Galicia Inheritance Tax. Reductions and Bonifications

Introduction

Galicia is composed by provinces as La Coruña, Lugo, Orense and Pontevedra, with known cities as Santiago de Compostela, Vigo, etc. 

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 Galicia region, the Inheritance and Donation Tax is regulated and adapted by the regional law Ley 9/2008, de 28 de julio, gallega de medidas tributarias en relación con el impuesto sobre sucesiones y donaciones.

In this section we will detail exclusively  reductions, tax rate and bonus  on the Inheriance and Donation Galicia  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 in the tax base

Reduction for kinship

In acquisitions due to death, including those of beneficiaries of life insurance policies, due to kinship with the deceased, the corresponding reduction will be applied from those included in the following groups:

a) Group I: acquisitions by descendants and adoptees under 21 years of age.

1,000,000 euros, plus 100,000 euros for each year under 21 that the successor has it, with a limit of 1,500,000 euros.

b) Group II: acquisitions by descendants and adoptees aged 21 years or older, spouses, ascendants and adoptive parents

 1,000,000 euros.

c) Group III: acquisitions by second-degree collateral by consanguinity.

16,000 euros;

Other second-degree collaterals, third-degree collaterals and ascendants and descendants by affinity.

 8,000 euros.

d) Group IV: in acquisitions by fourth-degree collaterals, more distant and stranger degrees.

There will be no room for reduction.

– Disability abatement

In acquisitions due to death, including those of beneficiaries of life insurance policies, the following reduction will be applied:

a) Reduction of 150,000 euros for taxpayers who are legally considered disabled persons, with a degree of disability equal to or greater than 33% and less than 65%, in accordance with the scale referred to in article 148 of the revised text of the General Social Security Law, approved by Royal Legislative Decree 1/1994, of 20 June.

b) Reduction of 100% of the taxable base for taxpayers belonging to groups I and II referred to in section two above, in accordance with the aforementioned regulations, who prove a degree of disability equal to or greater than 65%, provided that the taxpayer’s pre-existing assets do not exceed 3,000,000 euros.

c) Reduction of 300,000 euros for taxpayers who, in accordance with the aforementioned regulations, prove a degree of disability equal to or greater than 65% and are not entitled to the reduction indicated in the previous letter.

– Primary residence

When the taxable base of a mortis causa acquisition includes the value of the deceased’s main residence, and the acquisition corresponds to his or her descendants or adoptees, ascendants or adopters and collaterals, by consanguinity, a reduction shall be made with a limit of 600,000 euros and the corresponding percentage of reduction shall be applied according to the total real value of the property:

When the acquisition corresponds to the spouse, the reduction will be 100% of the value in the taxable base, with a limit of 600,000 euros.

In the case of the collateral relative, he or she must be over 65 years of age and it will be necessary to live with the deceased during the two years prior to the death.

For the purposes provided for in this section, it will be understood that the last habitual residence in which the deceased resided does not lose such character when the deceased, due to physical or mental circumstances, has moved to receive care in a specialised centre or to live with the relatives included in the kinship group that gives the right to obtain the reduction.

The purchasers must maintain the acquired property for five years following the accrual of the tax, unless within that period the purchaser dies or transfers the property by virtue of a succession agreement in accordance with the provisions of the Galician Civil Law Act.

In the event that the property is sold during the aforementioned period and the entire amount is reinvested in the acquisition of a property located in Galicia that constitutes or will constitute the main residence of the purchaser, the requested reduction will not be lost.

When the same transferor transfers several habitual residences in one or more acts, due to death or succession agreements, the reduction may only be made for a single habitual residence.

Other reductions:

– Reduction for the acquisition of compensation for toxic syndrome and for acts of terrorism.

– Reduction for the acquisition of assets and rights related to an economic activity and shares in entities

– Reduction for the acquisition of agricultural holdings and affected elements.

