Inheritance Tax DeductionsIn Murcia

This presentation has been updated and is valid for 2014.

Inheritance Law in Murcia

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There are special regional tax deductions and exemptions

passed by the local government in Murcia that only apply to

those beneficiaries who have been resident in the region.

Inheritance Law in Murcia

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If you have NOT been resident in Murcia then, when

determining your inheritance tax liability, you may only apply

the deductions and exemptions approved by the CENTRAL

government.

Inheritance Law in Murcia

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The central government exemptions and deductions are not

as generous as the regional exemptions.

This has caused complaints that the inheritance tax laws in

Spain are discriminatory against non-residents.

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Inheritance Law in Murcia

The regional level deductions available in Murcia were

enacted by the parliament in Cartagena and in their current

form are specified in Legislative Decree1/2010. as modified

by Ley 3/2012

The most important changes to State laws can be

summarised as follows:

Inheritance Tax Law in the Murcia

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Spanish Inheritance law first assigns beneficiaries to groups according to the degree of kinship with the deceased:

Group I Children, including adopted children, under the age of 21

Group II All other descendants, spouses and parents

Group III Close relatives such as brothers and sisters, grandparents,

aunts and uncles

Group IV More distant relatives

Personal Exemptions

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These are the personal deductions as amended by regional law in Murcia. They are in addition to state exemptions:

Personal Exemptions

Deduction

Group I Deduction of 99% up to €300,000

Group II Deduction of 99% up to €300,000

Group III No deductions available

Group IV No deductions available8

If the beneficiary is disabled:

If a Group I or II beneficiary is disabled then the 99%

deduction is applicable up to €450,000

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Deductions in transfer of Family Business

Tax deduction of 99% of the value of the business

Must be a sole trader or 'single director company'

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Deductions in transfer of Family Business

The participation of the deceased in the business must

have been at least 10% (or 20% when combined with

participation of the spouse)

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Deductions in transfer of Family Business

The business may not be sold for a period of no less than

5 years

The registered address of the company must remain in

Murcia for a period of 5 years

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State Level Tax deductions

As these are the only special deductions that have been created

by the region of Murcia it is necessary to consider State level tax

deductions

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State Level Tax deductions on income from Life Insurance:

An exemption of all tax on income up to €9,195,45

Available where the beneficiary is the spouse, parent or

descendent or adopted descendent

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State Level Tax deductions on income from Life Insurance cntd:

The exemption is available to each beneficiary but only once

regardless of number of life insurance policies

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State Level Tax deductions on Family Home

If the main, habitual family home is inherited there is a deduction

of 95% up to the value of €122,606 per beneficiary.

This applies to beneficiaries that are the spouse, child or parent

of the deceased.

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State Level Tax deductions on Family Home cntd

The property may not be sold for a further 10 years after the

inheritance.

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State Level Tax deductions on Family Home cntd

More distant relatives may also benefit from this exemption but

must have been living with the deceased in the property for a

period of at least two years prior to the date of death.

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Other Deductions:

As a general rule the following deductions may be made on any estate:

Funeral Expenses

Final Medical Expenses of the Deceased

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Other Deductions Cntd:

Debts held be the deceased that are evidenced by public

documents e.g. a mortgage

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Tax Rates in Murcia

Taxable Sum

Tax Payable On This Sum

Any Remainder Up To

Applicable Rate on Remainder (%)

0 0 7993,46 7,65

7993,46 611,5 7987,45 8,5

15980,91 1290,43 7987,45 9,35

23968,36 2037,26 7987,45 10,2

31955,81 2851,98 7987,45 11,05

39943,26 3734,59 7987,46 11,9

47930,72 4685,1 7987,45 12,75

55918,17 5703,5 7987,45 13,6

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Tax Rates in Murcia Cntd...

Taxable Sum

Tax Payable On This Sum

Any Remainder Up To

Applicable Rate on Remainder (%)

63905,62 6789,79 7987,45 14,45

71893,07 7943,98 7987,45 15,3

79880,52 9166,06 39877,15 16,15

119757,67 15606,22 39877,16 18,7

159634,83 23063,25 79754,3 21,25

239389,13 40011,04 159388,41 25,5

398777,54 80655,08 398777,54 29,75

797555,08 199291,4 And Above 34

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Existing Wealth

Once the relevant tax rate has been applied the result is multiplied by a coefficient determined by the existing wealth of the beneficiary as well as the group to which they belong:

Existing Wealth Groups/Coefficient

(In Euros) I & II III IV

0 to 390,657 1 1.59 2

390,657 to 1,965,309 1.05 1.67 2.1

1,965,309 to 3,936,629 1.1 1.75 2.2

More than 3,936,629 1.2 1.91 2.423

Existing Wealth

The Groups referred to consist of the following beneficiaries:

Group I Children, including adopted children, under the age of 21

Group II All other descendants, spouses and parents

Group III Close relatives such as brothers and sisters, grandparents,

aunts and uncles

Group IV More distant relatives

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Each year in Spain thousands of expats pay more

tax on inheritance than they should – simply

because they fail to follow some simple rules.

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To find out how to get expert advice, in English, about how to

reduce your liability for inheritance tax, go to:

Expert Probate Services in Murcia

Expert Probate Services in Murcia

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