Andalucia Increases Inheritance Tax Threshold to One Million Euros!
It’s always nice when the tax burden lightens and this is a good time to say thank you to the Junta de Andalucia for making a forward looking move when they finally agreed to change the rules over inheritance tax.
This tax the ‘Impuesto de Sucesiones y Donaciones’, is a regionally controlled tax that for many years has been higher in Andalucia than the rest of Spain. It was always an unpopular tax because it forced recently bereaved people to sell their property if they could not pay, or forced people into tax avoidance schemes. We will never know the number of people who would have lived in Andalucia but were put off by this tax and went to other regions or countries, or registered in other regions.
What are the New Inheritance Tax Thresholds for 2018?
The good news is that from 2018 parents, spouses, children and grandchildren of the deceased will not pay any inheritance tax on the first one million euros. This huge increase of 300% was concluded last week in Seville when the Ciudadanos party made the popular reform a condition of continued support for the ruling PSOE.
According to the current applicable rules, non-tax residents based in the European Union can also benefit from this increase.
This and some other changes open up a new era in estate planning for foreign residents in Andalucia bringing us in line, or below rates in the rest of Spain. Estate planning is complex and is ideally achieved over decades; when changes in the tax rate this large happen it’s worth having another look at what you are leaving and how. An estate can almost pass tax free, no matter how large, if it is distributed among close family.
It is strongly advisable to have a Spanish will for your Spanish assets and another will for your worldwide assets and both wills should work together. At My Lawyer in Spain we advise our clients how to make the most from Spanish inheritance laws in an easy to understand manner.
Please contact us for a free consultation about Estate Planning and any new Will requirements following this new law.
