applied the result is
multiplied by a coefficient determined by the ex...
Existing Wealth
The Groups referred to consist of the following beneficiaries:
Group I Children, including adopted childre...
Special Discounts
Once the national and regional deductions have been applied,
the following additional discounts shall be...
Each year in Spain thousands of expats pay more
tax on inheritance than they should – simply
because they fail to follow s...
To find out how to get expert advice, in English, about how to
reduce your liability for inheritance tax, go to:
Expert Pr...
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Inheritance tax deductions murcia

  1. 1. Inheritance Tax Deductions In Murcia
  2. 2. This presentation has been updated and is valid for 2016.* *myAdvocate Europe Ltd does not accept responsibility for losses of any type consequent upon reliance on the information contained in this presentation.Please consult a lawyer before acting. Inheritance Law in Murcia 2
  3. 3. In 2001 the Spanish government devolved the power to set inheritance tax rates and deductions o the regional parliaments. Inheritance Law in Murcia 3
  4. 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 Murcia 4
  5. 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 Murcia
  6. 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 Murcia
  7. 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 Murcia
  8. 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 Murcia
  9. 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 Murcia
  10. 10. The regional level deductions available in Murcia were enacted by the parliament in Cartagena and in their current form are specified in Legislative Decree 1/2010. The most important changes to State laws can be summarised as follows: Inheritance Tax Law in the Murcia 10
  11. 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. 12. These are the personal deductions as amended by regional law in Murcia. They are in addition to state exemptions: Personal Exemptions Deduction Group I Deduction of 99% Group II No additional deductions available Group III No additional deductions available Group IV No additional deductions available 12
  13. 13. Deductions in transfer of Family Business ● Tax deduction of 99% of the value of the business ● Must be a sole trader or 'single director company' 13
  14. 14. Deductions in transfer of Family Business ● The participation of the deceased in the business must have been at least 10% (or 20% when combined with participation of the spouse) 14
  15. 15. 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 Murcia for a period of 5 years 15
  16. 16. Inheritance Destined to Set-up a Business ● Beneficiaries of cash and life insurance policies shall have a deduction of 99% if they are in Groups I or II where the proceeds are used to set-up a business in Murcia 16
  17. 17. State Level Tax deductions As these are the only special deductions that have been created by the region of Murcia it is necessary to consider those deductions available to beneficiaries at the State level 17
  18. 18. State Level Tax deductions on income from Life Insurance: An exemption of all tax on insurance policies up to €9,195,45 Available where the beneficiary is the spouse, parent or descendent or adopted descendent 18
  19. 19. State Level Tax deductions on income from Life Insurance cntd: The exemption is available to each beneficiary but only once regardless of number of life insurance policies 19
  20. 20. State Level Tax deductions on Family Home If the main, habitual family home is inherited there is a deduction of 95% up to the value of €122,606 per beneficiary. This applies to beneficiaries that are the spouse, child or parent of the deceased. 20
  21. 21. State Level Tax deductions on Family Home cntd The property may not be sold for a further 10 years after the inheritance. 21
  22. 22. State Level Tax deductions on Family Home cntd More distant relatives may also benefit from this exemption but must have been living with the deceased in the property for a period of at least two years prior to the date of death. 22
  23. 23. Other Deductions: As a general rule the following deductions may be made on any estate: ● Funeral Expenses ● Final Medical Expenses of the Deceased 23
  24. 24. Other Deductions Cntd: ● Debts held be the deceased that are evidenced by public documents e.g. a mortgage 24
  25. 25. Tax Rates in Murcia 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 25
  26. 26. Tax Rates in Murcia Cntd... 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 31,75 797555,08 207266,95 And Above 36,5 26
  27. 27. 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: Existing Wealth Groups/Coefficient (In Euros) I & II III IV 0 to 390,657 1 1.59 2 390,657 to 1,965,309 1.05 1.67 2.1 1,965,309 to 3,936,629 1.1 1.75 2.2 More than 3,936,629 1.2 1.91 2.4 27
  28. 28. 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 28
  29. 29. Special Discounts Once the national and regional deductions have been applied, the following additional discounts shall be applied to any tax due to be paid: • 99% discount where the beneficiary is in Group I • 50% discount where the beneficiary is in Group II 29
  30. 30. Each year in Spain thousands of expats pay more tax on inheritance than they should – simply because they fail to follow some simple rules. 30
  31. 31. 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 Murcia Expert Probate Services in Murcia 31

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