Inheritance Tax Deductions Alicante


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Inheritance Tax Spain

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Factors that determine Inheritance Tax in Alicante tax exemptions (if any) tax rates the wealth of the beneficiary the proximity of the relation between testator and beneficiary

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Tax Exemptions in Spain are available at either State or Regional Level. The Regional level exemptions are typically more generous than the equivalent State level tax breaks but usually require residence in the region for a period of years prior to the inheritance to benefit from the additional deductions. If regional law does not grant any tax deductions on a particular asset class then recourse may be had to any State level exemptions that exist. Spanish Inheritance Tax

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We first must consider the various deductions that are applicable. The regional level exemptions available in Alicante were encacted by the Valencia parliament and in their current form are specified in Ley 13/1997. In Alicante there are two categories of exemption likely to be of general application:

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If the beneficiary is disabled: An exemption of €240,000 additional to any personal exemption if physical disabilty > 33% or sensory > 65% If anyone in this situation is resident (as legally defined) in Alicante, then may reduce by 99% total inheritace

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Disabled beneficiaries cntd. A tax exemption of €120,000 is available for those with a sensory disability >33%

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Deductions in transfer of Family Business Tax exemption of 95% of the value of the business Must be children or spouse to inherit If no child or spouse any relative 'to third degree of sanguinity' may benefit from exemption Must maintain business for a period of no less than 5 years

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State Level Exemptions As there are no regional exemptions for the inheritance of a property classified as the family home or income from life insurance policies in Alicante recourse must be had to the State Level exemptions

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Inheritance of the Family Home – State Deduction: Exemption exists for child, parent and spouse of the deceased 95% of value up to max of €122,606 per beneficiary Property may not be sold for 10 years after inheritance

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State Level Tax deductions on income from Life Insurance: An exemption of all tax on income up to €9,195,45 Available where the beneficiary is the spouse, parent or descendent or adopted descendent The exemption is available to each beneficiary but only once regardless of number of life insurance policies

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Other Deductions: As a general rule the following deductions may be made on any estate: Funeral Expenses Final Medical Expenses of the Deceased

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Other Deductions Cntd: Debts held be the deceased that are evidenced by public documents e.g. a mortgage

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Once we have applied the relevant tax deductions available we can apply personal exemptions. The personal exemption depends on the group the heir belongs to: Group I Children, including adopted children, under the age of 21 Group II All other descendants, spouses and parents Group III Close relatives such as brothers and sisters, grandparents, aunts and uncles Group IV More distant relatives

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The following are the personal exemptions available in Alicante: Deduction Group I Exemption of €40,000 plus €8,000 per year under the age of 21. A further reduction of 99% for this group if residents as per legal definition. Group II Exemption of €40,000. A further reduction of 99% for this group if residents as per legal definition. Group III No deductions available Group IV No deductions available

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Once the final amount of tax payable is determined then it is necessary to apply the relevant rate. The rates applicable can be downloaded here:

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Existing Wealth Once the relevant tax rate has been applied the resulting amount is multiplied by a coefficient which is determined by the existing wealth of the beneficiary as well as the group to which they belong:

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For example, to find out how myAdvocate Spain is helping clients avoid being overcharged by unscrupulous lawyers in Spain please go to: MyAdvocate Spain helps English-speakers who are dealing with inheritance related issues by providing regulated legal experts with extra safeguards at no additional cost.

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