Mallorca wants to abolish Inheritance Tax
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Significant changes are on the horizon for foreign property owners in Mallorca, including alterations to inheritance tax. Find out more in this article.
As a lawyer specializing in international inheritance law, I frequently advise clients on estate planning. Real estate assets and inheritance tax are often key areas of concern.
For this reason, it is crucial for me to keep you informed about current political developments. Notably, there are substantial political shifts taking place in the Balearic Islands, including Mallorca, that could impact future inheritance tax and the rentability of vacation properties.
This information is particularly relevant for those who own assets in Spain or intend to pass them on as part of an inheritance.
Plans for Inheritance Tax in Mallorca
The Balearic Islands have a new prime minister, Marga Prohens, who is supported by conservative parties. In collaboration with the right-wing populist party Vox, she has agreed upon a government program that includes tax relief measures. Of particular emphasis is the planned abolition of inheritance tax in Mallorca. Within the first 100 days of the legislative period, this tax will be completely eliminated for inheritances among close family members. Siblings and more distant relatives can expect a 50% reduction in inheritance tax.
Furthermore, there are plans to gradually reduce and eventually abolish the wealth tax during the tenure of the new Mallorcan government.
Liberalization of Vacation Rentals
However, the implementation of these plans depends on the abolition of the wealth tax, which was introduced at the end of December 2022. The feasibility of this will become clearer following the results of the Spanish parliamentary elections.
In addition, the Mallorcan government also intends to comprehensively liberalize vacation rentals, such as by lifting the existing moratorium on issuing new licenses. This would also be positive news for foreign investors who wish to rent out their vacation properties during their absence to increase profitability.
Please bear in mind that all of this information pertains to the current state of political developments and is not yet definitive. Changes remain possible.
In any case, given the proposed changes, it is of utmost importance that you, as clients, take the appropriate steps for estate planning and tax management to safeguard your assets and minimize potential tax burdens. Professional legal guidance can assist you in finding the best possible solutions. Therefore, do not hesitate to contact me to discuss your individual situation and develop tailored strategies.