Valencia’s Tax Picture Shifts as New Policies Take Effect
Economic changes are reshaping how the Generalitat Valenciana manages its finances. Before upcoming rules are fully in force, tax revenue began to dip as a result of shifts in policy and market activity. A new set of tax cuts announced by Carlos Mazón’s government included an inheritance and gift tax bonus approved in the Cortes this week. The move signals a broader approach to easing tax pressure in selected areas, with potential long term effects on regional coffers.
At present, until the impact of these discounts unfolds, the real estate market shows signs of strain. The anticipated lower collections could translate into tighter resources for the regional administration. Data from the Valencia Tax Office indicates that by October, rights recognized in favor of the Generalitat in the Alicante province reached 891 million euros, a 7.7 percent decrease. Real revenue stood at 867.2 million, down 8.3 percent compared with the same period last year.
The overall balance across the autonomous community shows a reduction, with effective collections down 4 percent to 1,950 million euros. The drop is largely tied to the Property Transfer Tax paid on the purchase of second hand property, while most tax revenue remains the remit of the Generalitat. Value added tax and personal income tax are administered by the state, though portions are redistributed to the regional authorities.
The image below reflects the trajectory of tax collection in the Alicante province. Information
If figures from the prior year are used as a benchmark, the Generalitat had already disbursed 641.8 million euros to the province for this concept at this stage. This year, though, the ten month total has fallen by 9.4 percent to 581.3 million. Alongside the slowdown in real estate activity, there has been a noticeable drop in the second hand housing market as well, affecting related revenue streams.
Experts note that neither the overall economic situation nor the reductions introduced by the Valencia Administration point to a rapid improvement in these figures. One set of measures included in the Accompaniment Law for Regional Budgets lowers the rate applied to purchases of homes by under 35s to 6 percent, provided the price does not exceed 180,000 euros. In cases where housing reaches a certain level of official protection, the rate rises to 6 percent and then to 3 percent for special protection segments, depending on the category of housing.
Less Inheritance Revenue in Alicante
Alongside the other measures, inheritance tax collection in Alicante has contributed 74.5 million to regional coffers so far this year, down 20.7 percent. Analysts explain that this decline is not driven by a generous 99 percent bonus approved midweek for children and spouses. Instead, it reflects a smaller volume of inheritances processed on the national level this year. In neighboring Valencia, however, inheritance collections increased by 26.9 percent, underscoring regional differences in wealth transfers and policy effects.
A separate note concerns wealth taxes and related charges. Revenue from wealth taxes rose by 0.5 percent to 52.4 million, while documented legal actions recorded a 1.3 percent uptick to 107.4 million. Authorities also highlight the revenue from gambling related levies. The fee on bingo and similar activities rose to 12.2 million euros, supported by a recovery in inflows to these venues after the pandemic. Revenue from amusement machines fell by 6 percent, totaling 30 million, alongside a reduced number of active gaming machines across the state.
Overall, the pattern suggests a period of adjustment as tax policy recalibrates and market activity responds to the new framework. While the data point to softer collections in some categories, other lines show resilience or modest growth. The autonomous administration continues to monitor the interplay between housing markets, inheritance flows, and gaming revenue, adjusting budgetary expectations accordingly. The goal remains to maintain adequate funding for regional programs while supporting a gradual transition through policy changes and market normalization.
As the region navigates these shifts, observers emphasize the importance of transparent reporting and timely data. The balance sheets provide a snapshot of how policy choices interact with the housing market, consumer behavior, and cross-border fiscal arrangements. For residents and investors alike, the evolving tax landscape in Alicante and the broader Valencian community will influence decisions in housing, inheritance planning, and business planning as the year progresses.