On 11 April, Decree-Law 1/2019 was published in the Official Gazette of the Regional Government of Andalusia, fulfilling the promise of the current Andalusian Government to eliminate Inheritance Tax for acquisitions by spouses and direct relatives. In addition to this measure, other measures are introduced, which are summarised below:

1) Personal Income Tax: in the personal income tax area, the applicable tariff is reduced to calculate the total regional quota. There are currently 8 brackets, ranging from 10% to 25.50% (determining a maximum marginal rate of 48%). The new regulation reduces the tariff to 5 brackets, with marginal rates from 9.50% to 22.50%. However, this reduction will be made progressively, from 2019 and concluding in 2023.

2) Inheritance and Gift Tax: two new bonuses are introduced for free acquisitions mortis causa and inter vivos.

In the case of acquisitions due to death, a bonus of 99% is applied to the total tax payable by taxpayers included in Groups I and II (descendants and adoptees, ascendants and adopters, and spouses, in addition to the assumptions of equality provided for at the autonomous level: de facto couples and permanent family foster care and guardianship for adoption purposes). This measure does not replace, but complements, the own reduction of 1,000,000 euros that came into force in January 2018.

In the case of inter vivos acquisitions, the same bonus is applied to the same beneficiaries, although the following conditions are added: i) the transmission must be formalised in a public document; ii) if the object of the transmission is cash or deposits in a current, savings, sight or term account, the origin of the funds must be justified.

3) Tax on Patrimonial Transmissions and Documented Legal Acts: modifications are added to two of the modalities of this tax.

Thus, in the "Onerous Assets Transfer" mode, a reduced rate of 3.5% is added for the acquisition of a habitual residence by large families (limited to a true worth of 180,000 euros).

With respect to the modality of "Documented Legal Acts" three measures are contemplated: i) the application of a rate of 0.1% in the case of the acquisition of a habitual residence by large families (with the same maximum real value as indicated above); ii) the elimination of the reduced rates in this modality applicable to mortgage loans for the acquisition of a habitual residence by a taxpayer under 35 years of age (which, following the latest state reforms, has ceased to be considered a taxable person); and iii) the elimination of the increased tax rate of 2% in the case of real estate transfers in which the VAT exemption is waived (transactions which, from now on, are taxed at the general rate of 1.5%);

For more information, please contact:

Nicolás Díaz Ravn

nicolas.diaz@AndersenTaxLegal.es