Andalucía inheritance tax: The most beautiful region in Spain (the food, the weather, the culture, the people, the golf, the good medical facilities etc etc. ) now offers one of the best inheritance tax deals in the world. After the latest changes 90% of people inheriting in Andalucia will not pay inheritance tax.
After this new increase in exemptions most families will not pay INHERITANCE TAX IN ANDALUCIA when they receive the estate from spouse or parent.
The aim is to make it the best retirement destination anywhere.
After the previous increase to the exemptions in Andalucia which we spoke about in our previous posts of 21/9/2017 and 19/1/2018 things just keep getting better.
A new reduction to inheritance tax in Andalucía was approved yesterday by our regional government .The third reduction in three years and this one is a game changer.
I believe this is going to cause a lot of extra investment in our region. As an estate planing and probate lawyer I have often been consulted about the inheritance tax situation in Andalucía and before there where other regions of Spain where you would get a better deal (for example the Valencia Region) but this is no longer the case.
Children and spouse resident in Andalucia will pay nothing when receiving up to 1000000 euro in value and just a testimonial amount on amounts above 1.000.000 euro.
Children and spouse who are not resident of Spain will get the same deal on assets inherited in Andalucía if they are resident in a E.U country. (and as explained in a recent update to this post also if they are resident of non E.U. countries )Spanish supreme court has said that the Andalucia´s high inheritance tax exemptions for spouse and children can now also be claimed by residents of non E.U.countries.
This last mention in relation to the sentences is extremely important as it will allow residents in the U.K. to claim the exemptions even when they have left the E.U. It is important that you consult a al lawyer specialised in probate for ex-pats like us to make sure that the exemptions are correctly claimed. (specially if you are from a NON-E.U. country).
Andalucía has gone in the last three years from being the worst region in Spain for Inheritance tax to being the best in Spain and one of the best in the world.
When people decide where to retire, for some (specially the wealthy) inherence tax is an important issue. Nobody wishes to reduce their estate unnecessarily due to a bad choice regarding where to retire or see their widow/widower struggle due to inheritance tax which happened often even in non-wealth families up to 2017.
Up to now many wealthy Spanish citizens would play around with assets and residency status of the future beneficiaries to make sure they where not subject to Andalucía inheritance tax.
The Duchess left an estate of over 5 billion and her husband and children paid almost no inheritance tax by making sure they all lived in Madrid before her death even though she had a palace in Sevilla and used to live between Sevilla and Madrid.
A well known case was the “Duchess of Alba”. Both her and her husband made sure that during the five yeas before her death they spent more time in Madrid than Sevilla. The difference in tax was from over 36% to less than half a percent. They saved hundreds of millions by living in Madrid instead of Sevilla.
In the past before these high exemptions where introduced in Andalucía we would often recommend our affluent with high net estates to purchase in the Valencia Region (Moraira , Calpe , Denia ) rather than Marbella as part of the estate planning effort to avoid the inheritance tax in Andalucía.
All of the above is history. Andalucía is now offers one of the most generous systems in the world. At the same time the rates in the Valencia Region have got worse.
Florida does not just have the sun, the beaches and the restaurants. It also has one of the best deals for inheritance tax in the U.S.A.
The politicians have realised that Andalucía was missing just one thing to attract wealthy Northern Europeans in retirement age in mass to Andalucía .
Favourable inheritance tax rules.
They have arrived.
You can now inherit from your father, mother or spouse 1.000.000 euro tax free and on any amount above that you are allowed a 99% reduction on the final tax bill. In other words regardless of what you receive you will pay next to nothing.
The conditions: For the Andalucía exemption to apply the beneficiary (children or spouse ) needs to be resident of Andalucia. If the beneficiary is non-resident he can also claim the Andalucía exemptions if the estate is in Andalucía an he is member of the E.U. (and now also if he is resident in a non E.U country. Place read the update of this article )
The preexisting wealth of the beneficiary needs to be less than 1.000.000 euro.
The exemptions do not apply to other family members or non family.
Donations to your children have been granted a 99% exemption as longs as they are resident in Andalucia or if they receive assets in Andalucía (as longs as they are resident in a E.U. country or in a third country thanks to recent sentences of our Supreme court referred to in the more recent update to this post. . )
If you wish to read our annual guideline to inheritance tax in Andalucia click here for the 2024 Andalucia inheritance tax guideline.
These new exemptions are excellent tools for estate planning and will allow for most families to pay no inheritance on assets inherited in Andalucia by distributing their estate amongst their family (depending on the size of the estate) in the most tax efficient way.
The distribution in Spain is essential because unlike in the u.k. where it is the estate that is taxed in Spain it is each beneficiary that is taxed and what he pays will depend on .
His relationship with the deceased (for example children and spouse pay much less then brothers , brothers , brothers less than cousins, cousins less then friends. etc )
Where the beneficiary lives. (there are different exemptions in different parts of Spain and then different again if you are non residen of Spain but resident in the E.U. )
Please note that what is explained above is a very simplified version of the situation. Please contact us for more information.
I you would like to find out more about our Inheritance work or our will writing work please click the links below:
If you have nothing better to do and you would like to see exactly step by step how the inheritance tax is calculated in Andalucía please read our annual Andalucia Inheritance tax guideline 2021 in English .
