Inheritance Law in the Balearic Islands
There are special regional tax deductions and exemptions passed by the local government in the Balearic Islands that only apply to those beneficiaries who have been resident in the region.
If you have NOT been resident in the Balearic Islands then, when determining your inheritance tax liability, you may only apply the deductions and exemptions approved by the CENTRAL government.
The central government exemptions and deductions are not as generous as the regional exemptions. This has caused complaints that the inheritance tax laws in Spain are discriminatory against non-residents.
The regional level deductions available in the Balearic Islands were enacted by the parliament in Palma and in their current form are specified in Law 22/2006.
All deductions, discounts and tariffs that apply to those who are married will be applied to those who, although unmarried, are registered as ‘established couples’ as per Ley 18/2001.
Personal Deduction Due to Kinship with Deceased
Personal deductions are applied according to group classification:
Group I Children, including adopted children, under the age of 21
Group II Children over 21, spouses, parents
Group III Close relatives such as brothers and sisters, aunts and uncles
Group IV More distant relatives or unrelated
The following are the personal exemptions available in the Balearic Islands:
Group I
Deduction of €25,000 plus €6,250 per year under the age of 21 up to a maximum of €50,000
Group II
Deduction of €25,000
Group III
Deduction of €8,000
Group IV
Deduction of €1,000
If the beneficiary is physically disabled:
- An exemption of €48,000 in addition to any personal deductions if disability of a degree > 33% and < 66%
- If the disability is > 66% then the additional discount increased to €300,000
If the beneficiary is mentally disabled:
- If the disability is a mental disability > 33% an additional deduction of €300,000 may be applied
Deductions in transfer of Family Business
- Tax deduction of 95% of the value of the business
- Must be children or spouse to benefit.
- Only if no child or spouse, any relative ‘to third degree of consanguinity’ may benefit from exemption
- The business may not be sold within a period of 5 years
Inheritance of the Family Home
The spouse, descendants, parents or any elderly relative who has lived with the deceased for two years prior to their death may deduct 100% of the value of the main family home up to a value of €180,000 each as beneficiaries.
The property may not be sold for a period of 5 years after the inheritance. The main family home is as defined for the purposes of legislation dealing with income tax.
Tax deductions on income from Life Insurance:
Where the beneficiary is a spouse, descendant or parent then a deduction may be made of 100% up to €12,000 of any income derived from a life insurance policy held by the deceased. There is no limit to the exemption if death was caused by an act of terrorism.
Special discounts
Where the beneficiary is a natural or adopted child, there is a 99% discount applied to any tax payable under the preceding rules.
Other Deductions:
As a general rule the following deductions may be made on any estate:
- Funeral Expenses
- Final Medical Expenses of the Deceased
Debts held be the deceased that are evidenced by public documents e.g. a mortgage
Tax Rates in The Balearic Islands
Once the final amount of tax payable is determined then it is necessary to apply the relevant rate.
| Taxable Sum | Tax Payable on this Sum | Any Reminder up to | Applicable Rate on Remainder % |
| 0 | 0 | 8000 | 7.65% |
| 8,000 | 612 | 8000 | 8.5% |
| 16,000 | 1292 | 8000 | 9.35% |
| 24,000 | 2040 | 8000 | 10.20% |
| 32,000 | 2856 | 8000 | 11.05% |
| 40,000 | 3740 | 8000 | 11.90% |
| 48,000 | 4692 | 8000 | 12.75% |
| 56,000 | 5712 | 8000 | 13.60% |
| 64,000 | 6800 | 8000 | 14.45% |
| 72,000 | 7956 | 8000 | 15.30% |
| 80,000 | 9180 | 40,000 | 16.15% |
| 120,000 | 15,640 | 40,000 | 18.70% |
| 160,000 | 23,120 | 80,000 | 21.25% |
| 240,000 | 40,120 | 160,000 | 25.5% |
| 400,000 | 80,920 | 400,000 | 29.75% |
| 800,000 | 199,920 | And Above | 34% |
Existing Wealth:
nce the relevant tax rate has been applied the result is multiplied by a coefficient determined by the existing wealth of the beneficiary as well as the group to which they belong:
| Existing Wealth (€) | I & II | III | IV |
| 0 to 400,000 | 1 | 1.5882 | 2 |
| 400,000 to 2,000,000 | 1.05 | 1.6676 | 2.1 |
| 2,000,000 to 4,000,000 | 1.1 | 1.7471 | 2.2 |
| More than 4,000,000 | 1.2 | 1.9059 | 2.4 |
The Groups referred to signify the following beneficiaries:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents, aunts and uncles
Group IV Distant relatives and unrelated
Many expats pay more tax on their inheritance than they should because they fail to follow some simple rules.
To discuss how to pay only the appropriate amount, please click the button below to get in touch with us.
This information is intended as a guide only. It is based on the current legislation for Inheritance tax in the Baleariac Islands as at October 2014. A suitable qualified tax lawyer should always be used to calculate a specific liability. If you require the assistance of a tax lawyer please contact who will introduce you to an appropriate lawyer. Please also note that this guide does not apply to Gifts (donaciónes) which have their own rules and rates.