Andalusia 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 Andalusia region, the Inheritance and Donation Tax is regulated and adapted by the regional law Ley 5/2021, de 20 de octubre, de Tributos Cedidos de la Comunidad Autónoma de Andalucía.

In this section we will detail exclusively  reductions, tax rate and bonus  on the Inheriance and Donation Andalusia  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. 

Discover which is the Inheritance and Donation tax treatment to Andalusia provinces, as Malaga (Marbella, Estepona, etc.), Cadiz, Sevilla, Granada, Jaén, Córdoba and Huelva

Inheritance

Reductions in the tax base

– Main residence

1. The percentage reduction provided for in Article 20.2 c) of Law 29/1987 of 18 December 1987 on inheritance and gift tax in the event of the acquisition mortis causa of the deceased’s main residence shall be 99%.
2. This reduction will be applicable with the following requirements:
3. a) That the successors are the spouse, ascendants or descendants of the deceased or persons equivalent to them in accordance with the provisions of Article 26, or a collateral relative over 65 years of age who had lived with the deceased during the two years prior to the death.
4. b) That the acquisition is maintained for three years following the date of the death of the deceased, unless the acquirer dies within that period.

– Family kinship

1. The amount of reduction provided for in Article 20.2 a) of Law 29/1987 of 18 December 1987 on inheritance and gift tax in the case of acquisitions mortis causa, including those of beneficiaries of life insurance policies, shall be as follows:
2. a) Group I: acquisitions by descendants and adoptees under 21 years of age, 1,000,000 euros.
3. b) Group II: acquisitions by descendants and adoptees aged 21 or over, spouses, ascendants and adoptive parents, 1,000,000 euros.
4. c) Group III: acquisitions by second and third degree collaterals, ascendants and descendants by affinity, 10,000 euros.
5. This reduction shall also apply in the cases of equivalence referred to in Article 26.

-Disability

1. The amount of the reduction provided for in Article 20.2 a) of Law 29/1987 of 18 December 1987 on inheritance and gift tax, in the case of acquisitions mortis causa, including those of beneficiaries of life insurance policies, when the taxpayer is considered to be a person with a disability, shall be as follows:
2. a) 250,000 euros, if the degree of disability is equal to or greater than 33% and less than 65%.
3. b) 500,000 euros, if the degree of disability is equal to or greater than 65%.
4. This reduction shall be compatible with the improvement of the State reduction in the taxable base for the acquisition of mortis causa by related persons provided for in Article 28.

Donation/Gift

– Donation of money to descendants for the acquisition of the main residence

1. Donees who receive money from their ascendants, or from persons equivalent to them in accordance with the provisions of Article 26, for the acquisition of their main residence, may apply a reduction of 99% of the amount of the taxable base of the tax, provided that the following requirements are met:
2. a) That the donee meets any of the following conditions:
3. To be under 35 years of age.
4. To be considered a person with a disability.
5. Be considered a victim of domestic violence.
6. Be considered a victim of terrorism or an affected person.
7. b) That the pre-existing assets of the donee are included in the first bracket of the scale established by Article 22 of Law 29/1987, of 18 December, on Inheritance and Gift Tax.
8. c) That the full amount of the donation is used to purchase the main residence.
9. d) The dwelling must be located in the territory of the Autonomous Community of Andalusia.
10. e) The donee must maintain the main residence for three years following the date of its acquisition.
11. f) The acquisition of the property must be carried out within the period of self-assessment of the tax corresponding to the donation, and the public deed in which the sale is formalised must be provided. This public document must state the donation received and its application to the payment of the price of the main residence.
12. The maximum base of the reduction will be 150,000 euros, in general. However, when the donee is considered a person with a disability, the basis of the reduction may not exceed 250,000 euros.

In the case of two or more donations, coming from the same or different ascendants or persons equivalent to them, the basis of the reduction will be the result of adding the amount of all of them, without exceeding the limits indicated above.

 – Donation of a main residence to descendants

1. Donees who receive full ownership of a property from their ascendants, or from persons equivalent to them in accordance with the provisions of Article 26, may apply a reduction of 99% of the amount of the taxable base of the tax, provided that the following requirements are met:
2. a) That the donee meets any of the following conditions:
3. To be under 35 years of age.
4. To be considered a person with a disability.
5. Be considered a victim of domestic violence.
6. Be considered a victim of terrorism or an affected person.
7. b) That the pre-existing assets of the donee are included in the first bracket of the scale established by Article 22 of Law 29/1987, of 18 December, on Inheritance and Gift Tax.
8. c) That the acquired property is intended for the habitual residence of the donee.
9. d) The donee must maintain the main residence for 3 years following the date of its acquisition.
10. e) That it is stated in the public deed in which the donation is formalised that the property is intended to constitute the habitual residence for the donee and the maintenance commitment referred to in the previous letter.
11. The maximum base of the reduction will be 150,000 euros, in general. However, when the donee is considered a person with a disability, the basis of the reduction may not exceed 250,000 euros.

