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Everyone will benefit from regional inheritance tax law

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12 Feb 2019

The new government of Andalucía formed by a coalition of PP and Ciudadanos has confirmed the immediate start of the procedures to eliminate in practice the inheritance and gift tax in the region (Click here to read the proposed measures).

Regional governments are empowered to regulate certain taxes and inheritance and gift tax is one of them. Residents in Spain are subject to the legislation of the region where they reside and non-residents are subject to state law.

Notwithstanding the above, since 2014, citizens residing in an EU member State, Norway, Iceland and Liechtenstein can opt to apply the law of the region where the property of greater value is located at, when the Spanish Government amended the legislation following a European Court resolution.

The Spanish Supreme Court issued a judgment on 19 February 2018 in favour of a Canadian citizen allowing the application of the law of the region of Cataluña. In addition, a resolution in favour of Costa Rica on 21 March and Switzerland on 22 March followed.

Finally, on 11 December 2018 the Spanish General Directorate of Taxation has issued the binding consultation V3151/2018 declaring that the effects of the judgment of the CJEU of 3 September 2014 are applicable to residents of non-EU countries and, consequently, the exclusion of third countries outside the EEA should not be taken into account, concluding that the regional legislation will be applicable in relation to all non-residents, regardless of whether they reside in a Member State of the European Union or the European Economic Area or in a third country.

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