Inheritance tax murcia

Inheritance Tax Deductions
In Murcia

This presentation has been updated and is valid for 2017.*
*Advocate Abroad does not accept responsibility for losses of any type consequent upon reliance on the
information contained in this presentation. Please consult a lawyer before acting.
Inheritance Law in Murcia
2

In 2001 the Spanish government devolved the power to set
inheritance tax rates and deductions o the regional
parliaments.
3

Most regions enacted tax laws that applied generous
deductions only to those beneficiaries who were resident in
the region over the balance of the previous five years.
4

Recently, on September 3rd 2014, the European Court of
Justice ruled that such laws were discriminatory and contrary
to European Law.
5

Accordingly, the Spanish government has enacted new
legislation (Ley 26/2014) which makes any deductions that
may be applied to residents also available to non-residents
who are EU citizens.
6

The main impact of the new legislation is as follows:
1) If the deceased who had assets in Spain was a non-
resident, living in another European country, then the
beneficiary may apply those deductions and exemptions
provided by the regional government in which the majority
of the inherited assets are located.
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2) If none of the assets to be inherited are located in Spain,
then the resident beneficiaries should apply the legislation
enacted by the regional government where they are normally
resident.
8

3) If the deceased was resident in one of the Spanish regions
and the beneficiaries were non-resident, and living in another
European Union country, then they may apply those
deductions and exemptions available to residents of the
region in which the deceased was resident.
9

The regional level deductions available in Murcia were
enacted by the parliament in Cartagena and in their current
form are specified in Legislative Decree 1/2010.
The most important changes to State laws can be
summarised as follows:
Inheritance Tax Law in the Murcia
10

Spanish Inheritance law first assigns beneficiaries to groups
according to the degree of kinship with the deceased:
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
Personal Exemptions
11

These are the personal deductions as amended by regional
law in Murcia. They are in addition to state exemptions:
Personal Exemptions
Deduction
Group I Deduction of 99%
Group II No additional deductions available
Group III No additional deductions available
Group IV No additional deductions available12

Deductions in transfer of Family Business
● Tax deduction of 99% of the value of the business
● Must be a sole trader or 'single director company'
13

● The participation of the deceased in the business must
have been at least 10% (or 20% when combined with
participation of the spouse)
14

● The business may not be sold for a period of no less
than 5 years
● The registered address of the company must remain in
Murcia for a period of 5 years
15

Inheritance Destined to Set-up a Business
● Beneficiaries of cash and life insurance policies shall
have a deduction of 99% if they are in Groups I or II
where the proceeds are used to set-up a business in
Murcia
16

Special Discounts
● Group I Beneficiaries shall benefit from a 99% discount
of any tax that falls due to be paid after the previous
deductions have been applied
17

Special Discounts
● Group II Beneficiaries shall benefit from a 60% discount
of any tax that falls due to be paid after the previous
deductions have been applied
● If the beneficiary in Group II is part of a ‘large family’ as
defined by Spanish legislation, the discount shall be
99%
18

State Level Tax deductions
As these are the only special deductions that have been created
by the region of Murcia it is necessary to consider those
deductions available to beneficiaries at the State level
19

State Level Tax deductions on income from Life
Insurance:
An exemption of all tax on insurance policies up to €9,195,45
Available where the beneficiary is the spouse, parent or
descendent or adopted descendent
20

State Level Tax deductions on income from Life
Insurance cntd:
The exemption is available to each beneficiary but only once
regardless of number of life insurance policies
21

State Level Tax deductions on Family Home
If the main, habitual family home is inherited there is a deduction
of 95% up to the value of €122,606 per beneficiary.
This applies to beneficiaries that are the spouse, child or parent
of the deceased.
22

cntd
The property may not be sold for a further 10 years after the
inheritance.
23

cntd
Other blood relatives may also benefit from this exemption but
must have been living with the deceased in the property for a
period of at least two years prior to the date of death.
24

Other Deductions:
As a general rule the following deductions may be made on
any estate:
● Funeral Expenses
● Final Medical Expenses of the Deceased
● Debts held be the deceased that are evidenced by
public documents e.g. a mortgage
25

Tax Rates in Murcia
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
26

Tax Rates in Murcia 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 31,75
797555,08 207266,95 And Above 36,5
27

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/Coefficient
(In Euros) I & II III IV
0 to 390,657 1 1.59 2
390,657 to 1,965,309 1.05 1.67 2.1
1,965,309 to 3,936,629 1.1 1.75 2.2
More than 3,936,629 1.2 1.91 2.4
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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
29

Each year in Spain thousands of expats pay more
tax on inheritance than they should – simply
because they fail to follow some simple rules.
30

To find out how to get expert advice, in English, about how to
reduce your liability for inheritance tax, go to:
Expert Probate Services in Murcia
Expert Probate Services in Murcia
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Inheritance tax murcia

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