The new government of the Comunidad Andalucía, with its decision of 26 January 2019 initiated the plan to de facto abolish the inheritance tax in Andalusia for certain categories of heirs. This will make the already favourable inheritance tax in Andalusia even more favourable. This article explains the new regulations.
Inheritance tax in Andalusia
Inheritance tax in Spain is jointly regulated by the Spanish national government and the Spanish autonomous regions. This allows the regions to decide on tax-free minimums, certain deductions and reductions, etc.
In Andalusia, the inheritance tax for first-line and first-degree heirs is already very favourable anyway. The tax-free minimum for them is €1,000,000 per heir provided the heir owns less than €1,000,000. So if you inherit less than 1,000,000 euros in Andalusia, you will not pay any inheritance tax.
There is also a 99.99% reduction on the family home, should the testator be a Spanish resident.
Decision dated 26 January 2019
There will be an additional reduction of 99% on the amount exceeding the tax-free minimum. This means that the taxable base reduces by 99% per cent. For example, if you inherit €1,100,000, the taxable base consists of €1,000 (1% of €100,000). Moreover, this rule applies to grandparents, parents, children, the surviving (registered) partner or spouse. So, in practice, they will usually pay no more inheritance tax.
Entry into force foreseen in 2019
The regional parliament has since confirmed the decision. The new measure came into force on 11 April 2019.
No taxes on an estate in Spain?
Unfortunately - despite this tax reduction - inheriting in Spain is not tax-free. After all, the main tax cost is the plusvalia muncipal.
The plusvalia muncipal is a municipal transfer tax on real estate. The longer the testator owned the property, the higher the tax will be.
Assets in Spain also count towards Flemish inheritance tax if the testator was resident in Flanders at the time of death. A Spanish property is then included in the estate, which has an impact on the applicable rate. However, you can reduce the inheritance tax paid in Spain from the Flemish inheritance tax.
What about donations
The 99% reduction also applies to donations under certain conditions.
Last update: September 2023