Main Innovations of the Inheritance Tax in Catalonia, Spain

1. The percentages of reduction for kinship in acquisitions made because of death are modified and fixed as follows:

  • Group I (descendants under 21): 100,000 plus 12,000 Euros for each year the holder of the rights falls under the age of 21 up to a limit of 196,000 €
  • Group II (descendants of 21 years old or older, spouses, and ascendants):
    • Spouse: 100,000 €
    • Child: 100,000 €
    • The remaining descendants: 50,000 €
    • Ascendants: 30,000 €
  • Group III (relatives to the second and third degree, ascendants and descendants by affinity): 8,000 €
  • Group IV (relatives to the fourth degree or more and strangers): no reduction applies due to kinship.

The previous quantities remain fixed regardless of the fact that the taxpayer applies another reduction in the tax base or exemption.

2. The reduction of 275,000 Euros relative to the acquisitions because of death for individuals 75 years old or older is limited to those individuals who belong in Group II (descendants of 21 years or older, spouses, and ascendants).

3. The additional reduction is revoked where before it was applicable for taxpayers of Groups I and II for acquisitions because of death, as well as this type of acquisition between members cohabitating who reduced the excess of their tax base by 50% after applying the reductions to which they were entitled.

In addition, the regime implementing the right to choose between the reduction because of kinship and the additional reduction is suppressed.

4. The determination of the percentage of the reduction of tax liability that the ascendants and descendants will be able to apply will depend on a progressive rate. There are two progressive rates:  one of general application and the other in which the percentages are reduced to half and are applicable when the taxpayers choose to apply the reduction for acquiring the family business because of death.

The application of progressive rates that are incorporated by the Law 2/2014 means, consequently, that as the tax base increases, the percentage of the reduction will be less.

Thus, there are different percentages of reduction of tax liability, depending on the degree of kinship that exists with the holder of the rights:

  • Spouses can apply a reduction of 99% of the tax liability for acquisitions because of death, including the sums received by beneficiaries through life insurance where beneficiaries added themselves to the rest of the goods and rights that are integrated in the hereditary portion.
  • The rest of the taxpayers of Groups I and II can apply the reduction according to the following table:
 

Tax Base in Euros

Reduction (percentage)

Rest of the Tax Base in Euros

Marginal Reduction (percentage)

1

0.00

0.00

100,000.00

99

2

100,000.00

99

100,000.00

97

3

200,000.00

98

100,000.00

95

4

300,000.00

97

200,000.00

90

5

500,000.00

94.2

250,000.00

80

6

750,000.00

89.47

250,000.00

70

7

1,000,000.00

84.6

500,000.00

60

8

1,500,000.00

76.4

500,000.00

50

9

2,000,000.00

69.8

500,000.00

40

10

2,500,000.00

63.84

500,000.00

25

11

3,000,000.00

57.37

Etc.

20

 

 

 

 

 

 

 

In the event of a dismemberment of the domain, the tax base is the theoretical tax base.

The previous percentages of reduction will be reduced by half according to the table, and in the event the taxpayer chooses to apply any of the following reductions and exemptions:

The reduction for the acquisitions of goods and rights related to an economic activity; shareholdings in entities; shares of people with work ties; certain rural real estate dedicated to a forest goal; goods used in the agricultural holding of the holder of rights; goods of cultural heritage; and goods of natural heritage.

The exemptions and reductions regulated by the Law 19/1995 on the modernization of agricultural holdings.

Any other reduction of the tax base or exemption that the taxpayer has to request and that depends on the combination of certain conditions that correspond to the will of the taxpayer.

The option is considered chosen with the presentation of the auto liquidation. If during the voluntary deadline to present the auto liquidation the taxpayer chooses distinct options, the last one selected will be the one taken into account.

The right to choose is not rehabilitated if, because of the administrative verification, it is not possible to apply one or more of the reductions or exemptions that have been mentioned.  Nor is it rehabilitated if the maintenance rules that are necessary to benefit from the reductions or exemptions above are infringed.

In addition, the reference to the reduction of the tax liability is repealed where it applies to the taxable transactions made after January 1, 2011.

5. Concerning deferment and fractioning of the managing bodies, added to the possibility to postpone by one year the payment of the liquidations made because of death, under certain conditions, an individual can ask the managing bodies to authorize the payment to be made through properties constituting the inheritance, alternatively and if the competent Directorate-General on heritage authorizes it, and if a favourable report is previously made by the competent department or entity on issue of the property’s utilisation.

As an exception, the deferment previously mentioned may be for two years in the case   the input taxes correspond to taxable transactions made from August 1, 2009 to December 31, 2015.

This article is not considered as legal advice

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