Inheritance and Gift Tax in the Valencian Community

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Inheritance and Gift Tax in the Valencian Community

The Inheritance and Gift Tax (IGT) is a direct tax levied on increases in wealth obtained free of charge by individuals, either upon death (inheritances) or through inter vivos transactions (gifts).

In the Valencian Community, this tax currently offers a particularly favorable framework following recent regional reforms, with substantial reductions in the taxable base and significant tax credits applied to the final tax liability.

Applicable Regulations

The Valencian Community, by virtue of its regulatory powers, has approved tax benefits that significantly reduce the tax burden for certain family groups.

Filing Deadline

The tax self-assessment must generally be filed:

Within 30 business days from the formalization of the gift in the case of inter vivos transfers; or
Within six months from the date of death in the case of inheritances.

Failure to comply with these deadlines may result in surcharges, late-payment interest, and, where applicable, administrative penalties.

Reductions in the Taxable Base

Before calculating the tax liability, regulations provide reductions in the taxable base for certain relatives:

A general reduction of €100,000 for spouses, ascendants, and descendants.
For children under 21 years of age, the reduction increases by an additional €8,000 for each year under 21, up to a maximum of €156,000.

These reductions substantially decrease the base on which the tax scale is applied.

Tax Credits (Bonuses) on the Liability

Once the tax liability has been calculated, particularly favorable regional tax credits apply.

Since May 2023, a 99% tax credit on the liability has been in force for inheritances or gifts made in favor of:

Children and descendants
Spouses
Parents and ascendants

In practical terms, this credit results in a minimal effective tax burden for direct relatives.

Collateral Relatives

For collateral relatives (siblings, nephews/nieces, uncles/aunts, etc.), the system provides a progressive framework:

From June 2026: 25% reduction of the tax liability
From June 2027: 50% reduction of the tax liability

This schedule introduces a gradual improvement in the tax treatment of transfers between relatives classified in Group III.

Formal Requirements

To benefit from regional reductions and credits, compliance with formal requirements is essential:

Gifts must be executed by public deed before a notary.
For monetary gifts, the origin of the funds must be evidenced.
Mandatory filing of the corresponding form with the Valencian regional administration within the legal deadline.

Failure to comply may result in the loss of tax benefits.

Practical Recommendations

Given the financial impact and technical complexity of the tax, it is advisable to:

Seek advice from a tax professional.
Strictly comply with filing deadlines.
Retain all supporting documentation (deeds, bank records, certificates, etc.).

Conclusion

The current Inheritance and Gift Tax framework in the Valencian Community is among the most favorable in Spain for direct relatives, due to the 99% tax credit on the liability and significant reductions in the taxable base. However, fully benefiting from these measures requires proper planning and strict compliance with legal and formal obligations.

Contact Us

If you have any questions or need specific advice, please, do not hesitate to contact us.

Laura Miralles Server and Maria Diego Leyda
Impley – Legal, Accounting & Tax Advice
Telf.: +34 965 854 423
Email: info@impley.com
Web: https://www.impley.com