Could inheritance tax soon be scrapped in Spain?
Spain's centre-right Popular Party is hoping to use its absolute majority in the Senate to eliminate inheritance tax at the national level, following the example of several regional governments across the country.
Spain's centre-right party the Partido Popular is hoping to take advantage of its absolute majority in the Spanish Senate to pass a bill that would scrap Inheritance Tax (el impuesto de sucesiones) at the national level.
This comes following several regional governments across Spain that have already scrapped the tax. More than half Spain’s 17 regions have in effect eliminated inheritance tax so far.
READ ALSO: EXPLAINED: How choosing the right region in Spain can save you thousands in inheritance tax
Most have done this by subsidising the tax at 99 percent, thus reducing it to 1 percent for inheritance between family members, or by cutting rates, as in Aragón's and Cantabria's case.
The regions to cut inheritance tax include Andalusia, the Balearic Islands, the Canary Islands, Castilla y León, Extremadura, Madrid, Murcia, La Rioja and Valencia. Many of these regions are ruled by right-wing PP or PP-Vox coalition governments.
Now the national party intends to make use of its absolute majority in the Senate to push through a bill that proposes the same tax cut at the national level. The plans, which Europa Press has seen and reported on, suggest that inheritance tax "does not make up even 1 percent of tax income" so, therefore, "eliminating it does not cause any type of unbearable damage to revenue."
However, any bill would need to be sent to the Spanish Parliament for approval, where the proposals could fall foul of the congressional arithmetic and be outvoted.
Building on the moves on regional governments, the PP proposal suggests that the national government should compensate regional executives for the cost of eliminating it on a fiscal year basis.
The proposal would make up part of broader reforms to the financing system of Spain's regions. Many of the regional governments currently cutting, subsidising or eliminating inheritance tax are headed by PP politicians voted in during the party's sweeping victories across the country in May's local and regional elections.
However, led by national leader Alberto Núñez Feijóo the PP failed to gain a majority in the following general election, held in July, and the numbers in the Spanish Parliament could mean that any proposal to implement the tax cut on a national level may be doomed before it has even got off the ground.
How does inheritance tax work in Spain?
Spain’s inheritance or succession tax is complex, changeable and long controversial.
READ ALSO: Where are the best and worst places for inheritance tax in Spain?
Spanish inheritance tax is decided by the Spanish State but all of the country’s 17 regions have the right to change these rules to make them more beneficial or detrimental to heirs. The succession tax rates will differ depending on how much is inherited, ranging from 7.65 percent on the first €7,933 up to 34 percent on €797,555+.
There are many factors to consider, such as which category heirs and other beneficiaries fall into, or the fact that in Spain the spouse of the deceased is also subject to inheritance tax, which is not the case in the UK and many other countries.
What are the different groups of heirs in Spain? There are several categories or groups that heirs can fall into and this will depend on how much allowance they can benefit from. The groups are the following:
Group 1: Children under 21 years of age
Group 2: Children over 21 years of age, spouses and parents
Group 3: Siblings, nieces, nephews, as well as aunts and uncles
Group 4: Cousins or more distant relations
Keep in mind that regional governments can and do change their inheritance tax conditions relatively often, so make sure you double-check with a Spanish source, preferably the website of your regional government. Often it can depend on which party rules your region.
In many of the regions that have recently cut or eliminated inheritance tax, doing so was a key campaign pledge. In Valencia, for example, where the PP govern in coalition with far-right Vox, the first thing regional President Carlos Mazón did when entering office was eliminate the inheritance tax.
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Spain's centre-right party the Partido Popular is hoping to take advantage of its absolute majority in the Spanish Senate to pass a bill that would scrap Inheritance Tax (el impuesto de sucesiones) at the national level.
This comes following several regional governments across Spain that have already scrapped the tax. More than half Spain’s 17 regions have in effect eliminated inheritance tax so far.
READ ALSO: EXPLAINED: How choosing the right region in Spain can save you thousands in inheritance tax
Most have done this by subsidising the tax at 99 percent, thus reducing it to 1 percent for inheritance between family members, or by cutting rates, as in Aragón's and Cantabria's case.
The regions to cut inheritance tax include Andalusia, the Balearic Islands, the Canary Islands, Castilla y León, Extremadura, Madrid, Murcia, La Rioja and Valencia. Many of these regions are ruled by right-wing PP or PP-Vox coalition governments.
Now the national party intends to make use of its absolute majority in the Senate to push through a bill that proposes the same tax cut at the national level. The plans, which Europa Press has seen and reported on, suggest that inheritance tax "does not make up even 1 percent of tax income" so, therefore, "eliminating it does not cause any type of unbearable damage to revenue."
However, any bill would need to be sent to the Spanish Parliament for approval, where the proposals could fall foul of the congressional arithmetic and be outvoted.
Building on the moves on regional governments, the PP proposal suggests that the national government should compensate regional executives for the cost of eliminating it on a fiscal year basis.
The proposal would make up part of broader reforms to the financing system of Spain's regions. Many of the regional governments currently cutting, subsidising or eliminating inheritance tax are headed by PP politicians voted in during the party's sweeping victories across the country in May's local and regional elections.
However, led by national leader Alberto Núñez Feijóo the PP failed to gain a majority in the following general election, held in July, and the numbers in the Spanish Parliament could mean that any proposal to implement the tax cut on a national level may be doomed before it has even got off the ground.
How does inheritance tax work in Spain?
Spain’s inheritance or succession tax is complex, changeable and long controversial.
READ ALSO: Where are the best and worst places for inheritance tax in Spain?
Spanish inheritance tax is decided by the Spanish State but all of the country’s 17 regions have the right to change these rules to make them more beneficial or detrimental to heirs. The succession tax rates will differ depending on how much is inherited, ranging from 7.65 percent on the first €7,933 up to 34 percent on €797,555+.
There are many factors to consider, such as which category heirs and other beneficiaries fall into, or the fact that in Spain the spouse of the deceased is also subject to inheritance tax, which is not the case in the UK and many other countries.
What are the different groups of heirs in Spain? There are several categories or groups that heirs can fall into and this will depend on how much allowance they can benefit from. The groups are the following:
Group 1: Children under 21 years of age
Group 2: Children over 21 years of age, spouses and parents
Group 3: Siblings, nieces, nephews, as well as aunts and uncles
Group 4: Cousins or more distant relations
Keep in mind that regional governments can and do change their inheritance tax conditions relatively often, so make sure you double-check with a Spanish source, preferably the website of your regional government. Often it can depend on which party rules your region.
In many of the regions that have recently cut or eliminated inheritance tax, doing so was a key campaign pledge. In Valencia, for example, where the PP govern in coalition with far-right Vox, the first thing regional President Carlos Mazón did when entering office was eliminate the inheritance tax.
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