Discover what inheritance tax deductions are available under law in Cataluña

1. Inheritance Tax Deductions
In Cataluña

2. This presentation has been updated and is valid for 2017. *
*Advocate Abroad does not accept responsibility for losses of any type consequent upon reliance on the
information contained in this presentation. Please consult a lawyer before acting.
Inheritance Law in Cataluña
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3. In 2001 the Spanish government devolved the power to set
inheritance tax rates and deductions to the regional
parliaments.
Inheritance Law in Cataluña
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4. Most regions enacted tax laws that applied generous
deductions only to those beneficiaries who were resident in
the region over the balance of the previous five years.
Inheritance Law in Cataluña
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5. Recently, on September 3rd 2014, the European Court of
Justice ruled that such laws were discriminatory and contrary
to European Law.
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Inheritance Law in Cataluña

6. Accordingly, the Spanish government has enacted new
legislation (Ley 26/2014) which makes any deductions that
may be applied to residents also available to non-residents
who are EU citizens.
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Inheritance Law in Cataluña

7. The main impact of the new legislation is as follows:
1) If the deceased who had assets in Spain was a non-
resident ie living in another European country, then the
beneficiary may apply those deductions and exemptions
provided by the regional government in which the majority
of the inherited assets are located.
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Inheritance Law in Cataluña

8. 2) If none of the assets to be inherited are located in Spain,
then the resident beneficiaries should apply the legislation
enacted by the regional government where they are normally
resident.
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Inheritance Law in Cataluña

9. 3) If the deceased was resident in one of the Spanish regions
and the beneficiaries were non-resident, and living in another
European Union country, then they may apply those
deductions and exemptions available to residents of the
region in which the deceased was resident.
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Inheritance Law in Cataluña

10. The regional level exemptions available in Cataluña were
brought into force by the Barcelona parliament and in their
current form are laid-out in Law 19/2010.
The most important deductions available are as follows:
Inheritance Tax Law Cataluña
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11. Spanish Inheritance law first assigns beneficiaries to groups
according to the degree of kinship with the deceased:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents,
aunts and uncles
Group IV More distant relatives
Personal Deductions
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12. The following are the additional deductions available in
Cataluña:
Personal Deductions
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Deduction
Group I Deduction of €100,000 plus €12,000 for each year
under 21 years of age up to €196,000
Group II Spouse: €100,000; Child: €100,000; Other
Descendants: €50,000; Parents: €30,000
Group III €8,000
Group IV No deductions available

13. Where the beneficiary is over 75 years old
A deduction of €275,000 may be applied where the heir is
over 75 years of age who is a beneficiary within Group II
though this deduction is incompatible with earlier
deductions
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14. Where an heir is disabled:
In addition to any personal deductions that may be
applicable, a beneficiary with a disability may add an
additional €275,000 deduction if the disability is determined
to be > 33% or €650,000 where it is > 65%
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15. Inheritance of the Family Home:
Where a property inherited is the main family home then a
reduction amounting to 95% of the value of the property up
to €500,000 may be made where the beneficiaries are the
spouse, child or parent of the deceased
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16. Inheritance of the Family Home:
The property may not be sold for a period of 5 years if the
exemption is taken advantage of.
Included in the definition of family home are any storage
room (trastero) and up to 2 x parking spaces.
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17. Deductions available for the Inheritance of the
Family Business
A tax deduction of 95% of the value of the interest held by
the deceased in the business. This applies to all
beneficiaries who were related to the deceased to the third
level of consanguinity and persons in the employ of the
business for at least 10 years, among other requirements.
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18. Deductions available for income from Life
Insurance Policies
A deduction of 100% is applicable on any income from a life
insurance policy held by the deceased up to a maximum of
€25,000 where the beneficiary is the spouse, descendant or
parent of the deceased
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19. Special Deductions - Spouse
After applying the aforementioned deductions a discount of
99% shall be applied to any tax payable by a spouse
including any payable under life insurance payout.
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20. Special Deductions – Groups I & II (except spouse)
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For Group I & II beneficiaries, apart from the spouse, the
following discounts may be applied to the calculated
amount of tax due, depending on the amount inherited:

21. Special Deductions – Groups I & II (except spouse)
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Taxable amount Discount Applied % Remaining taxable amount
Marginal Rate of Discount
%
0 0 100,000 99
100,000 99 100,000 97
200,000 98 100,000 95
300,000 97 200,000 90
500,000 94.2 250,000 80
750,000 89.47 250,000 70
1,000,000 84.6 500,000 60
1,500,000 76.4 500,000 50
2,000,000 69.8 500,000 40
2,500,000 63.84 500,000 25
3,000,000 57.37 and upwards 20

22. Special Deductions – Groups I & II (except spouse)
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These discounts shall be reduced by 50% should the
beneficiary also apply any of the following deductions:
• Family Business
•Any other deduction to the amount of tax payable except
the deduction applicable to the family home

23. Once all deductions have been applied the final amount of tax
payable is determined then it is necessary to apply the relevant
rate:
Inheritance Tax Rates in Cataluña
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24. Tax Rates in Cataluña
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Taxable
Sum
Tax Payable On
This Sum
Any Remainder
Up To
Applicable Rate on
Remainder
0 0 €50,000 7%
€50,000 €3,500 €150,000 11%
€150,000 €14,500 €400,000 17%
€400,000 €57,000 €800,000 24%
€800,000 €153,000 And above 32%

25. Existing Wealth
Once the relevant tax rate has been applied the result is
multiplied by a coefficient determined by the existing wealth of
the beneficiary as well as the group to which they belong:
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Group/Coefficient
I & II III IV
1 1.5882 2

26. Special Rules
Where the same assets are subject to two or more processes of
inheritance within a period of 10 years, in the second and any
subsequent inheritance processes, the taxable amount shall be
reduced.
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27. Special Rules
Payment of Inheritance Taxes may be postponed for a period of
up to two years (without penalty) for those inheritances that
occurred between August 1, 2009 and December 31, 2015.
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28. Existing Wealth
The Groups referred to consist of the following beneficiaries:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents,
aunts and uncles
Group IV More distant relatives
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29. Each year in Spain thousands of expats pay more
tax on inheritance than they should – simply
because they fail to follow some simple rules.
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30. To find out how to get expert advice, in English, about how to
reduce your liability for inheritance tax, go to:
Expert Probate Services in Cataluña
Expert Probate Services in Cataluña
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