An overview of the legal tax deductions one can make upon receiving an inheritance in Galicia, Spain. Updated for 2016.

1. Inheritance Tax Deductions
In Galicia

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 acting
Inheritance Law in Galicia
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3. In 2001 the Spanish government devolved the power to set
inheritance tax rates and deductions to the regional
parliaments.
Inheritance Law in Galicia
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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 Galicia
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5. On September 3rd 2014, the European Court of Justice ruled
that such laws were discriminatory and contrary to European
Law.
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Inheritance Law in Galicia

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.
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Inheritance Law in Galicia

7. The main impact of the new legislation is as follows:
1) If the deceased who had assets in Spain 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.
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Inheritance Law in Galicia

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.
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Inheritance Law in Galicia

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.
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Inheritance Law in Galicia

10. 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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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
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12. 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 years old but €100,000 less for each year
over 21 up to 24.Rest of group II – €400,000
Group III Deduction of €8,000
Group IV No deductions available
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13. 13
Inheritance of Special Awards
● For inheritance of special indemnities paid to victims of
toxic shock syndrome or victims of terrorism any tax on
those awards may be reduced by 99%
● The reduction applies where such indemnities are not
subject to Income Tax

14. If the beneficiary has a disability:
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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15. If the beneficiary has a disability 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 where the pre-existing wealth of the
beneficiary is less than €3m. For those with pre-existing
wealth equal to or greater than €3m, limited to 300,000 €
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16. If the beneficiary has a disability cntd:
For those with a disability > 65% in Groups III or IV a
deduction of 300,000 € may be applied to any inheritance
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17. 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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18. Deductions in transfer of Family Business
● The deceased’s participation 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 the business is a ‘Reduced Size Company’
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19. Deductions in transfer of Family Business
● The business may not be sold for a period of less than 5
years
● The registered address of the company must remain in
Galicia for a period of 5 years
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20. Deductions for Creation of a Business
● 95% deduction up to value of 118,750 €, where the
inherited assets are destined towards the creation of a
business based in Galicia
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21. Inheritance of the Family Home
A tax deduction is available to relatives of the deceased where
the asset inherited is the family home - up to the value of
€600,000 according to the following bands:
Up to €150,000 – 99%
€150,000 - €300,000 – 97%
Over €300,000 – 95%
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22. ● However, where the family home is inherited by the spouse
of the deceased, 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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23. Other blood 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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24. A property will NOT lose it’s attribution as a ‘family home’ where
the owner has moved to live elsewhere with other family
members or to a specialized residential home.
Inheritance of the Family Home Cntd
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25. Other Deductions:
As a general rule the following deductions may be made on
any estate:
● Funeral Expenses
● Final Medical Expenses of the Deceased
● Debts held be the deceased that are evidenced by
public documents e.g. a mortgage
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26. 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

27. 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

28. 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

29. 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 1.668 2.1
2.007.380,43 to 4.020.770,98 1 1.747 2.2
Over 4.020.770,98 1 1.906 2.4

30. Any beneficiary within Group I ie children under the age of 21,
shall receive a discount of 99% on any inheritance tax due to be
paid after the application of these rules.
The discount of 100% previously available to Group II
beneficiaries on tax due to be paid on amounts up to 125,000 €
is no longer available.
Special Discounts Group I & II Beneficiaries
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31. 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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32. 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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33. 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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