In the case of two or more donations from the same or different donors who are co-owners of the donated home, the basis of the reduction may not exceed the aforementioned limit.

– Other reductions

– Improvement of the state reduction of the taxable base for the acquisition “mortis causa” of sole proprietorships or professional businesses.

– Improvement of the state reduction of the taxable base for the acquisition “mortis causa” of shares in entities.

– Own reduction by donation of money to relatives for the constitution or expansion of a sole proprietorship or professional business.

– Improvement of the state reduction of the taxable base for the acquisition Donation of sole proprietorships or professional businesses.

 – Improvement of the state reduction of the taxable base for the Donation acquisition of shares in entities. 

Tax Rate

The full amount of the tax regulated in Article 21.1 of Law 29/1987, of 18 December, on Inheritance and Gift Tax, will be obtained by applying the tax rates indicated in the following scale to the taxable base:

Multiplier coefficient

In accordance with the provisions of Article 8 of the Law approving rules on assigned taxes and other tax and administrative measures by the Autonomous Community of Andalusia for the financial year 2003, and with effects applicable exclusively to lucrative transfers accrued from 1 January 2003,  The following equivalences are established:

1. Persons in a de facto union and registered in the Register of Unions or unmarried couples of the Autonomous Community of Andalusia will be equated to spouses.
2. Persons who are the object of permanent or pre-adoptive foster care will be equated with adoptees.
3. Persons who carry out permanent or pre-adoptive foster care for adoptive parents.

[*] The following equivalences are established:

1. Persons in a de facto union and registered in the Register of Unions or unmarried couples of the Autonomous Community of Andalusia will be equated to spouses.
2. Persons who are the object of permanent or pre-adoptive foster care will be equated with adoptees.
3. Persons who carry out permanent or pre-adoptive foster care for adoptive parents.

Groups I and II comprise the most direct heirs, who enjoy significant benefits in taxation.

Descendants and adoptees under the age of 21

Descendants and adoptees who are under 21 years of age are grouped in Group I. This group benefits from a considerable tax rebate, which drastically reduces the cost of the tax payable. This preferential treatment seeks to encourage the transmission of family wealth and support younger generations.

Spouses and descendants 21 years of age or older

Group II includes spouses and descendants over 21 years of age. Although these heirs do not have the full bonus that minor descendants have, they are still favored by a series of reductions in the tax, thus facilitating access to the inherited assets to other people close to the deceased.

Groups III and IV

Groups III and IV are made up of more distant relatives and people outside the deceased, who face a higher tax burden compared to the previous groups.

Group III includes second-degree collaterals, such as siblings, and third-degree collaterals, such as uncles and nephews. On the other hand, Group IV is made up of fourth-degree collaterals, such as cousins, and strangers.

These groups generally do not reach the same bonuses, which implies a greater economic weight when it comes to inheritance tax.

Conclusion

99% discount on the tax liability Groups I and II in INHERITANCE AND DONATIONS

One of the most outstanding features of Andalusian tax policy is the 99% rebate on the tax liability for the heirs of Groups I and II. This bonus applies to acquisitions “mortis causa” and can transform the financial situation of those who receive an inheritance. In this way, many heirs can keep a considerable part of the family patrimony, which favors economic stability and the continuity of assets within the same family.

SUCCESSIONS / INHERITANCE

From 11 April 2019, taxpayers included in Groups I and II of those provided for in Article 20.2.a) of Law 29/1987, of 18 December, on Inheritance and Gift Tax, or in the cases of equivalence established in the corresponding law according to the time of the taxable event,  They will apply a 99% discount on the tax liability derived from “mortis causa” acquisitions, including those of the beneficiaries of life insurance policies.

DONATIONS / GIFTS

From 11 April 2019, taxpayers included in Groups I and II of those provided for in Article 20.2.a) of Law 29/1987, of 18 December, on Inheritance and Gift Tax, or in the cases of equivalence established in the corresponding law according to the time of the taxable event,  They will apply a 99% discount on the tax liability derived from Donation acquisitions, provided that it is formalized in a public document (and the origin of the funds is justified in cases where the donation is cash).