Murcia eliminates tax on Inheritance and gifting to brothers, uncles and nephews 

In 2021, over thirty-three thousand Murcian’s benefited from the Inheritance and gifting tax rebates in groups one and two. (Kinship groups one – children under 21 years of age and two – children over 21 years of age, spouses, grandparents, parents and adoptive parents). 

It was already announced last year by the President of the Region of Murcia, that the tax on gifting for members of group three was going to be eliminated, a pioneering approach that exempts siblings, uncles, nephews and ascendants from the procedures and descendants by affinity (parents-in-law, daughter-in-laws, son-in-laws, stepchildren or stepparents) of the imposed tax. As of the 28th of January 2022, this fiscal tax is eliminated and represents another advance in the regional government’s fiscal moderation policies to boost the economy.

The Minister of Economy, Finance and Digital Administration indicated during the presentation of the measure that extending the practical suppression of donations among group three favours job creation and economic growth. For example, it can be the ideal tool for the continuity and renewal of businesses and companies whose owner is close to retirement. Specifically, the bonus of 99 percent of the tax on gifting for the kinship group Three, will have effects from January 1, 2022, and which joins the one already in force elimination of inheritance and donation tax in the Region of Murcia for kinship groups one (children under 21 years of age) and two (children over 21 years of age, spouses, grandparents, parents and adoptive parents). Likewise, the Minister of Economy recalled that the tax on gifting is voluntary and discounting it is a way to encourage these donations, which in turn have an effect of helping families and boosting growth.

With the data calculated by Murcia Region Tax Agency, it can be verified that the main beneficiaries are lower and middle class Murcian taxpayers. Money, where it is best is in the pockets of Murcia to contribute, along with other measures such as streamlining and simplifying administrative procedures, economic growth, and job creation.  In the succession bonuses processed at the Tax Agency of the Region of Murcia in 2021 of the kinship group one, 73 percent did not reach 100,00 euros, while in group two the percentage rises to 81 percent. They only exceed 300,000 euros in 3.7 and 3.8 percent. 88 percent of group one donation self-assessments were less than 100,000 euros, being 90 percent in group two. In this tax, there was no donation of more than 300,000 euros in kinship group one; and those of group two that exceeded this amount accounted for 1.8 percent.

Modelo 720 –  Recent news from the Court of Justice of the European Union knocked down the controversial Declaration of Assets Abroad, through the declaration Model 720 on January 27th 2022. The ruling amends and considers that Spanish tax regulations impose disproportionate restrictions and abusive on the free movement of capital.

The conclusion resulted that resident taxpayers are still obligated to report their assets overseas, but the high fines have been dramatically reduced. 

For tax purposes you are considered a Spanish Fiscal Resident if you stay in Spain for more than 183 days within a one-year period. All fiscal residents in Spain, are obligated by law to declare any assets outside of Spain over 50,000€. This declaration needs to be completed if you fall into this category, if your assets exceed this amount for the year ending 31st December 2021. It is extremely important as you are legally still required by law to make the submission of declaration, before March 31st 2022.  

This is a process that fiscal residents must complete depending on their financial status and is separate to the annual income tax return. The Modelo 720 should be completed by all fiscal residents in Spain on an over scope of assets for the year ending 31st December 2021, to declare Bank accounts/Properties and Investments with a value of more than 50,000€ where you are legally obligated to report on the Modelo 720 before 31st March 2022. It is extremely important to declare all assets abroad, as this is a legal requirement. Failing to file Modelo 720 or filing it incorrectly, will still result in fines and penalties, even though these have been reduced significantly. 

Xerxes Tax and Law

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