Inheritance tax in Andalucia
Andalucia is one of the Autonomous Communities in which the Donations and Inheritance Tax for the closest relatives have been practically abolished.
In order not to harm acquisitions by inheritance or by donation in favor of the spouse and direct relatives, the following benefits are established:
In acquisitions “mortis causa” or by inheritance
Regional reduction for spouse and direct relatives of up to 1,000,000 euros.
On the tax base, a reduction of € 1,000,000 will be applied in acquisitions by inheritance, and the excess is settled. That is, the exempt minimum is set at € 1,000,000 for each heir who is a direct relative of the deceased.
In Andalucia, the increase of one million euros to the minimum exempt from Inheritance has been a social demand for a long time due to the injustice that, in many cases, was causing the repudiation of inheritances and even the indebtedness of families to be able to cope to the payment of this tax.
Today, only about 4% of inheritances are being forced to pay thanks to this increase in the limit.
Requirements for the application of this reduction:
1. That the beneficiary of the inheritance is included in the following kinship groups:
Group I:
Descendants or adopted, under 21 years of age. Those who are adopted are equated with those who are the object of permanent foster care and custody for the purpose of adoption.
Group II:
Descendants or adopted, 21 years or older. Those who are adopted are equated with those who are the object of permanent foster care and custody for the purpose of adoption.
Spouse or domestic partner registered in the Andalusian Domestic Partnership Registry.
Ancestors (parents, grandparents and other ancestors).
Adopters. Adoptors are equated with people who carry out permanent foster care and foster care for adoption purposes.
The aforementioned kinship matches apply to the reductions, multiplier coefficients and bonuses in the quota.
2. That the pre-existing patrimony of the heir or legatee does not exceed 1,000,000 euros.
In addition to this reduction, other reductions may be applied that we will analyze later.
In acquisitions by inheritance or by donation
99% discount of the tax quota in acquisitions by inheritance and donation.
In Andalucia, a 99% discount is applied to the tax rate of the tax, both in inheritance and in donations.
The beneficiaries of this bonus are those included in the aforementioned Groups I and II.
With this discount, parents or ascendants can anticipate the transfer of assets to children or descendants, preventing the tax from being an obstacle. In this way, children or descendants are allowed to face their economic difficulties while the parents or ascendants are alive.
It is an essential requirement to enjoy this bonus that the donation is made in a public deed.
Other reductions in Inheritance Tax in Andalucia
We refer exclusively to reductions in the tax base of the “mortis causa” acquisition tax.
To determine the applicable reductions, 4 groups are distinguished:
Group I and II: Direct relatives of the deceased, whom we have referred to in the previous section (descendants, spouse, parents, grandparents …).
Group III:
Collaterals of 2nd and 3rd degree by consanguinity or affinity (brothers, uncles, nephews, brothers-in-law).
Ascendants or descendants by affinity (parents-in-law, grandparents of the spouse, children of the spouse, in-law nephews …).
Group IV: More distant degrees of kinship (cousins, great-uncles …) and strangers.
In Andalusia, state reductions are improved and their own reductions are established, applicable after the state ones.
1. Improved state reductions
Reduction for habitual residence
The Autonomous Community of Andalucia improves the state reduction according to the net real value of the habitual residence in BI of each subject:
Up to 123,000: 100% reduction percentage
From 123,000.01 to 152,000: 99%
From 152,000.01 to 182,000: 98%
From 182,000.01 to 212,000: 97%
From 212,000.01 to 242,000: 96%
Over 242,000: 95%
Thus, the reduction percentage will range from 100% to 95%, depending on the real net value of the property transferred.
Requirements for the application of this reduction:
That the beneficiaries are:
Relatives included in Groups I and II mentioned above (descendants, adoptees, spouse, common-law partner, adopters …).
A collateral relative (brother, uncle …) of the deceased who has lived with him during the 2 years prior to the death.
That the acquisition of the habitual residence is maintained during the 3 years following the death.
Reduction for individual company, business, professional and participations in entities
The reduction of the Inheritance Tax in Andalusia for the transfer of a company or business is improved compared to the state one. A 99% reduction is set in the tax base.
Requirements for the application of this reduction:
That individual companies, professional businesses and entities must have their fiscal and social domicile in Andalucia.
That the acquired business remains in Andalusia for 5 years after death.
Beneficiaries of this reduction:
The spouse, descendants or ascendants and collaterals up to the third degree by consanguinity and by affinity to the deceased.
People without a kinship relationship with the deceased who, in addition, meet the following requirements:
Labor or service contract in force in the company or business of the deceased on the date of death, with a minimum seniority of 10 years.
Have entrusted tasks of responsibility in the management or direction of the company upon death, with a minimum seniority in the exercise of these tasks of 5 years.
2. Reductions of the Inheritance Tax in Andalucia
Autonomic reduction
The regional reduction of 1,000,000 euros for spouse and direct relatives, to which we referred at the beginning.
Disability reduction
For relatives in Group I and II, a reduction of up to 1,000,000 euros will be applied when the disability is equal to or greater than 33%.
On the other hand, for relatives in Group III and IV, a reduction of up to 250,000 euros will be applied, if their pre-existing assets are equal to or less than € 1,000,000.
Reduction for agricultural holdings
A 99% reduction in the tax base is established.
Requirements for the application of this reduction:
That the deceased has exercised the agricultural activity in a habitual, personal and direct way on the date of death.
That the acquired business remains in Andalusia for 5 years after death.
That the acquirer maintains the farm for 5 years.
Beneficiaries of this reduction:
The spouse or descendants when the following requirements are met:
That the deceased has exercised the agricultural activity in a habitual, personal and direct way on the date of death.
In the event of retirement of the deceased, that the spouse or descendants have exercised the agricultural activity in the same way.
Persons unrelated to the deceased when the following requirements are met:
That the acquirer is a professional farmer or, where appropriate, obtains it within 1 year from the acquisition of the farm.
That the acquirer has a current employment contract with the deceased full-time that is recorded in the TGSS by affiliation to the General Regime.
That the acquirer prove a minimum seniority of 5 years.