With the advent of the new administration in the Valencia Community, significant revisions have been made to the inheritance and donation tax policies, mirroring the progressive approach taken by regions such as Madrid, Andalucía, and Murcia. Consequently, residents of Valencia now stand to benefit from decreased tax burdens. Let us elucidate the previous and current tax frameworks for better understanding:
How used to be before?
Before the recent changes, the initial step in calculating the tax involved determining the total value of the inheritance or donation. For instance, if the total value amounted to €250,000, certain beneficiaries such as descendants, ascendants, or spouses were entitled to a reduction of €100,000 from the total value. In this scenario, the taxable base would then be reduced to €150,000
How is it now?
Under the revised tax scheme, the reductions remain consistent with the previous structure. However, a significant change lies in the introduction of a 99% tax deduction for descendants, ascendants, or couples. To simplify, let’s consider a flat tax rate of 20%. Previously, the tax bill for a taxable base of €150,000 would have amounted to €30,000. However, with the newly introduced 99% tax deduction, the tax liability is reduced to a mere €300, resulting in substantial savings.
While other regions have extended similar benefits to additional beneficiary groups such as cousins, uncles, etc., Valencia has initiated this favorable adjustment, marking a positive step forward. Notably, Valencia historically carried a heavier regional tax burden compared to its counterparts.
Should you require further clarification on these changes, our tax expert stands ready to assist you. Feel free to reach out with any inquiries regarding your specific circumstances.