In the near future it is expected that the Spanish Government will introduce a ‘fiscal harmonisation’ policy. The purpose of this policy is to eliminate the different practices between regions. However, it could mean that there will be an increase in inheritance and donation tax for some people.
Currently, inheritance and donation tax legislation has been delegated by the Spanish central government to the autonomous governments of the different regions. So, the regional governments make the decision about the allowances or reductions which apply and the threshold above which they must pay.
This means that taxation levels are more favourable at the moment in certain regions such as Madrid, Andaluciá, the Valencian Community and Murcia. This advantage for those donating or inheriting will disappear with the implementation of the tax harmonisation policy.
The uncertainty surrounding Brexit and the implications of the new policy have resulted in many people choosing to donate their property whilst conditions are more favourable. The changes will have an impact on all those families where a transfer of property is anticipated, whether they are resident or non-resident. Pre-empting this, people are choosing to donate now and eliminate the uncertainty. In the Murcia region alone, they have seen a 45% increase in the number of donations.
An additional reason for the increase is a recent change announced by the Ministry of Defence. It has been decreed that all non-EU nationals are exempt from having to obtain military authorisation for the purchase, gift or inheritance of a property in urban and non-border areas. This makes donation an even more attractive alternative at the moment.
Previously, Brexit meant that from January 2021 British nationals were required to receive military authorisation. This meant an additional cost, delay and hurdle in acquiring properties in the areas that are considered to be ‘of interest to national defence’. Most properties located on the Spanish coastline come into this category. With this requirement suspended, donation is once again a simple and straight forward process in comparison to inheritance proceedings. Donation currently offers significant reductions in most cases, at least at the moment.
At Ábaco Advisers we are here and at your disposal if you would like us to study your specific case. We can complete the donation process in a minimum amount of time and make sure that you benefit from numerous advantages that there are at present. If you are interested in finding out more please contact us at firstname.lastname@example.org