Big reduction to inheritance tax: The new regional government continues with its tax revolution.
After the reduction time to inheritance tax, now it is the turn for donation tax. If you receive a donation of an asset in Andalucía from your parent or spouse the tax due is now reduced by 99% . Example : if last year your mother had gifted you a house in Andalucia for a value of 400000 euro you would have paid an incredible 80655 euro in donation tax to the Andalucia regional government who collects this tax. Now on the same donation you would only pay 806 euro donation tax .
Beneficiaries resident in Andalucia are allowed to claim this exemption but also residents in any E.U. country (including the U.K. until the end of the transition period) if the asset is in Andalucia . (thanks to a sentence of the European Court of Justice back in 2014).
Do not try and perform the above withoght a solicitor.
Group I and II heirs (spouse and descendants) in Andalucía have had inheritance tax drastically reduced but some worry that a change in government could cause them to do away with these new exemptions. Some families have decided to lock in the benefits of the new system.
They clearly do not wish to die ,so the other way of locking in the gain is to transfer part of their wealth to their children by donation that as explained has now been reduced to almost 0 euro.
This way even if the government changes and the inheritance tax goes up again they will not be affected.
Needless to say a donation in life to your children has other risks like them not coming over for Christmas etc.
