Andalusia, now a region in Spain with ultra-low Inheritance & Gift tax laws

New tax laws in Andalusia in 2019 make this Spanish region a godsend for the mega-rich / Pixabay
New tax laws in Andalusia in 2019 make this Spanish region a godsend for the mega-rich / Pixabay

With the change of government, the region of Andalusia approved a new set of inheritance laws on the 11th of April 2019 which drastically reduce, or even suppress, Inheritance & Gift tax.

The gist of these changes is that to most people they translate into paying drastically less taxes when inheriting money or being gifted it, or even no tax at all! All comments below apply only to those beneficiaries classified in Groups I and II, for tax purposes:

  • 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.

Gift tax in Andalusia

The giftee/taxpayer needs to be EEA/EU-resident. The taxable base benefits from a tax relief of 99%. This is more clearly understood with a table of practical examples before and after the tax changes of 11th April 2019 (all numbers rounded off).

Gift tax in Andalusia, Spain 2019

To benefit from this lenient regional gift taxation, you must contact a law firm, such as Larraín Nesbitt Lawyers, to arrange both drafting a Gift deed witnessed by a Spanish Notary Public and submitting a Gift tax return. If a lawyer is not instructed to follow the correct procedure, very steep taxes are to be expected of up to 88% and the tax benefit sought will be negated. Bottom line, to pay less tax (or almost no tax) you must contact a lawyer to arrange the signing of a Gift deed before a Spanish Notary Public.

Inheritance tax in Andalusia

In a nutshell, inheritance tax is as follows in Andalusia:

Requirements to benefit from this tax allowance

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

 Inheritance Tax in Andalusia

  • Pre-existing wealth nil-rate band raised to 1,000,000 euros (per inheritor).
  • Estates equal to or below 1,000,000 euros will go untaxed (per inheritor).
  • Estates over 1,000,000 euros will benefit from a 99% tax relief (per inheritor), meaning you only pay 1% on anything that exceeds the one million threshold.
Inheritance tax in Andalusia, Spain 2019

To benefit from this lenient regional inheritance taxation, you must contact a law firm to arrange the drafting of an Acceptance of Heirs deed witnessed by a Spanish Notary Public, as well as submit an Inheritance tax return (even if there is no tax to pay). If a lawyer is not instructed to follow the correct procedure, you can also expect very high taxes of up to 88% and the tax benefit sought will once again be negated. Just like the Gift tax, to pay less tax (or no tax) you must contact a lawyer to arrange the signing of an inheritance tax deed before a Spanish Notary Public.

Conclusion

This is as positive as taxation news get. Inheritance and Gift taxation had traditionally been Andalusia’s Achille’s heel, holding it back, but no longer. It now turns out it will become one of its main selling points!

Needless to say, the profound impact these new tax schemes will have over the mid- to long-run, when word of mouth spreads and the good news gains traction, is that they will act as a beacon, attracting affluent individuals who will flock to the Costa del Sol and Sotogrande. With ever-changing tax laws, wealthy individuals are always on the prowl seeking low-taxation areas, ready to relocate and settle down with their families to preserve and increase their wealth.

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