Inheritance Tax DeductionsIn Cantabria
This presentation has been updated and is valid for 2014.
Inheritance Law in Cantabria
2
In Spain, inheritance law was originally controlled by the
central government alone.
But in 2001 the power to set inheritance tax rates and
deductions were devolved to the regional parliaments.
Inheritance Law in Cantabria
3
However, the tax laws enacted by the regional parliaments,
including deductions and exemptions, only apply to those
beneficiaries who have been resident in the region over the
balance of the previous five years.
Inheritance Law in Cantabria
4
If you have been resident then when determining your
inheritance tax liability you must see if the regional
government has approved a deduction or exemption.
If not, you should apply the national deduction or exemption.
5
Inheritance Law in Cantabria
The central government exemptions and deductions are not
as generous as the regional exemptions.
This has caused complaints that the inheritance tax laws in
Spain are discriminatory against non-residents.
6
Inheritance Law in the Cantabria
7
The regional level exemptions available in Cantabria were
enacted by the Santander parliament and in their current
form are specified in Law 11/2002, Law 1/2005 and
Legislative Decree 62/2008
The most important changes to state succession laws may
be summarised as follows:
Inheritance Tax Law in Cantabria
8
Personal Deductions
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
Spanish Inheritance law first assigns beneficiaries to groups according to the degree of kinship with the deceased:
9
The following are the personal exemptions available in Cantabria:
Group Deduction
Group I a deduction of €50,000 plus €5,000 for each year under 21
Group II a deduction of €50,000 is applicable
Group III a deduction of €8,000 is available
Group IV No deductions available
Personal Deductions
10
If the beneficiary is disabled:
An exemption of €50,000 additional to any personal
exemption if physical disabilty > 33% or sensory > 65%
If the disability is > 65% then the beneficiary may apply a
deduction of €200,000
11
Deductions on income from Life Insurance Policy:
An exemption on income from a Life Insurance Policy
held by the deceased is available to beneficiaries being
either the spouse or a child (or adopted child) according
to the following limits:
12
Deductions on income from Life Insurance Policy:
Beneficiary Deduction
Spouse 100% exemption from taxes up to a maximum of €206,780
Child below age of majority
100% exemption from taxes up to a maximum of €310,170
Child under age of 30
100% exemption from taxes up to a maximum of €103,390
Parent living with deceased
100% exemption from taxes up to a maximum of €189,548
13
Deductions in transfer of Family Business
Tax exemption of 99% of the value of the business
To benefit from this deduction the beneficiary should be
either a child or spouse of the deceased
14
Deductions in transfer of Family Business Cntd..
If no child or spouse any relative 'to third degree of
consanguinity' may benefit from exemption
Must maintain business for a period of no less than 5
years
15
Inheritance of the Family Home
Exemption exists for child, spouse and parent of the
deceased. Also any relative over 65 years of age who has
spent at least two years in the home prior to inheritance
Value of exemption is 99% of value of the property
16
Inheritance of the Family Home Cntd...
Property may not be sold for 10 years after inheritance
17
General Rules
Any asset which has been subject to more than one
inheritance within a period of 10 years may have any tax
paid in the previous inheritance deducted from it's value
for the purposes of calculating inheritance tax.
18
Other Deductions:
As a general rule the following deductions may be made on any estate:
Funeral Expenses
Final Medical Expenses of the Deceased
19
Other Deductions Cntd:
Debts held be the deceased that are evidenced by public
documents e.g. a mortgage
20
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 Cantabria
21
Tax Rates in Cantabria
Taxable Sum Tax Payable On This Sum
Any Remainder Up To
Applicable Rate on Remainder (%)
0 0 7993,46 7,65
7993,46 611,5 7987,45 8,5
15980,91 1290,43 7987,45 9,35
23968,36 2037,26 7987,45 10,2
31955,81 2851,98 7987,45 11,05
39943,26 3734,59 7987,46 11,9
47930,72 4685,1 7987,45 12,75
55918,17 5703,5 7987,45 13,6
22
Tax Rates in Cantabria Cntd...
Taxable Sum Tax Payable On This Sum
Any Remainder Up To
Applicable Rate on Remainder (%)
63905,62 6789,79 7987,45 14,45
71893,07 7943,98 7987,45 15,3
79880,52 9166,06 39877,15 16,15
119757,67 15606,22 39877,16 18,7
159634,83 23063,25 79754,3 21,25
239389,13 40011,04 159388,41 25,5
398777,54 80655,08 398777,54 29,75
797555,08 199291,4 and above 34
23
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:
Existing Wealth Groups
(In Euros) I & II III IV
0 a 403,000 1 1.5882 2
403,000 to 2,007,000 1.05 1.6676 2.1
2,007,000 to 4,020,000 1.1 1.7471 2.2
More than 4,020,000 1.2 1.9059 2.4
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
24
Each year in Spain thousands of expats pay more
tax on inheritance than they should – simply
because they fail to follow some simple rules.
25
To find out where to get expert advice, in English, about how
to reduce your liability for inheritance tax, go to:
Expert Probate Services in Cantabria
Expert Probate Services in Cantabria
26