Only four of the 15 common regime communities maintain a high tax pressure on the inheritance tax from parents to children. The approval of reductions by the Balearic Islands and the Canary Islands plus the commitment made by the regional governments of La Rioja and Valencia increases the taxation differences between communities to levels not seen in Spain. The list of high inheritance tax rates, which includes Asturias, Aragon, Catalonia and Castilla La Mancha, can actually be reduced to three communities if the new Aragonese Government finally fulfills its promise and reduces the tax to 99%.
For the same inheritance (800,000 euros from parents to children), an Asturian pays 103,000 euros and a Catalan 45,000 euros, while in four communities the fee is zero, according to estimates by the REAF-Council of Economists (see attached graph). For the other seven, the payment is between 134 and 1,634 euros.
The most substantial reduction compared to what there was a few months ago will occur in Valencia, where the aforementioned inheritance of 800,000 euros from parents to children will go from being taxed at 63,194 euros to only 1,264 euros. That is the difference between whether the death occurred before or after the regional elections last May.
The speed with which legislative change has occurred in communities like the Balearic Islands has given rise to complaints from tax officials. Alejandro del Campo Zafra, lawyer and tax advisor at DMS Legal in Palma de Mallorca, explains that he recommends that clients not take advantage of the inheritance bonuses if there is a home involved because it may penalize them in the personal income tax in the future.
Del Campo explains that in order to benefit from the tax reduction in the Balearic Islands, in the case of homes, the reference value set by the Cadastre must be entered. The Mallorcan lawyer adds that in many cases the real value of the property is higher than that reference in the cadastre. Therefore, if the property received as an inheritance is sold for its real value, the fee that will have to be paid to the Treasury for the capital gain will be much higher than the savings in inheritance.
“This precedent introduced by the Balearic Treasury is dangerous because if the inheritance tax continues to be eliminated in all autonomous communities, it could end up harming us thanks to personal income tax,” reflects Del Campo. Of the four communities in which taxation will be changed, it has only been reliably approved in the Balearic Islands and the Canary Islands. In La Rioja and the Valencian Community, the calculations of the General Council of Economists-REAF are made with what is specified in their respective draft laws.
The president of the General Council of Economists, Valentí Pich, believes that “the inheritance tax should be at a lower and exempt rate for small estates.” And he remembers the need for it not to impact the successions of family businesses. Regarding the differences between communities, the economist denounces that "in Catalonia we are like on an island and it makes no sense." For now there is no sign of a change in attitude in the fiscal policy of the Government of Pere Aragonès.
According to sources from the Department of Economy, directed by Natàlia Mas, “Catalonia is not the one with the highest tax, although some insist on saying so.” They add that “the inheritance tax responds to a logic of generating equal opportunities that is fully consistent with the objective of reducing social inequalities.”
The differences between communities not only occur in inheritances, but are also important in the wealth tax and personal income tax. In the latter, the commitment that the president of Madrid, Isabel Díaz Ayuso, has reiterated this month, to reduce taxation by half a point in all sections of personal income tax in the autonomous part stands out. Today, the Madrid community is where the least income tax is paid, so the new measures will only increase this gap with other communities. Catalonia, on the other hand, is one of the common regime autonomies where low incomes pay more personal income tax. This week, the Extremaduran government gave its approval to reduce the first sections of the income tax by between 8 and 10%.
The tax reduction strategy followed by the PP communities after the elections last May is a repetition of the one that was launched last year with the deflation of the personal income tax rate and reductions in assets. In the case of the wealth tax, Valencia and Cantabria have committed to eliminating it (through a bonus), while the Balearic Islands will wait to see what happens with the tax on great fortunes. This same week, Extremadura approved a decree in which there was a 100% bonus. If everything announced is confirmed, in six of the 15 general regime communities it would have been eliminated. And in two others a very low rate will be maintained.
