Understanding Inheritance Tax in Andalucia, Spain, doesn’t have to be complex.
This article aims to clarify common misunderstandings about Inheritance Tax in Spain and provide an updated overview of Inheritance Tax in Andalucia.
Inheritance Tax in Spain, known as Impuesto de Sucesiones y Donaciones, operates at two levels: national and local.
National rules set the foundation, while each region, including Andalucia, can apply its own specific regulations.
This tax applies to both inheritances and lifetime gifts and it is important to understand that it is charged to the recipients (the beneficiaries) which includes spouses.
Inheritance Tax in Spain is due when the beneficiary is resident in Spain or the asset that is being gifted or inherited is based in Spain.
Spanish tax authorities have categorised have categorised the relationship between the taxpayer and the person making the gift/leaving the inheritance into 4 groups.
Each group is allowed specific tax-free allowance on inheritance not for lifetime gifts:
The “Raw Tax” is what the national law established at the amount of tax you should pay after the initial allowance.
| Inheritance Range | Tax Rate |
|---|---|
| Up to €7,993 | 7.65% |
| €7,993 to €31,956 | 7.65% to 10.2% |
| €31,956 to €79,881 | 10.2% to 15.3% |
| €79,881 to €239,389 | 15.3% to 21.25% |
| €239,389 to €398,778 | 25.5% |
| €398,778 to €797,555 | 29.75% |
| Above €797,555 | 34% |
The final national element to apply when considering inheritance tax in Spain is the ISD Multiplicater
| Pre-existing net wealth (Euro) | Group I and II | Group III | Group IV |
|---|---|---|---|
| 0 - 402,700 | 1.00 | 1.5882 | 2.0 |
| 402,700 - 2,007,400 | 1.05 | 1.6676 | 2.1 |
| 2,007,400 - 4,020,800 | 1.1 | 1.7471 | 2.2 |
| 4,020,800 + | 1.2 | 1.9059 | 2.4 |
Each autonomous region in Spain has its own reductions, deductions and allowances.
Since January the 1st 2018, in Andalucia, the personal allowance for those that can be found in the Kinship groups I and II increased to a €1,000,000 tax-free allowance per beneficiary, with a 99% tax relief on any amount above that threshold.
But this was not always the case.
With each region in Spain having the right to set their special rules in relation to Inheritance Tax, the rates and exemptions have become highly politicised. Depending on the party and their political affiliation in power in each region, you can see changes in exemptions or levels of taxation.
Historically, Andalucia had a high inheritance tax burden under the Spanish Socialist Worker’s Party. However, since 2018 politics in Andalucia have been more center-right, which therefore introduced substantial tax exemptions, drastically reducing the inheritance tax in Andalucia.
This means that although such a favourable situation is in place, a change in the political situation might mean a change in the favourable nature of Inheritance tax in Andalucia.
Those who can benefit from this generous tax allowance and exemption are first and second-degree relatives, specifically spouses and children. Other relatives like siblings and nephews are not eligible for the same benefits.
It’s important to know that, de facto couples (parejas de hecho) are treated as married couples for inheritance tax purposes, provided they are registered in the Andalusian Registry of De Facto Couples (Registro de Parejas de Hecho).
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First you must determine the “real value” of all the assets inherited. In practice this means that the starting point is a full, open-market valuation.
The taxable person in the context of inheritance in Spain 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.
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:
| Amount | To (Euro) | Rate (Percentage %) | Beginning Scale (Euros) |
|---|---|---|---|
| 0.00 | 7,993.46 | 7.65 | |
| 7,993.46 | 7,987.45 | 8.50 | 611.50 |
| 15,980.91 | 7,987.45 | 9.35 | 1,290.43 |
| 23,968.36 | 7,987.45 | 10.20 | 2,037.26 |
| 31,955.81 | 7,987.45 | 11.05 | 2,851.98 |
| 39,943.26 | 7,987.46 | 11.90 | 3,734.59 |
| 47,930.72 | 7,987.45 | 12.75 | 4,685.10 |
| 55,918.17 | 7,987.45 | 13.60 | 5,703.50 |
| 63,905.62 | 7,987.45 | 14.45 | 6,789.79 |
| 71,893.07 | 7,987.45 | 15.30 | 7,943.98 |
| 79,880.52 | 39,877.15 | 16.15 | 9,166.06 |
| 119,757.67 | 39,877.16 | 18.70 | 15,606.22 |
| 159,634.83 | 79,754.30 | 21.25 | 23,063.25 |
| 239,389.13 | 159,388.41 | 25.50 | 40,011.04 |
| 398,777.54 | 398,777.54 | 29.75 | 80,655.08 |
| 797,555.08 | and beyond | 34.00 | 199,291.40 |
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.
| Pre-existing net wealth (Euro) | Group I and II | Group III | Group IV |
|---|---|---|---|
| 0 - 402,700 | 1.00 | 1.5882 | 2.0 |
| 402,700 - 2,007,400 | 1.05 | 1.6676 | 2.1 |
| 2,007,400 - 4,020,800 | 1.1 | 1.7471 | 2.2 |
| 4,020,800 + | 1.2 | 1.9059 | 2.4 |
With the special rules in place in Andalucia, as explained, the first million euros benefit from a tax-free allowance and anything above that benefits from a 99% tax relief.
Inheritance tax must be paid within six months of the date of death, though extensions may be granted in very specific and justified circumstances.
The assets will not be released to beneficiaries until the tax has been paid.
At Private Client Consultancy Wealth, we’re experts in navigating Inheritance Tax in Andalucia Spain. Our wealth managers and legal team can assist you in planning your financial future the way you want it to be.
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