(English) Monthly Newsletter - Arcos & Lamers Asociados

Inheritance in Spain (III)

This is our third article we are publishing related to the reduction of inheritance tax in Spain and specifically in Andalusia. This time, we wish to inform you about the reduction in the Autonomous Community of Andalusia when the same property is being inherited consecutively.

Previous articles:

1) Reductions on the inheritance tax for acquisition of a company, business or shares in Spanish companies, as well as Reduction for acquisition of habitual residence.

2) Reduction by relatives of the testator and the reduction of the autonomous community.

Reduction for consecutive transfers mortis causa of the same property

Inheritance in Spain (II)

Reductions on the inheritance tax in Spain and specifically in Andalusia for acquisition of a company, business or shares in Spanish companies, as well as Reduction for acquisition of habitual residence.

In our previous articles (SEE… ), we have already informed you about the general reductions and bonuses on these reductions as well as additional reductions to be taken into account for the calculation of the inheritance and gift tax in Spain and specifically in Andalusia.

Reduction for acquisition of a single-shareholder company, professional businesses, or shares in a company.

Reduction of 95% for acquisition mortis causa of a single-shareholder company, professional businesses, or shares in exempt companies, by spouses, descendants or adopted children of the deceased (in case there are none, by ascendants, adopters and relatives up to the third degree) provided that they stay the owner for a period of ten years after the death of the testator.

With regard to autonomic bonuses, the aforesaid period of 10 years is reduced to 5 years, and the reduction is lowered to 99%, leaving 1% of taxations for the mere statistic purposes in case:

The compensation councils in Spain (“junta de compensación”)

The definition of compensation councils in Spain is set out in the Spanish Royal Decree 3288/1978.

The urban planning must be executed in essence by the Administration of the State, the local entities, the special urban entities and in particular all individuals.

The compensation councils are created to develop a certain area of the town in Spain. They have their own administrative board and have legal personality.

The interesting parties create these compensation councils to create a system so that all owners of plots that fall under a certain urban plan, can exercise the public functions in favour of the general interest of all the owners.

The Spanish fiscal consequences of the original contribution of the plots to the compensation councils depend on the fact whether the compensation councils act as trustee or not: