Inheritance taxes in Catalonia

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The taxes that must be paid when receiving an inheritance change depending on the community and that is why, before starting the process, it is important to know what obligations correspond to you in your particular community. What are the inheritance taxes in Catalonia? We will explore them in this article and tell you all the details you need to bear in mind when carrying out this process.

To understand in depth how inheritance tax works in Catalonia, let’s start at the beginning and take an in-depth look at all the peculiarities of this issue.

What is a succession?

A succession is a process by which the estate of a person who has died becomes legally available to his or her heirs. In order to establish who is entitled to collect the estate, a probate proceeding is carried out and the assets involved in the inheritance are determined. In addition, an analysis is made of whether there is a will and, if so, whether it is valid.

What are the taxes involved in Catalonia?

In April 2020, Law 4/2020 of the budgets of the Generalitat de Catalunya was passed, which came into force the following day and which in its point II modified the measures contemplated in Law 19/2010 regarding the regulation of Inheritance and Gift Tax.

Inheritance and gift tax is levied on acquisitions made by natural persons deriving from inheritance titles that are recognised in the inheritance regulations. If this acquisition is made by a company, foundation or other form of legal entity, the transaction is subject to corporate income tax. The tax is also levied on all persons who received an asset or right in the inheritance. This tax is one of the taxes that have been ceded to the autonomous communities in 2020, i.e. they were granted the taxing power.

When is Inheritance and Gift Tax due?

According to the aforementioned legislations, these are the cases in which there is an obligation to file and pay Inheritance and Gift Tax:

  • If the person who died was habitually resident in Catalonia, regardless of the place of residence of the heirs, the corresponding taxes must be paid in Catalonia.
  • If the donee is habitually resident in Catalonia. On receipt of the donation, as long as it is a movable asset such as money and the heir resides in Catalonia, taxes will be paid in Catalonia.
  • In the case of donations of real estate that is located in Catalonia, as long as the donation is real estate in Catalonia, it will be taxed there regardless of where the heir resides.

What changes in relation to the old regulation?

The first modification that we can point out is the one that refers to the bonuses that are applied in installments, they have reductions in percentages for the different quotas, however a fixed quota of 99% is always maintained, which will correspond to the spouse.

It should be noted that, with the new modifications, it is more convenient to grant donations in life than to inherit. This is because the deceased can carefully organize his estate and grant donations as a forecast. These donations must specify the collatable character, in addition to the fact that many professionals indicate that the Patrimonial Gain should be taken into account in case of donation.

Another of the modifications of the new regulation indicates that the exchange assets (causative and heir) are taken into account as multiplier factors. This modifies the inflection point, which until these changes made it more expensive to donate than to inherit.

How is inheritance tax calculated in Catalonia?

To find out how much you have to pay when you receive an inheritance, you have to start by calculating the estate. To do this, you have to calculate the taxable base, i.e. the total value of the inheritance received. This amount will be the one subject to taxation and a series of concepts established by the Generalitat de Catalunya can be deducted from this value.

Some deductible charges are:

  • Assessments: periodic benefits, whether annual or temporary, that are attached to the ownership of an estate.
  • Pensions: Obliging a debtor to pay an annual pension or annuity in exchange for property, movable or immovable.

And so are some expenses:

  • Those arising from death, last illness, funeral and burial.

In addition, there are also deductible debts:

  • The debts of the deceased that he may have left during his lifetime and that are passed on through his inheritance (such as state taxes and Social Security debts).

Reductions:

  • For disability: If the degree of disability is equal to or exceeds 33%, the corresponding reduction is 275,000 euros. In the case of a degree of disability of 65% or more, the reduction will be 650,000 euros.
  • For over 75 years of age: The reduction will be 275 thousand euros (this reduction is incompatible with the reduction for disability).
  • For acquisition of the main residence: A reduction corresponding to the value of the main residence of the deceased person can be applied to the taxable base (the joint limit of 500 thousand euros to be prorated by the heirs, the limit for each heir being no less than 180 thousand euros). This reduction may be applicable to the spouse or partner of the deceased, cohabitant, descendants or ascendants of the deceased.

The Tax Agency of Catalonia also contemplates:

  • For decennial overtaxation.
  • For the acquisition of natural and cultural heritage assets.
  • For insurance, the amount depends on the date on which it was taken out.
  • When the acquisition of goods and rights is related to an economic activity.

Now you know everything you need to consider when calculating inheritance tax in Catalonia. If you still have any doubts, contact us so we can advise you. At Blegal we are the only law firm that covers all your needs. The best advisors and lawyers are available to you online and in person.

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