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News / Welcome tax reforms for the Valencian Community

Welcome tax reforms for the Valencian Community

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19.06.25
Castle of Cullera, Province Valencia in Spain - Welcome tax reforms for the Valencian Community

The Valencian Community has announced tax reforms for this Spanish region, which are good news for residents of Valencia, Alicante and Castellón provinces.  These beneficial changes centre on wealth tax, inheritance and gift tax, property transfer tax, stamp duty, and personal income tax.

The Valencian Community government published its new Law 5/2025 on 31 May 2025, ushering in a series of significant regional tax reforms. These changes will be implemented gradually between June 2025 and June 2027, aiming to ease the tax burden on individuals and families while encouraging investment and economic activity in the region.

Wealth tax

  • The wealth tax-free threshold for the Valencian region doubles from €500,000 to €1,000,000 (under state rules it is €700,000). This is effective from 31 December 2025, meaning it will apply to the 2025 wealth tax return (submitted in 2026).
  • This increased allowance also applies to certain non-residents with assets in the Valencia region.

If your assets surpass €1,000,000, you will still benefit from the reduced taxable base.  The additional €300,000 main home allowance also continues to apply for residents, making a total of €1,300,000. Since these are individual allowances, they can potentially be doubled for couples owning assets in joint names.

Succession and gift tax

  • With effect from 1 June 2026, a new 25% reduction will apply to inheritances and gifts received by siblings, uncles and aunts, nieces and nephews (Group III beneficiaries).
  • From June 2027, this reduction will double to 50%.

This reform compliments Valenciana’s introduction of a 99% tax reduction for spouses, descendants and ascendants (Group I & II beneficiaries) in May 2023, enabling residents to leave assets to more family members without prohibitive tax charges.

Property transfer tax and stamp duty

For those purchasing property in Valencia, Alicante and Castellón provinces, the following tax changes have been confirmed.

  • Effective 1 June 2025, a 50% reduction in stamp duty applies for property transactions linked to strategic investment projects (PIAs).
  • From June 2026, property transfer tax will be reduced from 10% to 9% for properties valued at less than €1,000,000. (The tax rate for properties over €1m remains 11%.)
  • Stamp duty will also reduce from 1.5% to 1.4% from June 2026.

Personal income tax

While Law 5/2025 does not include any changes to the regional Valenciana income tax rates, the following increased deductions will help some families:

  • Support for families (birth, adoption and fostering).
  • Charitable donations for cultural, environmental and linguistic purposes.
  • Deductibility of certain health-related expenses (for example, prescription eyeglasses).

Tax planning

This series of tax reforms reflects a measured yet impactful shift in the local Valencian government’s tax policy. They will benefit a range of taxpayers, from individuals and families to property buyers and investors.  This makes Valenciana a more competitive Spanish region.

As the changes are rolled in over the next two years, it’s worth reviewing your tax and wealth management to maximise potential savings.

Please do not hesitate to get in touch with our advisers if you have any queries about how these reforms could benefit you and your family. Contact us today.

Tax rates, scope and reliefs may change. Any statements concerning taxation are based upon our understanding of current taxation laws and practices which are subject to change. Tax information has been summarised; individuals should seek personalised advice.
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