Summer 2013 Tax Changes

For months now I have been warning my clients that Succession and Gift tax (ISD) for Residents would change as in the Valencian Community as it was virtually non existent

Well, at the beginning on the 2nd of August 2013 the regional government did just that, let’s take a look at how this affects us:

Previously:

When you inherited from a Resident here, a spouse, descendant or ascendant (direct bloodline), the deductions applicable were:

• Firstly a 40,000€ deduction was applicable on the total amount of the estate. Up to 96,000€ if the heir is under 21 years old.
• Next, a reduction of up to 122,606€, if the was a property included in the estate and it was the deceased’s home, in this case the heirs were obliged to maintain the property for 10 years.
• Finally, a reduction of a further 99,00% if you were directly related.

As it stands now;

• T he 40,000€ deduction has been changed to 100,00€, and if the heir is under 21 years old, the amount is increased to up to 156,000€.
• The reduction on properties that were the deceased’s home has been increased to 150,000€, and the obligation on keeping the property has been lowered to 5 years.
• This final reduction on the amount left to pay after all deductions has been changed from 99,00% to 75,00%.

With regards to Gift tax: the 420,000€ cap has been lowered to 150,000€,

Whilst sometime ago we saw the increase on IVA on new properties from 8% to 10%, this time the increase affects second hand properties, with the transfer tax (ITP) also being raised from 8% to 10%. It will continue at 8% for subsidised housing (VPO) or when it is a commercial premises being purchased by a PYME (small to medium sized companies), as their main office.

Further increase affect the Document Tax (AJD), which goes from 1,2% to 1,5%

Tax on second hand goods increases from 4% to 6%, But the tax on the purchase of second hand high end assets, such as cars (over 20,000€ or over 2.000cc), boats (over 8ms or 20,000€) or works of art or antiques, increases from 4% to 8%. The IVA on new assets is 21%.

Vehicles over 12 years old will pay fixed quotas: between 10€ to 55€ for motorbikes and between 40€ to 140€ on cars.