In a groundbreaking move following the example set by the Balearic Islands, the newly formed PP and Vox coalition government in the Valencian Community is set to eliminate the Inheritance and Donations Tax. Announced by Carlos Mazón after the inaugural session of the new Consell held in Alicante, the executive has agreed to expedite the process of granting a 99% reduction in both autonomous taxes for first-degree family members.
Previously, the Inheritance Tax was subject to a 50% general reduction, with some exceptions for young children or individuals with disabilities. However, the president has emphasized that the maximum reduction will now apply when the inheritance or donation benefits children, spouses, parents, and guardians. Mazón argued that this tax burden has imposed severe economic hardships on many families, forcing them to pay without any real economic benefits or an increase in their wealth.
This significant reform will be retroactively applied from May 28, the date of the regional elections. The decision comes as a response to the staggering number of people declining to receive inheritances in the Valencian Community, which reached over 20,000 individuals in 2022. Furthermore, the trend has shown an alarming 24% increase in the first quarter of the current year.
Despite the anticipated impact on the budget, the president stressed that the tax generated from these tributes represents only a minimal 1% of the total public revenue, accounting for nearly €400 million in 2022 – €352 million from Inheritance Tax and €40 million from Donations Tax.
Moreover, this move aligns with the government’s commitment to fiscal responsibility. Just yesterday, the new Consell took the first step by issuing a decree to streamline the administrative structure, reducing the number of autonomous secretaries and undersecretaries from 55 to 46. President Mazón asserted that political savings and reducing the number of politicians are priorities of his administration. Additional measures in this direction will be considered in future Consells.
Furthermore, it is expected that the government will soon abolish the tourist tax, as President Mazón believes that lowering taxes will stimulate economic growth and enhance public services. He reiterated the commitment to optimize the Consell and reduce political expenses in favor of prioritizing social policies that directly impact the lives of citizens.
If you need assistance to find out how much inherintace tax your beneficiaries will have to pay if you pass away, please do not hesitate to contact Pellicer & Heredia International Lawyers and their tax department will be able to do a tax simulation.