Navarre Inheritance Tax. Reductions and Bonifications

Introduction

The Inheritance and Gift Tax is a state tax. It is regulated by Law 29/1987, of December 18, on the Tax on Inheritance and Gift Taxes and the Regulation that develops it is Royal Decree 1629/1991, of November 8.  But, this national tax can be adapted and improved by regions. So, for Navarra region, the Inheritance and Donation Tax is regulated and adapted by the regional law DECRETO FORAL LEGISLATIVO 250/2002, DE 16 DE DICIEMBRE, POR EL QUE SE APRUEBA EL TEXTO REFUNDIDO DE LAS DISPOSICIONES DEL IMPUESTO SOBRE SUCESIONES Y DONACIONES

In this section we will detail exclusively  reductions, tax rate and bonus  on the Inheriance and Donation Navarra  tax. For other aspects as Process of Inheritance, Executing a foreign Will etc, please, visit our Inheritance Process section, where all aspects and procedures may be reproduced in inheritance process independently of the specific executed region. 

Successions

Reductions on the tax basde

Protected areas

The “mortis causa” and intervivos acquisitions of full ownership or bare ownership, of land declared as protected natural areas or proposed as sites of Community Interest of the European Ecological Network Natura 2000, will enjoy a reduction in the taxable base of the Tax of 95 per cent. The same reduction will be made in the extinction of the usufruct.

Life Insurance

The receipt of amounts from insurance companies by the beneficiaries of life insurance contracts referred to in Article 8(c), which were entered into before 24 June 1992, shall enjoy the following reductions in the taxable base:

a) Reduction of 90 per cent of amounts exceeding 3,005.06 euros when the relationship between the contracting party and the beneficiary is that of ascendant or descendant by affinity.

b) Reduction of 50 per cent when the relationship between the contracting party and the beneficiary is that of second-degree collateral.

c) Reduction of 25 per cent when the relationship between the contracting party and the beneficiary is that of third- or fourth-degree collateral.

d) Reduction of 10 per cent when said relationship is more distant or there is no relationship.

Disability

Mortis causa acquisitions made by taxable persons who can prove a degree of disability equal to or greater than 33 per cent and less than 65 per cent will enjoy a reduction of 60,000 euros.

This amount will be 180,000 euros when the taxpayer proves a degree of disability equal to or greater than 65 per cent.

Tax Rate

Relationship with the deceased

(*) Note: the rate is progressive and each tax rate will be applied to each of the brackets of the taxable base indicated.

(*) Tax rate to be applied from 0 euros to 6,010.12, since in these cases there is no tax bracket at 0.8%

(**) This rate is not progressive and is applied to the total taxable base, without prejudice to the specific bracket of “Up to 7,813.16” for the indicated degrees of kinship.

The degrees of kinship are as follows:

• Grade 1: Ascendants and descendants by affinity: Father-in-law, son-in-law, daughter-in-law, stepfather, stepmother, stepchild.
• Grade 2: Second-degree collaterals: Sibling.• Grade 3: Third degree collaterals: Uncle, nephew, brother-in-law
• Grade 4: Fourth degree collaterals: Cousin, uncle-in-law, nephew-in-law, great-uncle, great-nephew.
• Grade 5: Collaterals of more distant and strange degrees: All other cousins (all except the carnals), brother-in-law, father-in-law, and all those people of more distant kinship than those listed above or people without a relationship of kinship.
• Grade 6: Spouse or stable partner according to their specific legislation.
• Grade 7: Ascendant or descendant by consanguinity, adopted or adoptive parents: Father/mother, child, grandparent, grandchild, great-grandparent, great-grandchild including kinship by adoption.

The tax liability shall be obtained by applying to the taxable base, calculated in accordance with the provisions of the previous chapter, the corresponding tax rates of those indicated below, depending on the degree of kinship and the legal title of the acquisition determined in accordance with the provisions of the previous article.

Mortis Causa to Spouses or members of a stable couple, according to their specific legislation, in the case of acquisitions “mortis causa” by inheritance, legacy or any other succession title, as well as the receipt of amounts by the beneficiaries of life insurance contracts in the event of the death of the insured referred to in Article 8.c).

Tax rate

– Taxable base up to 250,000 euros: 0 per 100.

– Base rest: 0.80 per 100.

Donation to Spouses or members of a stable couple, according to their specific legislation, in the case of acquisitions by donation or any other legal transaction free of charge and Donation, as well as the receipt of amounts by the beneficiaries of life insurance contracts referred to in letters d) and e) of Article 8.

Tax: 0,8 %

Ascendants or descendants in a direct line by consanguinity, adoptive parents or adoptees, in the case of acquisitions “mortis causa” by inheritance, legacy or any other succession title, as well as the receipt of amounts by the beneficiaries of life insurance contracts in the event of the death of the insured referred to in Article 8.c).

Tax rates indicated in the following rate:

Ascendants or descendants in the direct line by consanguinity, adoptive parents or adoptees, in the case of acquisitions by donation or any other legal transaction free of charge and Donation, as well as the receipt of amounts by the beneficiaries of life insurance contracts referred to in letters d) and e) of Article 8.

Tax rates indicated in the following rate:

Ascendants and descendants by affinity and collateral relatives of the second and third degree, in the case of acquisitions “mortis causa” as well as receipts of life insurance contracts in the event of the death of the insured referred to in letter c) of Article 8:

1. c) Ascendants and descendants by affinity.

In the cases provided for in letter b), the excess will be taxed over the amount referred to in said letter:

Second-degree collaterals.

(a’) In the cases referred to in point (b), the excess shall be taxed on the amount referred to in that subparagraph:

The acquisition “mortis causa” of the full ownership of the deceased’s habitual residence, by one or more of his siblings, will be taxed at the special tax rate of 0.8 per cent, provided that the following conditions are met:

a) That the purchaser had lived with the deceased, in the deceased’s habitual residence, during the five years prior to the death.

b) That the purchaser does not dispose of the inherited home and that it constitutes his habitual residence for five years following its acquisition, unless any of the circumstances provided for in the Personal Income Tax regulations by virtue of which he is exempted from the temporary obligation to maintain the residence as his habitual residence occur.

The rate will be the one resulting from the application of the rate established in subletter a’) of this letter d) on the taxable base calculated in accordance with the provisions of Chapter VI on the full value of the assets, including the value of the home.

The application of the special tax rate will also proceed when the dwelling is included in the lot awarded to the heir, provided that such allocation does not entail an excess of allocation in favour of the successful bidder of the same.

For these purposes, the concept of habitual residence defined in the Personal Income Tax regulations will be taken into account.

Third degree collaterals.

In the cases provided for in letter b), the excess will be taxed over the amount referred to in said letter:

Fourth-degree collaterals

Collaterals of more distant and strange degrees.