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Inheritance and Gift Tax: Do you pay less in Madrid or Barcelona?

The persons who acquire goods or rights by inherence, legacy or any other succession title, by donation, or who are beneficiaries of life insurance contracts (when the contracting party is a person other than the beneficiary) are subject to the Inheritance and Gift Tax (ISD: Impuesto sobre Sucesiones y Donaciones).

People who are subject to ISD but who are Non Residents in Spain, for example, for inheriting a property in Spanish territory, must pay according to state regulations. However, since 2014, taxpayers with habitual residence in another Member State of the European Union or of the European Economic Area can choose to avail themselves of the state regulations, or of the Autonomous Community that would correspond to them according to the rules of territoriality of the tax law.

For this reason, if you are a resident of an EU or EEA country, you will be interested in knowing in which Autonomous Community you pay less for Inheritance and Gift Tax. Then we will compare the bonuses of the Autonomous Community of Madrid and Catalunya, although if you want to know the details of any other Community, you can contact us without any type of commitment.

Bonuses for inheritance in Catalonia and Madrid

In Catalonia different percentages of bonuses are applied according to the degree of kinship with the deceased. In the case of the spouses, they can apply a discount of 99% including the amounts of life insurance that accrue to the rest of the assets and rights. For the rest of the relatives of groups I (descendants under 21 years old) and II (descendants over 21 years of age and ascendants), the percentage of the bonus is reduces if the taxable base is higher, by applying the tables established by law. Even so, for taxpayers belonging the groups I and II, the 99% bonus is maintained in inheritances with a value of less than 100,000 Euros of tax base.

On the other hand, in Madrid, both the spouses and the rest of the passive subjects of groups I and II of kinship can apply a bonus of 99%, including the amounts of life insurance that accrue to the inheritance.

Click here if you are a foreigner and want to know how to plan your testament to avoid paying extra taxes in Spain.

Bonuses for donations in Madrid and Catalonia

On the one hand, in Barcelona and the rest of Catalunya, donations or any other legal transaction comparable are not subsidized, but they can enjoy several reductions, such as the 95% reduction in the tax base of the net value of participations acquired by donation by people with labor or professional relationship (provided that requirements are met), among others.

On the other hand, in Madrid a 99% bonus is applied for any acquisition by inter vivos donation in which the taxpayers are included in Groups I and II of kindship, being essential that the donation be formalized in a public document.

Obviously, donations must comply with all the formal requirements required to avoid being considered as money laundering, for example.

If you need to know more information about the Inheritance and Gift Tax in Madrid, Catalunya or other Communities, as well as help to make a testament, make a donation or pay taxes, do not hesitate to speak with us. Fill in the form on the top right and we will assist you as quick as possible.

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