“Comunidades Autónomas” have their own inheritance and gift tax regulations as a result of the Spanish State ceding the tax revenue of inheritance and gift tax to the “Comunidades Autónomas”, along with some regulatory autonomy to adapt tax to the particular circumstances of each.

This means that most of them have ruled new (and huge) benefits compared to those established by the Spanish State.

While the tax scheme and regime is the same in all parts of Spain, the “Comunidades Autónomas” took advantage of their new powers to fix higher thresholds, or different rates or direct reductions on the amount to be paid (and sometimes all of these) to benefit close relatives of the deceased or disabled people. There are also benefits that help promote local business, farming, etc. as well as in the acquisition of cultural assets of each Comunidad Autónoma.

However, the regulations change quite frequently so it is necessary to check the regulation in force at the time the tax is due.

Andalucía has ruled the following benefits:

With effect from 1January 2022 tax rates for inheritance and gift are reduced in every category.
The tax rates will remain the same with regard to the kinship groups but without taking into account the existing assets or wealth of the tax payer thus simplifying the process. The combination of the tariff and coefficient will in general, lead to marginal tax rates of no more than 45%.

Registered unmarried partners in Andalucía and those registered in other Autonomous Communities will be considered the same as spouses for all reductions, tax rates and deductions.

Reductions for cash gifts to descendants for the acquisition of a habitual residence

Recipients who receive money from ascendents, or adopted ascendents to buy a habitual residence can apply a reduction of 99% as long as they comply with the following:

a) The recipient is under 35 or has a disability, and their pre-existing wealth does not exceed 402.678,11€
b) That the whole donation is used to buy the first home
c) The residence is located in the Autonomous Community of Andalucía
d) The acquisition of the home which is going to be the main residence must be carried out within the same tax period of the declaration of the donation (one month), and supported by the sale document which must state the amount of donation received and that it has been used for the payment of the residence.
The benefit is also extended to victims of domestic violence and of terrorism.

The maximum reduction is 150,000€, with a maximum of 250,000€ if the recipient has a disability.

If there is more than one donation, from the same donor or various donors, the reduction will apply to the total sum of the donations, as long as they do not exceed the maximum amounts stated above.

Reductions for the gift of the habitual residence to descendants

This benefit is extended to descendants under 35, victims of domestic violence and of terrorism, with a maximum general limit of 150,000€ and an increase from 180,000€ to 250,000€ for disabled recipients.

Reductions for the gift of the habitual residence to descendants with a disability

Recipients who receive the full ownership of a residence of an ascendent or adopted ascendent can apply a reduction of 99% as long as they comply with the following:

a) The recipient has a disability and the house or apartment will be used as their habitual residence
b) That the public deed which records the donation states that the residence will be the habitual residence of the recipient and the recipient undertakes not to transfer ownership for 3 years following the acquisition.
c) The recipient´s pre-existing wealth does not exceed 402.678,11€
The maximum reduction is 180,000€.

If there is more than one donation from an owner or co-owners of the gifted residence, the reduction cannot exceed the about limit.

Reductions for cash gifts to family members to start up or expand an individual enterprise or professional business

A recipient who receives a cash gift from an ascendent, sibling, aunt, uncle, nephew or niece to start up or expand an individual enterprise or professional business can apply a reduction of 99% as long as the following conditions apply:

a) The whole gift is used for the creation or expansion of the business
b) The business or individual enterprise is based physically or for tax purposes in the Autonomous Community of Andalucía
c) The individual enterprise or professional business is established or expanded within six months of the registering of the donation
d) The gift is recorded in a public deed stating that the cash gift is to be used exclusively for the purposes of establishing or expanding the individual enterprise or professional business and that it complies with the conditions stated here
e) The individual enterprise or professional business does not have as its main activity only the possession of assets.
f) The individual enterprise or professional business established or expanded as a result of the cash gift is kept for three years from the date of the public deed which records the gift, unless the recipient dies within this period.

The maximum reduction is 1,000,000€.

If there is more than one donation, from the same donor or various donors complying with the conditions above, the reduction will apply to the total sum of the donations, as long as they do not exceed the maximum amount stated above.

Improvement of the state reduction for the gift of, in total or part, of an individual enterprise or professional business

The following improvements may be applied to the state reduction for gifts of an entire individual enterprise or professional business, or for the gift of shares:

a) The requirement to retain the actual assets acquired (and not merely their monetary value) is three years irrespective of the family relationship between donor and recipient. The acquisition or the maintenance of the acquired assets are not required to be exempt from wealth tax.
b) It is applicable to spouses, descendants, ascendants, and also uncles, aunts, nephews and nieces can benefit from the reduction for shareholdings.
c) The percentage of reduction is increased from 95% to 99% when the business or individual enterprise is based physically or for tax purposes in the Autonomous Community of Andalucía, and remains based there for five years from the date of donation. This requirement is reduced to three years when the recipients are ascendants, descendants, spouse, adopted or unmarried recorded partners.
d) The obligation that it is the main source of income is eliminated.
e) The reduction now allows the assignment of capital to third parties, obtained through profits not distributed within the 10 previous years, as long as the profits are generated from economic activity.
f) For gift or inheritance of individual enterprises or professional businesses the benefit is extended to retired or disabled people.
g) Agricultural businesses are also included in this legislation.

Improvement of the state reduction for the gift of, in total or part, of an individual enterprise or professional business where there is no family relationship

The majority of the state reductions in the previous article, with the same conditions applying, will be applicable to those people who do not have a family relationship with the donor as long as they comply with the following:

a) The recipient has a current contract to work or supply services for the enterprise or professional business, and has been doing so for a minimum of ten years.
b) Has designated job responsibilities in the running of the enterprise or business at the time of donation and has had that role for a minimum of five years. The responsibilities correspond to those stated in groups 1 and 2 of the Régimen General de la Seguridad Social or the donor has granted special powers to undertake the running of the business.
c) If the recipient is an ascendant, descendant, spouse, adopted or unmarried recorded partner, a reduction of 99% will be applied.
d) A public deed to formalise the gift is necessary in order for the reduction to be applied.
e) If the donation is a cash gift the reduction will only be applied when the origin of the funds has been certified, and furthermore, that the appropriate public deed has been provided which formalises the origin of the funds.

Moreover – gifts in cash or any kind of bank deposit made to spouses, children or unmarried partners will benefit from a deduction of 99% in the tax due .  The gift must be made in a public deed, before a notary giving proof of the origin of the funds.

• The question now is when can these benefits be taken advantage of?
  

  When the gift is of immovable assets located in Andalucía or the gift is of other kinds of assets when the beneficiary is a resident in Andalucía.

  ---