Andalusia to abolish inheritance tax in 2019

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Changes to inheritance tax in Andalusia / Gtres

Andalusia’s centre-left wing party was ousted from power last December after 37 years in control. With the turn of tide, the new centre-right wing ruling coalition agreed in Seville to abolish inheritance tax in Andalusia. It won’t actually be abolished – excuse the catchy title – it will be suppressed by 99% on all estates over 1 million euro. This translates into only HNWIs (high-net-worth individuals) paying a paltry amount on inheriting; the rest of us get to walk away scot-free.

The change means 99.99% of inheritors in Andalusia will no longer need to pay inheritance tax on inheriting assets from their parents or spouse, which is a welcome respite. Despite what you may hear, IHT, called ISD in Spain, never taxed the ‘rich’ but the hard-working middle class.

This bold move allows Andalusia to jump onto the front of the band wagon of other autonomous regions in Spain which are applying reductions on IHT to such an extent that in practice it translates to almost suppressing it i.e. Madrid, Basque Country, La Rioja, Navarre, Catalonia, Valencia, Balearic Islands, Canary Islands and now Andalusia too, leading the pack.

Andalusia will officially become in 2019 a tier 1 tax-friendly region for inheritance tax, even surpassing Madrid in some respects. Relating to Spanish Inheritance Tax, there has been an ongoing movement throughout Spain over the last decade to suppress or greatly reduce inheritance tax to the point of negating it. This trend will finally coalesce into this new regulation.

In a nutshell, inheritance tax will be as follows in Andalusia:

Requirements to benefit from this tax allowance

  • Inheritor/estate beneficiary (taxpayer) needs to be EEA/EU-resident.

Spanish Inheritance Tax

  • Pre-existing wealth nil-rate band raised to 1,000,000 euro (per inheritor).
  • Estates equal to or below 1,000,000 euro will go untaxed (per inheritor).
  • Estates over 1,000,000 euro will benefit from a 99% exemption (per inheritor), meaning you only pay 1% over what exceeds the 1 million threshold.

Who benefits?

  • Group I: natural and adopted children under 21.
  • Group II: natural and adopted children over 21, spouses, registered civil partnerships, parents, adoptive parents, grandparents and great-grandparents.
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