Positive news for residents and property owners in Mallorca, Menorca, Ibiza and Formentera. The July 2025 Balearic Islands succession tax reform further protects your wealth and legacy from unwelcome taxation, making the region an increasingly attractive place to live.
The Balearic Islands government has taken further steps to protect residents from high taxes imposed on wealth. The latest reform builds on the 2023 succession and wealth tax improvements and makes the Balearics a competitive tax jurisdiction.
While the Spanish tax regime is established by the state, the autonomous regions can adjust tax rates, allowances and some rules for local taxpayers to make them more beneficial.
On 24 July 2025, the Official Gazette of the Balearic Islands published Law 6/2025, introducing significant amendments to the regional Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones ‘ISD’). The reform came into effect the following day and consolidates the Balearics as one of the most advantageous regions in Spain for estate and gift planning.
2023 succession tax reform
Since July 2023, inheritances and succession agreements between close relatives (Groups I and II) have benefited from a 100% tax exemption in the Balearic Islands. This means that spouses, parents and children, grandparents and grandchildren do not pay any Spanish succession tax on inheritances.
This reform also introduced a 50% reduction for cases where the deceased does not have any descendants, or has disinherited them, and leaves assets to a brother, sister, nephew, niece, uncle or aunt. Furthermore, stepchildren and in-laws may benefit from a 25% reduction in the absence of other descendants.
2025 Balearic succession tax reform
The 2025 Balearic Islands reform strengthens the 2023 regime by extending the exemption to lifetime gifts and increasing allowances for extended family members (Group III). The following applies from 25 July 2025:
- Full exemption: a 100% deduction now applies to gifts between close relatives (Groups I and II), as well as to inheritances.
- Increased allowances for Group III:
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- The allowance for siblings, uncles/aunts and nephews/nieces, where there are no descendants of the deceased, has increased from 50% to 60%.
- The allowance for other Group III cases increased from 25% to 35%.
This development underlines the increasingly favourable tax environment in the Balearic Islands for wealth transfers. Families now have greater flexibility to plan, with significantly reduced tax exposure, particularly for direct relatives and, to a lesser extent, for collateral heirs.
2024 Balearics wealth tax reform – a reminder
With effect from 2024, Balearic Islands residents and property owners benefit from a €3,000,000 personal tax-free allowance for Spain’s main wealth tax. This allowance is much higher than the €700,000 applied under the state rules.
If you are resident in Spain, you also receive the additional €300,000 allowance against your main home. Wealth tax is an individual tax in Spain, so property and other assets held in joint names can potentially benefit from a combined allowance of up to €6,600,000 in the Balearic Islands.
All these tax reforms are very welcome for Balearic residents and those looking to move there, and make the islands an even more attractive place to live. It is worth reviewing your wealth management and estate planning to ensure your assets are structured to fully benefit from the regional tax regime.
Contact Blevins Franks for clarification on how these changes could benefit you and your heirs, or if you would like an objective review of your estate planning.
Other regions
These Balearic positive tax reforms reflect a trend we are seeing increasingly across many Spanish regions. Over recent years, Andalucía, the Canary Islands, Madrid, Murcia and Valenciana have all acted to virtually eliminate inheritance tax for spouses and children. Andalucía, Madrid, Murcia and, more recently, Valenciana also offer much more beneficial wealth tax allowances than under the state rules.
Regardless of which Spanish region you live in or plan to move to, reach out to our specialist advisers for guidance on how to improve your tax liabilities. Restructuring how you own assets can make a surprising difference to how much tax you pay.
Contact Blevins Franks today
