Tax reforms in Andalucía will reduce income tax and succession tax liabilities for local taxpayers from 2022.
It is not often that we have good tax news, but the government in Andalucía has been making a habit of it the last couple of years. In 2019 it committed to reform its tax system to reduce the pressure on local taxpayers. The latest changes make Andalucía one of the most tax attractive regions in Spain, especially for succession tax planning.
Law 5 of 20 October 2021, on ceded taxes of the Autonomous Community of Andalucía, introduces substantial changes in personal income tax and succession and gift tax. Most are effective from 1st January 2022.
Personal income tax rates 2022
The general income tax scale rates have been modified, reducing the applicable tax rates. From January 2022, the applicable general income tax scale rates are as follows:
| TAXABLE BASE FROM | TAXABLE BASE TO | NATIONAL TAX RATE | REGIONAL TAX RATE | TOTAL TAX RATE |
| | | | |
| 0 | 12,450 | 9.50% | 9.50% | 19% |
| 12,450 | 20,200 | 12% | 12% | 24% |
| 20,200 | 35,200 | 15% | 15% | 30% |
| 35,200 | 60,000 | 18.50% | 18.50% | 37% |
| 60,000 | 300,000 | 22.50% | 22.50% | 45% |
| 300,000 | onwards | 24.50% | 22.50% | 47% |
Spanish succession and gift tax (SSGT)
These changes will be a relief for Andalucía residents as they reduce the amount of tax your family and heirs will have to pay when they inherit your assets.
From 1st January 2022 the applicable succession and gift tax rates are:
| FROM | TO | TAX RATE |
| €0 | €8,000 | 7% |
| €8,000 | €15,000 | 8% |
| €15,000 | €30,000 | 10% |
| €30,000 | €50,000 | 12% |
| €50,000 | €70,000 | 14% |
| €70,000 | €100,000 | 16% |
| €100,000 | €150,000 | 18% |
| €150,000 | €200,000 | 20% |
| €200,000 | €400,000 | 22% |
| €400,000 | €800,000 | 24% |
| €800,000 | onwards | 26% |
The tax rates have been reduced across the bands. The starting tax rate has reduced from 7.65% to 7%, while the top rate is now 26% compared to 36.5% in 2021.
The Spanish tax regime also applies multipliers, which in some cases can significantly increase the tax rates. This is usually based on both the pre-existing wealth of the beneficiary and their degree of kinship, but in Andalucía is now only based on the relationship.
| SUCCESSION & GIFT TAX MULTIPLIERS - ANDALUCÍA |
| GROUP I & II | GROUP III | GROUP IV |
| 1.0 | 1.5 | 1.9 |
Previously, group IV beneficiaries would be subject to multipliers between 2 and 2.4, and even group I & II heirs could face up to 1.2.
The beneficiary groups are defined as follows:
| Group I | Descendants (children, grandchildren etc) under 21 |
| Group II | Descendants over 21, ascendants (parents etc), spouses and pareja de hecho partners (which Andalucía treats the same as spouses for SSGT purposes) |
| Group III | Siblings, cousins, uncles/aunts, nephews/nieces, in-laws, potentially stepchildren (determined case by case) |
| Group IV | Everyone else, including unmarried partners not registered as pareja de hecho |
Succession tax personal and main home reductions
At state level, the highest personal reduction is only €15,957. Here in Andalucía, your children and spouse benefit from a €1 million allowance on inheritances (not gifts):
| Groups I and II | €1,000,000 |
| Group III | €10,000 |
| Group IV | Nil |
Previously the €1 million allowance was only available to those whose pre-existing wealth was less than €1 million; this condition has now been removed.
The 99% tax relief for inheritances that applies to Group I and II beneficiaries will still be applicable in 2022.
In Andalucía, the main home is reduced by 99% for inheritances received by close family. Until now, this was reduced to 95% if the property was valued over €242,000, but this no longer applies. The 99% reduction is available if:
- The beneficiary of the property is a spouse, civil partner, ascendant, descendant, or other relative over 65 years old who lived with the deceased the previous two years before death.
- The property is retained for three years.
Gift tax allowance on main home
The requirements for the 99% reduction on lifetime gifts on the main home have been expanded to:
- The recipient is either below 35 years old, or qualifies as disabled, or is a victim of domestic violence or terrorism, and
- Their pre-existing wealth does not exceed €402,678, and
- The recipient uses the property as their main home and retains it for three years, and this is stated in the public deed of gift.
Property taxes
Property transfer tax – with effect from 27th October 2021, this tax rate is 7% (this only applies to re-sales as new properties are subject to VAT). The new tax rate applicable for leasing is 0.3%.
Stamp duty tax – The new tax rate applicable for notary documents from 27th October is 1.2%.
Spanish wealth tax
After last year’s reductions, there are no changes to Andalucía’s wealth tax rates for 2022 and so they are as follows:
| FROM | TO | TAX RATE |
| €0 | €167,129 | 0.2% |
| €167,129 | €334,252 | 0.3% |
| €334,252 | `€668,499 | 0.5% |
| €668,499 | €1,336,999 | 0.9% |
| €1,336,999 | €2,673,999 | 1.3% |
| €2,673,999 | €5,347,998 | 1.7% |
| €5,347,998 | €10,695,996 | 2.1% |
| €10,695,996 | onwards | 2.5% |
Tax planning
These tax reforms, particularly to succession tax, are very welcome for Andalucía tax residents. While Spain’s inheritance regime remains complex and often misunderstood, your family and heirs will pay less tax under these new rates, meaning more of your hard-earned wealth goes to them, rather than to the taxman.
Remember that many British expatriates remain liable for UK inheritance tax, so your estate planning needs to be set up to take account of both the Spanish and UK rules. At Blevins Franks, our advisers are cross-border specialists and have years of experience helping clients navigate both regimes to achieve their wishes for their heirs.
If you’d like to understand how these Andalucía reforms benefit you personally, get in touch with your local Blevins Franks office. We can also review your tax planning and wealth management to ensure it takes full advantage of Andalucía’s tax regime.
Contact us now.
