Castilla La Mancha 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 Castilla La Mancha region, the Inheritance and Donation Tax is regulated and adapted by the regional law Ley 8/2013, de 21 de noviembre, de Medidas Tributarias de Castilla-La Mancha.

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

Reductions in the tax base

 – Acquisition of a sole proprietorship, a professional business or shares in entities.

Reduction of 4 per cent of the taxable base for the acquisition “mortis causa” of rights over a sole proprietorship, a professional business or shares in entities that are not listed on organised markets, to which the reduction established in article 20.2.c) of the Inheritance and Gift Tax Law would apply.

For the application of this reduction, the following requirements must be met:

1. The sole proprietorship, professional business or entities must have their tax domicile and be located in Castilla-La Mancha. Both requirements must be maintained for five years after the date of the death of the deceased.
2. The requirements set out in Article 20.2.c) of Law 29/1987, of 18 December, must be met, except for the period of permanence of the acquisition in the estate of the deceased, which is established at five years.

This reduction will not be applicable to lucrative acquisitions of individual companies, professional businesses or shares in entities whose main activity is the management of movable or immovable assets under the terms established in Article 4.8. Two.a) of Law 19/1991, of 6 June.

This reduction is compatible with and will be applied after the reduction established in article 20.2.c) of the Inheritance and Gift Tax Law.

– Disability abatement

People with an accredited degree of disability equal to or greater than 33 percent and less than 65 percent will be applied a reduction of 125,000 euros. The reduction will be 225,000 euros for those people who prove a degree of disability equal to or greater than 65 percent.

These reductions will be applied in addition to those that may correspond depending on the degree of relationship of the taxpayer with the deceased.

Regulations: Law 8/2013, of 21 November, on Tax Measures of Castilla-La Mancha. Article 15.

Tax Liability Rebates

– Kinship Groups I and II

Depending on the amount of the taxable base of their respective tax returns, taxpayers included in groups I and II of kinship provided for in article 20.2.a) of the Tax Law may apply the following discounts to the tax liability:

1. Tax returns whose taxable base is less than 175,000 euros, a bonus of 100 percent of the tax liability.
2. Tax returns whose taxable base is equal to or greater than 175,000 euros and less than 225,000 euros, a rebate of 95 percent of the tax liability.
3. Tax returns whose taxable base is equal to or greater than 225,000 euros and less than 275,000 euros, a rebate of 90 percent of the tax liability.
4. Tax returns whose taxable base is equal to or greater than 275,000 euros and less than 300,000 euros, a rebate of 85 percent of the tax liability
5. Tax returns whose taxable base is equal to or greater than 300,000 euros, a rebate of 80 percent of the tax liability.

– Disability

Taxpayers who have a degree of disability equal to or greater than 65 percent may apply a rebate of 95 percent of the tax liability.

The same percentage of rebate will be applied to contributions subject to tax made to the protected assets of people with disabilities regulated in Law 41/2003, of 18 November, on the protection of the assets of people with disabilities and amending the Civil Code, the Law of Civil Procedure and Tax Regulations for this purpose.

The above two bonuses are compatible with the kinship bonus and will be applied after it.