– Reduction for the acquisition of rural properties

– Reduction for the acquisition of forest farms that are part of the area of joint management and marketing of productions carried out by groups of forest owners endowed with legal personality

– Reduction for the acquisition of assets intended for the creation or incorporation of a company or professional business

Donations

Money allocated to the acquisition of a main residence in Galicia

A reduction of 95% of the taxable base of the tax will be applied to donations to children and descendants of money intended for the acquisition of their main residence  , provided that the following requirements are met:

a) The donee must be under 35 years of age or a woman who is a victim of gender violence. In the first case, it must be the acquisition of their first habitual residence. In the second, they must not be the owner of another home.

b) The amount of the donation may not exceed 60,000 euros. This limit is unique and applies both in the case of a single donation and in the case of successive donations, provided that they are granted in favour of the same donee, whether they come from one or different ascendants. In the event that the amount of the donation or donations referred to in this article exceeds this amount, there will be no right to any reduction.

c) The sum of the total taxable base minus the personal and family minimum for personal income tax purposes of the donee, corresponding to the last tax period, whose regulatory declaration period was concluded on the date of accrual of the first donation, may not exceed 30,000 euros.

d) The donation must be formalised in a public deed in which the will is expressed that the money donated be used to acquire the main residence of the donee. In the case of those under 35 years of age, it must also be stated that it is their first habitual residence. This declaration of will must be simultaneous to the donation.

e) The donee must acquire a home located in Galicia within six months of the donation. In the event of several donations, the period will be calculated from the date of the first donation. The reduction will not apply to donations of money after the purchase of the home, except in the cases of acquisition with a deferred price or third-party financing, provided that it is proven that the amount of the money donated is used to pay the outstanding price or to cancel all or part of the credit, with the term, limits and requirements established in the previous sections, except in the way of calculating the six-month period, which will be made for each donation.

f) The accreditation of the situation of gender violence will be made in accordance with the provisions of Law 11/2007, of 27 July, Galician for the prevention and comprehensive treatment of gender violence.

Other reductions per Donation:

– Reduction for the acquisition of assets and rights related to an economic activity and shares in entities

– Reduction for the acquisition of agricultural holdings and rural properties

– Reduction for the acquisition of assets and rights related to an economic activity, of shares in entities and of agricultural holdings in succession agreements

– Reduction for the acquisition of forest farms that are part of the area of joint management and marketing of productions carried out by groups of forest owners endowed with legal personality

– Reduction for the acquisition of goods intended for the creation of a company or professional business.

Tax Rate

The full amount of inheritance and gift tax will be obtained by applying the following tax rates to the taxable base depending on the degrees of kinship indicated in Article 6.two of this consolidated text:

a) In the case of the taxable events referred to in paragraphs a and c of Article 3.1 of Law 29/1987 of 18 December 1987 on Inheritance and Gift Tax, and provided that the taxpayers are included in groups I and II of Article 6.2 of this consolidated text, the following rate shall apply:

b) In the case of the taxable events referred to in section b) of article 3.1 of Law 29/1987, of 18 December, on inheritance and gift tax, and provided that the taxpayers were included in groups I and II of article 6.two of this consolidated text and the donation was formalised in a public deed, The following fee will apply:

c) If the requirements established in this letter are not met, the rate indicated in the previous section will be applied.

d) In the case of the taxable events referred to in paragraphs a, b and c of Article 3.1 of Law 29/1987 of 18 December 1987 on Inheritance and Gift Tax, and provided that the taxpayers are included in groups III and IV of Article 6.2 of this consolidated text, the following rate shall be applied:

 Tax liability

The inheritance and gift tax liability shall be obtained by applying to the full amount the corresponding multiplier coefficient of those indicated below, established according to the pre-existing assets of the taxpayer and the group, according to the degree of kinship indicated in Article 6.two of this consolidated text:

Bonifications of Tax liability

Kinship Group I

Deduction of 99% of the amount of the instalment.