Wealthy individuals are likely to flock to Andalusia in the future, following the new Inheritance and Gift Tax laws introduced from April 2019. The new laws intend to reduce or even suppress the amount of taxes due when inheriting or being gifted money. According to an article from Idealista.com the new law will help beneficiaries in Group I and II to avoid the previous heavy taxation:
Group I: Natural and adopted children under 21.
Group II: Natural and adopted children over 21, spouses, registered civil partnerships, parents, adoptive parents, grandparents and great-grandparents.
Reduced Gift Tax in Andalusia
There are a few rules that apply, however. The recipient must be an EEA/EU resident and the new taxable base benefits can offer tax relief of up to 99%. The following table published by Idealista shows the exact benefits more clearly, with all numbers rounded off.
The second condition is that the recipient must have a Spanish lawyer draw up a Gift Deed witnessed by a Spanish Notary Public and submit a Gift Tax Return. Failure to follow the correct legal requirements could leave the recipient liable to steep taxes of up to 88%.
Reduced Inheritance Tax in Andalusia
Similar rules apply to take advantage of the new inheritance tax laws. The beneficiary must be an EEA/EU resident. The new rules apply as follows:
- Pre-existing wealth nil-rate band raised to 1,000,000 euros (per inheritor).
- Estates equal to or below 1,000,000 euros will go untaxed (per inheritor).
- Estates over 1,000,000 euros will benefit from a 99% tax relief (per inheritor), meaning you only pay 1% on anything that exceeds the one million threshold.
- This translates as follows:
Once again, to benefit from this generous new tax ruling, inheritors must contact a Spanish law firm to arrange the drafting of an Acceptance of Heirs deed, which must be witnessed by a Spanish Notary Public. They must also submit an Inheritance Tax Return, even if no tax is due.
Failure to follow the correct legal procedures could result in the tax benefit being negated and taxes of up to 88% being due.
This revolutionary new tax law means that in the foreseeable future many individuals will flock to the Costa del Sol, seeing it as a low-taxation area offering a means to preserve their wealth as it is passed down to future generations.