Centre-Right opposition party Ciudadanos wants the government to scrap inheritance tax between parents and children and spouses, and dramatically reduce it for more distant family members and those where the deceased and the beneficiary have business connections.
Last year saw record highs of people refusing inheritances – one in every 10 was rejected – since, in Spain, the tax has to be paid before the assets transfer into beneficiaries’ names.
And beneficiaries only have six months to pay the tax.
Ciudadanos wants to increase this to at least a year where the estate is at least 75% fixed assets, and also wants to allow payment in kind instead of in cash if necessary.
Albert Rivera’s party says the tax should be reduced to zero where the beneficiary is a child or parent, spouse or unmarried partner of the deceased and where the inheritance is the latter’s permanent home.
This tax exemption would also apply to second- or third-degree relatives or even more distant ones where the beneficiary in question does not own a home of his or her own.
Garages and outbuildings, even if not purchased at the same time as the home, would also be included.
Zero tax would, additionally, apply where the inheritance is a business or portfolio of enterprises and is left to either relatives or non-blood relations who had a business relationship with the deceased, such as an employee or trade partner.
Farms and other land-based industries, including farmland for non-commercial use, would be included.
Discounts could be scaled based upon the degree of relations between deceased and beneficiary, and also by disability, and would be applied to ‘succession tax’ where property transfer is made in life to prevent problems for beneficiaries after the benefactor dies.
Zero tax would apply to inheritances of under €1 million, with the tax-free threshold for a second- and third-degree relatives reduced to €350,000 and, for more distant relatives, €125,000.
This would increase to €180,000 where the beneficiary has a disability of at least 33% or €360,000 where the disability is at least 65%.