If you own property or assets in Mallorca, Ibiza, Menorca, or Formentera—or stand to inherit from someone who does—understanding Inheritance Tax Balearic Islands is essential.
While the core structure of Spain’s inheritance tax is national, each autonomous region—including the Balearic Islands—has its own rules, reductions, and allowances that significantly impact what you owe.
This guide walks you through what makes the inhertiance tax rules in the Balearic Islands unique, who pays what, how to calculate your liability, and how our powerful PCC Wealth Inheritance Tax Calculator simplifies the entire process.
Whether you’re a resident, a non-resident, or a beneficiary with connections to the islands, this is the essential reference for 2025.
While Spain applies a national inheritance tax framework, each autonomous region, including the Balearic Islands, has the power to adjust allowances, deductions, and rates.
That means the way inheritance tax in the Baleares works can be dramatically different from other parts of Spain, particularly when it comes to how much tax you actually pay.
To understand how this regional system operates, you must first grasp the relationship between Spain’s national inheritance tax rules and the Balearic-specific regime.
The national inheritance tax system in Spain applies a progressive tax on individuals receiving an inheritance, based on:
The national rules also set out standard allowances and multipliers. However, these can be significantly improved by the regional rules of the deceased’s or heir’s place of residence, in this case, the Balearic Islands.
For a detailed explanation of the national system, visit our comprehensive guide: Spanish Inheritance Tax: Everything You Need to Know in 2025.
Like the national law, the way inheritance tax in the Balearics is calculated depends largely on the heir’s relationship to the deceased.
Spanish law places heirs into four kinship groups:
Why does this matter? Because Groups I and II receive the most generous treatment, especially in the Balearic Islands, where they currently enjoy 100% tax relief.
Groups III and IV still benefit from reduced tax bands and partial deductions, though not as favourable as close family members.
In order to benefit from the regional rules for inheritance tax in the Balearic Islands, one of the following conditions must apply:
This EU-compliant flexibility ensures that non-residents and expats with property or family in the Baleares can benefit from the region’s favourable deductions and allowances provided the criteria are met.
While Spain has a national inheritance tax framework, each Comunidad Autónoma (autonomous region) can apply its own reductions, bonuses, and rate bands.
Baleares is one of the most generous regions for close family members, with 100% deductions for spouses, children, and parents, a policy that took effect from 18 July 2023 and remains in place in 2025.
The key unique features of Inheritance Tax Balearic Islands include:
These benefits only apply if either the deceased or the heir has a strong legal connection to the Balearic Islands.
Below are the regional deductions.
| Group | Description | Deduction |
|---|---|---|
| I | Children under 21 | €25,000 + €6,250/year under 21 (max €50,000) |
| II | Children over 21, spouses, parents | €25,000 |
| III | Siblings, uncles/aunts | €8,000 |
| IV | Distant relatives, unrelated | €1,000 |
You may be liable for inheritance tax in Balearics if:
For non-residents, you may choose the tax law of the region where the most valuable Spanish asset is located.
This flexibility, established after key EU legal rulings, ensures that residents and non-residents can benefit equally from regional deductions, provided the conditions are met.
The Balearic regime allows for further deductions based on disability, property inheritance, and life insurance. These can significantly reduce the tax payable — or eliminate it entirely in some cases.
For beneficiaries with a recognised disability, the Balearic government allows substantial extra deductions on top of the standard kinship-based exemptions.
If the beneficiary has a physical disability rated between 33% and 65%, they may deduct an additional €48,000 from the taxable inheritance.
For those with a higher degree of physical or mental disability—defined as over 66%—the deduction increases significantly to €300,000.
Similarly, a mental disability rated above 33% also qualifies for the €300,000 exemption.
These deductions are in addition to any general allowances based on relationship to the deceased and can drastically lower the effective inheritance tax in the Baleares.
| Condition | Extra Deduction |
|---|---|
| Physical disability (33–65%) | €48,000 |
| Disability over 66% (physical or mental) | €300,000 |
| Mental disability > 33% | €300,000 |
Beneficiaries who inherit the deceased’s primary residence can also benefit from a generous exemption, provided certain conditions are met.
If the beneficiary is a spouse, descendant, parent, or elderly relative who had cohabited with the deceased for at least two years prior to death, they may deduct 100% of the value of the main home from their inheritance tax base, up to a maximum of €180,000 per person.
To retain this benefit, the property must not be sold for at least five years after the inheritance is received.
This exemption is a crucial element of the inheritance tax Balearic Islands framework, particularly for families wishing to retain generational homes.
In cases where the deceased held a life insurance policy and the beneficiary is a spouse, child, or parent, the payout can also benefit from a full inheritance tax exemption, up to a maximum of €12,000.
If the death was the result of an act of terrorism, the exemption becomes uncapped, and the full amount received is tax-free.
This provides a critical safety net for families in tragic or unexpected circumstances and is another area where the inheritance tax Balearic Islands rules offer meaningful relief.
The Balearics tax authority also supports continuity of family-owned businesses through favourable treatment.
