We anticipated it a few weeks ago and it is now official. On November 23rd, 2023, Law 6/2023 which modifies the Inheritance and Gift Tax in the Valencian Region came into force. In this week’s article we analyse the small print of the new law. Main changes and novelties. And how it will affect to the taxes to be paid by anyone who receives an inheritance or a gift from now on.
Changes in the Gift Tax.
Until now, gifts between parents and children; and between grandparents and grandchildren (when the parents who acted as a link between the two had passed away) were eligible for a kinship reduction of 100.000€ (up to 156.000€ when the recipient of the gift was under 21 years of age). However, this reduction could only be applied when the recipient of the donation (donee) had an estate equal to or less than 600.000€.
With the change in the law:
- The requirement for the donee to have an estate equal to less than 600.000€ is eliminated.
- The donor’s spouse can also benefit from this kinship reduction.
- This kinship reduction can now be applied to direct donations between grandparents and grandchildren (without the need for the link between the two -father or mother- to be deceased).
- The limitation that prevented making use of the reduction for kinship when the donor or donee had already applied this it in the previous 10 years has been removed.
However, the most important change is undoubtedly the 99% rebate for spouses, parents, adoptive parents, children, adopted children, grandchildren and grandparents of the donor. This rebate will also be applicable to individuals with a physical or sensory disability of more than 65%, or a mental disability of more than 33%.
Novelties in Inheritance Tax.
Inheritance tax also presents important changes. The main deductions (100.000€ for kinship, up to 150.000€ for the purchase of the main residence, etc.) remain unchanged. However, the tax reliefs have been substantially modified.
The kinship tax rebate is increased to 99% for:
– Descendants or adopted children, spouses, ascendants and adoptive parents.
– People with a physical or sensory disability of over 65%, or a mental disability of over 33%.
How does this change in the law affect me? Practical example.
After the death of his father, Peter (only child) inherits his father’s main residence (200.000€), a holiday apartment (300.000€) and a bank account (50.000€). Before this change in the law was passed, Peter would have paid approximately 27.000€ in inheritance tax. After the passing of the law, the amount to be paid by him will be around 600€.
When do these changes in the Inheritance and Gift Tax law come into force?
The effects of this modification will apply retroactively to gifts and deaths that took place after 28.05.23. If you have paid Inheritance or Gift Tax on a donation or inheritance after this date, you are entitled to get your money back. Our office can help you.
Conclusions.
The modification of the Inheritance and Gift Tax is a radical change in the tax landscape of the Valencian Region. At White-Baos Lawyer we are experts in Inheritance Law and Inheritance Tax. Do not hesitate to contact us. We will study your case and offer you expert legal advice to recover your money.
The information provided in this article is not intended to be legal advice, but merely conveys information relating to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
E-mail: info@white-baos.com
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