Significant changes in inheritance and gift taxation
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SubscribeThe recently published Act 6/2025 introduces significant improvements affecting taxation under inheritance and gift tax (IGT) for taxable events occurring from July 25, 2025, onwards.
The most notable change, which may have the broadest application, affects the taxation applicable to gifts made to close relatives.
Until Act 6/2025 entered into force, gifts made to taxpayers included in Groups I (descendants under 21 years old) and Group II (descendants aged 21 or over, spouses, and ascendants) benefited from a regional deduction that, in practice, resulted in an effective tax rate of 7% of the taxable base. With the new regulation approved by Act 6/2025, taxpayers in these groups may apply a 100% deduction on the net tax due, which in practice means a total exemption from the tax in these cases.
The entry into force of this measure ensures there is now equal treatment under IGT for both inter vivos (lifetime) and mortis causa (inheritance) transfers to close relatives. It is worth recalling that, for acquisitions due to death, including succession agreements, a 100% rebate has already been applicable for a couple of years.
However, it should be noted that when analyzing the tax impact of gifts, it is important to consider the tax treatment for the transferor of the assets under personal income tax. We recommend a detailed analysis of these transactions to verify their implications for all parties involved.
Furthermore, a significant improvement has also been introduced for the deceased’s or donor’s collateral relatives of the second or third degree of consanguinity, included in Group III (siblings and nephews/nieces), who may benefit from a 60% deduction. The rest of the taxpayers in Group III (collateral relatives of the second and third degree by affinity, as well as ascendants and descendants by affinity) will be able to apply a 35% deduction.
The application of these deductions, as with the 100% rebate for mortis causa transfers, is subject to an essential requirement when the gift includes real estate: the public deed must state the value of the acquired real estate, which in any case may not exceed the reference value increased by 20%.
To conclude, the reform introduced by Act 6/2025 represents a substantial improvement in the taxation of gifts in the Balearic Islands, especially for direct and close collateral relatives. However, it is advisable to analyze specific situations in detail and consider the civil and tax implications that may arise, to determine the most appropriate way to transfer family assets to the next generation.
For more information, please contact our Knowledge and Innovation Area specialists.
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