Inheritance Tax DeductionsIn Valencia

This presentation has been updated and is valid for 2014.

Changes in 2014:

1. Increase of personal exemption from 40,000€ to

100,000€ for Group I beneficiaries + 8,000€ for each year

under 21 (up to a max. of 156,000€)

Inheritance Law in Valencia

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This presentation has been updated and is valid for 2014.

Changes in 2014:

2. Group II deduction increases to 100,000€

3. 95% deduction of value of family home up to a value of

150,000€ for specified beneficiaries

Inheritance Law in Valencia

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There are special regional tax deductions and exemptions

passed by the local government in Valencia that only apply

to those beneficiaries who have been resident in the region.

Inheritance Law in Valencia

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If you have NOT been resident in the Valencia region then,

when determining your inheritance tax liability, you may only

apply the deductions and exemptions approved by the

CENTRAL government.

Inheritance Law in Valencia

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The central government exemptions and deductions are not

as generous as the regional exemptions.

This has caused complaints that the inheritance tax laws in

Spain are discriminatory against non-residents.

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Inheritance Law in Valencia

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The regional level exemptions available in Valencia were

enacted by the Valencia parliament and in their current form

are specified in Law 13/1997.

Inheritance Tax Law in Valencia

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Spanish Inheritance law first assigns beneficiaries to groups according to the degree of kinship with the deceased:

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

Personal Exemptions

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The following are the personal exemptions available in Valencia :

Deduction

Group I Exemption of €100,000 plus €8,000 per year under the age of 21 up to a maximum of €156,000. A further reduction of 75% for this

group if residents as per legal definition.

Group II Exemption of €40,000. A further reduction of 75% for this group if residents as per legal definition.

Group III No deductions available

Group IV No deductions available

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If the beneficiary is disabled:

An exemption of €240,000 additional to any personal

exemption if mental disability > 33% or physical > 65%.

A discount of 99% is applied to any inheritance tax payable

by any beneficiary with a physical disability > 65% or

mental disability > 65%

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Deductions in transfer of Family Business

Tax exemption of 95% of the value of the business

Should be children or spouse to inherit to benefit from the

deduction

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Deductions in transfer of Family Business

If no child or spouse any relative 'to third degree of

consanguinity' may benefit from exemption

Must maintain business for a period of no less than 5 years

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Inheritance of the Family Home

Exemptions exist for child, parent and spouse of the

deceased with a value up to 95% of value up to max of

€150,000 per beneficiary

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State Level Tax deductions on income from Life Insurance:

An exemption of all tax on income from a life insurance policy up

to €9,195,45

Available where the beneficiary is the spouse, parent or

descendent or adopted descendent

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State Level Tax deductions on income from Life Insurance:

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 the final amount of tax payable is determined then it is necessary to apply the relevant rate:

Tax Rates in Valencia

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Taxable Sum Tax Payable On This Sum

Any Remainder Up To

Applicable Rate on Remainder (%)

0 0 7993,46 7,65

7993,46 611,5 7668,91 8,5

15662,38 1263,36 7831,19 9,35

23493,56 1995,58 7831,19 10,2

31324,75 2794,36 7831,19 11,05

39155,94 3659,7 7831,19 11,9

46987,13 4591,61 7831,19 12,75

54818,31 5590,09 7831,19 13,6

Tax Rates in Valencia

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Tax Rates in Valencia

Taxable Sum Tax Payable On This Sum

Any Remainder Up To

Applicable Rate on Remainder (%)

62649,5 6655,13 7831,19 14,45

70480,69 7786,74 7831,19 15,3

78311,88 8984,91 39095,84 16,15

117407,71 15298,89 39095,84 18,7

156503,55 22609,81 78191,67 21,25

234695,23 39225,54 156263,15 25,5

390958,37 79072,64 390958,37 29,75

781916,75 195382,76 En adelante 34

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Existing Wealth

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

Pre-existing Wealth Groups

In Euros I y II III IV

From 0 a 390.657,87 1 1,5882 2

From 390.657,87 to1.965.309,58

1,05 1,6676 2,1

From 1.965.309,58 to3.936.629,28

1,1 1,7471 2,2

More than 3.936.629,28 1,2 1,9059 2,4

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Existing Wealth

The Groups referred to consist of the following beneficiaries:

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

To find out how to get expert advice, in English, about how to

reduce your liability for inheritance tax, go to:

Expert Probate Services in the Valencia Region

Expert Probate Services in Alicante

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