If the deceased owned a qualifying family business, up to 95% of its value may be exempt from inheritance tax.
This exemption generally applies to the spouse or children of the deceased.
However, if there are no direct descendants or spouse, more distant relatives—up to the third degree of consanguinity—may also qualify.
One key condition is that the business must not be sold within five years of the inheritance, ensuring continuity and compliance with the intent of the tax benefit.
Do you Need Expert Inheritance Tax in The Balearics?
Inheritance tax in the Balearic Islands follows a structured, multi-step process.
Here’s how to calculate what’s owed, whether you’re using our IHT Calculator or doing it manually:
We however recommend you get in touch with us if you want to ensure accuracy and assistance.
Start by calculating the total net value of assets received, this includes real estate, bank accounts, investments, vehicles, personal effects, and business interests.
Subtract outstanding debts and funeral costs.
Identify the heir’s kinship group (I, II, III, or IV).
This will determine both your allowance and which tax rate brackets apply.
The taxable person in the context of inheritance in Spain, no matter the autonomous community, is the recipient, that means during this stage the relationship between the taxpayer and the person making the gift or leaving the inheritance must be determined.
This stage consists of working out the personal allowance available (per recipient) depending on which category you fall under.
In the Baleares, as we have seen above, the basic exemptions are:
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Once you have deducted the personal allowance available from the value arrived at in stage 1, you need to calculate the “raw tax figure” from the following table:
| Taxable Base (€) | Tax Payable (€) | Remainder up to (€) | Rate on Remainder (%) |
|---|---|---|---|
| 0 | 0 | 8,000 | 7.65% |
| 8,000 | 612 | 8,000 | 8.5% |
| 16,000 | 1,292 | 8,000 | 9.35% |
| 24,000 | 2,040 | 8,000 | 10.2% |
| 32,000 | 2,856 | 8,000 | 11.05% |
| 40,000 | 3,740 | 8,000 | 11.9% |
| 48,000 | 4,692 | 8,000 | 12.75% |
| 56,000 | 5,712 | 8,000 | 13.6% |
| 64,000 | 6,800 | 8,000 | 14.45% |
| 72,000 | 7,956 | 8,000 | 15.3% |
| 80,000 | 9,180 | 40,000 | 16.15% |
| 120,000 | 15,640 | 40,000 | 18.7% |
| 160,000 | 23,120 | 80,000 | 21.25% |
| 240,000 | 40,120 | 160,000 | 25.5% |
| 400,000 | 80,920 | 400,000 | 29.75% |
| 800,000 | 199,920 | Above | 34% |
Finally, multiply the tax rate determined in the table above by the coefficient that depends on the kinship category and the recipient’s pre-existing net wealth.
| Existing Wealth (€) | Group I & II | Group III | Group IV |
|---|---|---|---|
| 0 – 400,000 | 1.00 | 1.5882 | 2.00 |
| 400,000 – 2,000,000 | 1.05 | 1.6676 | 2.10 |
| 2,000,000 – 4,000,000 | 1.10 | 1.7471 | 2.20 |
| Over 4,000,000 | 1.20 | 1.9059 | 2.40 |
Calculating inheritance tax in the Balearic Islands can be complex, especially when dealing with multiple beneficiaries or international assets.
That’s why we created the PCC Spanish Inheritance Tax Calculator. It’s free, fast, and specifically built to account for the regional rules in place across Spain, including the Balearic Islands.
You simply enter a few details, such as the region, relationship to the deceased, and value of the assets, and receive an instant estimate of the tax due.
It’s ideal for both residents and non-residents planning ahead or managing a current inheritance.
Inheritance tax is one of the most complex areas of Spanish tax law, especially for international families, blended households, and property owners.
Even in a region like the Balearic Islands, where the rules are more favourable, strategic planning can mean the difference between a small administrative fee and a major tax burden.
At Private Client Consultancy, our wealth and tax experts help both residents and non-residents structure their assets to minimise Spanish inheritance tax, ensure family members are protected, and avoid unexpected liabilities.
Whether you’re living in the Balearics or hold property there, speaking to a professional now, before any assets change hands, can make all the difference.
While the Balearic Islands offer generous inheritance tax reductions for close family members, the system is still complicated by strict deadlines, cross-border rules, and sharp tax increases for distant relatives or unmarried partners.
Understanding the allowances and exemptions available in 2025 is the first step. But efficient inheritance planning—especially for expatriates or those with assets across jurisdictions—requires personalised advice.
At Private Client Consultancy, we specialise in helping expats and international families navigate inheritance tax in the Balearics and across Spain.
Whether you’re receiving an inheritance or planning your estate, we’re here to ensure you make the most of every available relief and avoid unnecessary tax exposure.
Disclaimer: Tax laws, rates, and reliefs are subject to change and may vary depending on individual circumstances and residency status. Any information provided on this website is based on our understanding of current regulations (or the date of when the content was published) and should not be considered personalised financial or tax advice. As tax obligations can differ across regions, countries and evolve over time, we strongly recommend seeking professional advice tailored to your specific situation before making any financial decisions.
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