Modifications relating to inheritance tax in the Balearic Islands, 2016.

Last October, the Balearic Islands Government announced a general tax increase, which has been materialized with the arrival of the new year in the budgets of the CAIB.

This represent an increase of 65% in revenues from Inheritance and Donations Tax, 45% Tax Heritage and 18.16% for Property Transfer Tax. At be repealed regional deduction which determines the maximum tax of 1% on the tax base, taxpayers duties in Baleares, groups I and II (spouse, parents and descendants ….) Will be increased during the year 2016, taxation of this tax from the € 700,000 per taxpayer.

Although the effect of certain tax benefits that affect both inheritance taxation as corresponding to donations, especially of the aforementioned groups is maintained. At the time of calculating the cost of the tax benefits there are two groups:

– For Groups I and II benefits. In each group there are, on the one hand, tax benefits affecting reductions and, on the other, those who pose a deduction in the amount of the tax, among which the deduction of the fee for group II (children, descendants and spouses), which in practice means limiting the taxation of inheritances to 1% and 7% donations for these families. Although the taxation of inheritance is modified when the estate exceeds the amount of 700,000 euros, the reduced tax rate of 1% is maintained, and also regarding the tax base for inheritance do not exceed this limit.

– For the groups III and IV benefits. Several tax benefits are included, as reduced by transfer of an undertaking, the reduction transmission residence and bonuses on sales of goods in exchange for food.

Progressive table of inheritance tax for people between group I and II (children, parents, spouses):

Taxable income from (€) Gross tax (€) Rest tax base up (€) Applicable type
0 0 700.000 1%
700.000 7.000 300.000 8%
1.000.000 31.000 1.000.000 11%
2.000.000 141.000 1.000.000 15%
3.000.000 291.000 And more

As the Wealth Tax is concerned, the minimum exempt from 800,000 down to 700,000 euros, increasing the fee based on the table that we show below:

Taxable income from (€) Gross tax (€) Rest tax base up (€) Applicable type
0,00 €
0 €
170.472,04 € 0,28
170.472,04 €    477,32 €
170.465,00 €
340.937,04 €
1.176,23 €
340.932,71 € 0,69
681.869,75 € 3.528,67 € 654.869,76 € 1,24
1.336.739,51 € 11.649,06 € 1.390.739,49 € 1,79
2.727.479,00 € 36.543,30 € 2.727.479 € 2,35
5.454.958,00 €
100.639,06 €
5.454.957,99 €
10.909.915,99 €
258.832,84 €
And more 3,45

Finally, in reference to the Capital Transfers and Documented Legal Acts Tax, a new applicable rate is established from the time when the value of the property exceeds 1,000,000 euros, then taxed at 11%.

If you need more information or advice on the recent changes in the tax, please contact Ripoll Mateu Solicitors Mallorca. We are at your disposal through our new website  or at our offices in Palma and Pollença.


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