Reform of inheritance and gift tax approved in Catalonia

On January 22, 2014, the Catalan Parliament approved the “Ley de medidas fiscales, administrativas, financieras y del sector público” (Law on Fiscal, Administrative, Financial, and Public Sector Measures), which includes the reform of inheritance and gift tax in Catalonia. With this reform, the currently high exemptions and tax deductions were mainly reduced. The previously high exemptions resulted in only 6.2% of heirs in Catalonia having to pay inheritance tax in recent years. According to calculations by the Dirección General de Tributos de Cataluña, after the reform, the percentage of those who have to pay taxes in the event of inheritance will increase to 18.5%.

With the reform coming into force, the following exemptions will apply to inheritance tax in Catalonia:

  • Descendants under 21 years of age: €100,000 plus €12,000 for each year the descendant is younger than 21. Maximum amount is €196,000. (Tax bracket I) – Exemption until now: €275,000 to €539,000.
  • Children over 21 years of age and spouses: €100,000 (Tax bracket II) – Exemption until now: €275,000 or €500,000.
  • Other descendants: €50,000 (Tax bracket II) – Exemption until now: €150,000.
  • Parents and grandparents: €30,000 (Tax bracket II) – Exemption until now: €100,000.
  • Second and third-degree relatives (siblings, siblings’ children, in-laws): €8,000 (Tax bracket III) – Exemption until now: €50,000.
  • Fourth-degree relatives and other persons: no exemption (Tax bracket VI) – Exemption until now: €0.

The most important of the other changes that come with the reform of Catalan inheritance and gift tax law is the change to the so-called “Bonificación” in inheritance tax. The “Bonificación” allows the taxpayer to deduct a significant percentage of the resulting tax amount, depending on their relationship with the deceased. For spouses, this deduction remains unchanged at 99%. For other relatives in tax brackets I and II, the deduction is reduced from the previous 99% to a percentage ranging from 99% to 20% depending on the value of the inherited assets. Like the above exemptions, this deduction is only allowed for inheritances, not for gifts.

For beneficiaries of inheritances and gifts residing abroad, the Catalan legislation is mostly irrelevant, as the Catalan inheritance and gift tax law only applies if both the deceased and the heir are resident in Catalonia. In all other cases, the national Spanish inheritance and gift tax legislation applies, which results in a much higher taxation of inheritances and gifts in Spain.


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