B Law & Tax
23 August 2023

Tax Advisor: Inheritance Tax in Andalusia: Inheritance tax amount, discounts and conditions

Receiving an inheritance can sometimes be costly. Inheritance and Gift Tax has generated considerable controversy. This is because the amount of this tax can vary significantly depending on the autonomous community of residence. In reality, this tax is national in scope and is payable on the transfer of assets from one individual to another upon death. However, in the context of the financing system, the regions have assumed 100% of the collection and the exercise of certain regulatory powers.

In Andalusia, the increase of one million euros in the minimum exemption of Inheritance Tax has been a demand long expressed by society due to the injustice that in many situations led to the waiver of inheritance and even to the debt of families to face this tax.

Conditions

To be a recipient of an inheritance, the person involved must belong to one of the following kinship groups:

Group I. Descendants or adopted children under 21 years of age.

Group II. Descendants or adopted descendants 21 years of age or older, spouses, ascendants or adoptive parents.

Group III. Collaterals of 2nd and 3rd degree by consanguinity or affinity, ascendants or descendants by affinity.

Group IV. More distant degrees of kinship and strangers.

Allowances

Persons belonging to Groups I and II will be eligible for a 99% reduction in the amount of taxes derived from hereditary acquisitions, i.e., those originated by the death of the owner. This also applies to beneficiaries of life insurance policies.

However, there are situations in which parents or ascendants choose to advance the transfer of assets to their children or descendants while they are still alive, in order to avoid the obstacles that arise after death. In such instances, individuals belonging to Groups I and II will also be eligible for a 99% discount. However, it is crucial that the gift be formalized by a public deed.

Amount to be paid

In relation to the amount to be paid, the total sum will be calculated by applying the valuation scale established in article 37 of the Law to the taxable base, as detailed on the website of the Junta de Andalucía. To this resulting amount, coefficients established in the autonomous regulation of the tax (according to article 38 of the Law) will be applied according to the degree of kinship with the deceased person, giving rise to the final taxable amount.

However, for events subject to taxation before January 1, 2022, the calculation of the total amount will be based on the application of the scale of rates defined in article 33 of the TR on the taxable base. Then, coefficients will be applied according to the tax rules at the state level, considering the previous estate of the taxpayer and its relationship with the deceased, which will result in the tax liability.

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