Lawyer Raymundo Larrain briefly explains the (groundbreaking) changes in inheritance tax in the region of Valencia.
In a bold move, the newly appointed regional government of Valencia has approved today Friday 21st of July to suppress inheritance tax from parents to children (Groups I & II) with retroactive effects as from the 28th of May 2023. This still needs to be ratified by the Valencian regional parliament as a mere formality to be enacted (likely within the next 30 days).
In Spain, beneficiaries are classified in four different groups depending on their kinship with the deceased. As a general rule, the closer the kinship, the more lenient the tax allowance.
Group I: Natural and adopted children under 21.
Group II: Natural and adopted children over 21, spouse, registered civil partnerships, parents, adoptive parents, grandparents, and great-grandparents.
Group III: Relatives in second and third degree: in-laws, brothers/sisters (siblings), nephews/nieces, aunts and uncles.
Group IV: Relatives in fourth degree, or without any relationship: a friend, common law partners.
You can expect these tax breaks to be expanded, and improved upon, over the next years in the Valencia to include Group III, in line with what’s already been approved in other regions of Spain with similar tax-friendly laws.
This trend follows on the back of other Spanish regions which have also suppressed IHT over the years to much success, such as:
*to be approved shortly
That’s great news, but I’m a British national (or from outside the EU), this tax change surely doesn’t benefit me
Actually, it does!
Although Brexit is undoubtedly an unmitigated disaster, the good part is that our nice EU Overlords have ruled that ALL non-EUs must also benefit from regional tax allowances (such as this new one in Valencia) in line with the core tenements that behove the Union.
Bottom line, if you are British, this tax change favours you. Same goes for our American cousins, Canadians, South Africans, Australians, New Zealanders, etc basically anyone who wasn’t lucky enough to be born in the light of the Union; nobody is perfect. ????
And for those brave souls that wish to delve deeper on this arid tax topic: Inheritance tax in Spain: regional tax reliefs to benefit ALL non-residents in the future (even outwith EU/EEA) – 29th July 2019
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