Inheritance Tax Deductions Balearic Islands


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Inheritance Tax Spain 2011

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Important Factors to Determine: Inheritance Tax Balearic Islands tax deductions and exemptions (if any) tax rates the wealth of the beneficiary the proximity of the relation between testator and beneficiary

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When changing the manner in which the autonomous regions of Spain funded themselves, the central government devolved the powers to set inheritance tax rates. Most regions have used that power to virtually abolish the tax for those who are resident in their region. Spanish Inheritance Tax

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While the regional exemptions and deductions tend to be more generous than those available at the State level they are not uniform and all regions do not apply the same deductions and exemptions. If there is no relief available at the regional level the a State level exemption may be availed of. Spanish Inheritance Tax

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We first must consider the various deductions that are applicable. The regional level deductions available in the Balearic Islands were enacted by the parliament in Palma and in their current form are specified in Ley 22/2006.

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The following categories of exemption are the most important and likely to be of general application:

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If the beneficiary is disabled: An exemption of €48,000 additional to any personal deductions if disabilty of a degree > 33% and < 66% If the disability is > 66% then the additional discount increased to €300,000

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If the beneficiary is disabled: If the disability is a physical disability > 33% an additional deduction of €300,000 may be applied

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Deductions in transfer of Family Business Tax deduction 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

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Deductions in transfer of Family Business The business may not be sold for a period of no less than 5 years

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Inheritance of the Family Home The spouse, descendants, parents or any elderly relative who has lived with the deceased for two years prior to their death may deduct 100% of the value of the main family home up to a value of €180,000 each

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Inheritance of the Family Home The property may not be sold for a period of 5 years after the inheritance. The main family home is as defined for the purposes of legislation dealing with income tax.

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Tax deductions on income from Life Insurance: Where the beneficiary is a spouse, descendant or parent then a deduction may be made of 100% up to €12,000 of any income derived from a life insurance policy held by the deceased

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

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Apart from personal deductions we must consider personal exemption limits as these might be greater than the personal deductions. These depend 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 the Canary Islands: Deduction Group I Deduction of €25,000 plus €6,250 per year under the age of 21 up to a maximum of €50,000 Group II Deduction of €25,000. Group III Deduction of €8,000. Group IV Deduction of €1,000.

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Each year in Spain thousands of expats pay more tax on inheritance than they should - simply because they fail to follow some simple rules.

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To find out how to deal with such issues as... The immediate steps to take when dealing with an Inheritance. How to manage an inheritance in Spain with a non-Spanish will.

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As well as... The difference between State and regional tax exemptions. How to reduce your inheritance tax bill in Spain.

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And much more... Download the myAdvocate Spain guide to Inheritance Tax in Spain by clicking on: Spanish Inheritance Tax

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Always make sure to get information on a Spanish lawyer’s professional background as well as the legal fees they will charge before you commit to using their services. Consider this free service from myAdvocate Spain™: Lawyer Verification System

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More information and contact: [email protected] Tel. +34 931 845 073

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