The 99% bonus on Inheritance and Gift Tax recently approved by Consell has led to a notable rise in notarial inheritance formalities in Alicante, driven by demographic shifts and higher mortality rates linked to the pandemic. The aging population in the region is evolving rapidly, influencing these trends.
In 2021 and 2022, the growth in formalized inheritance procedures surpassed pre-pandemic levels. Historically common in Alicante before the pandemic, the formalization of inheritances reflected covid’s impact. During the first year, 14,966 inheritances were awarded to beneficiaries, a rise of 15.8% compared with 2019. In 2022, 14,646 inheritances were recorded, a figure still above pre-pandemic levels by 13.4%. These statistics come from the Notary College of Valencia.
Early data for this year point to a renewed recovery. Between January and March, 3,960 inheritances were distributed in Alicante. This marks a 10% increase from the same period last year and up to 25% more than the first quarter of 2019.
This growth coincides with a rising volume of property transfers by inheritance. INE data shows that in the last year Alicante residents inherited 10,292 homes, a thousand more than in 2019. In the first half of 2023, a further 5,653 houses changed hands because of the owner’s death, approximately 20% higher than pre-pandemic levels.
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Behind these figures stands Delfín Martínez, deputy dean of the Valencia Notary College, who notes increased tax compliance and a growing number of heirs. With more resources at administrations’ disposal, people take fewer risks and do not formalize inheritances within the traditional window, a practice once common. The explanation, Martínez says, also includes purely demographic factors: higher mortality from the pandemic and evolving population dynamics.
Regarding the bonus, the notary believes the measure will have a positive but limited impact, since most heirs no longer owe tax thanks to a 100,000 euro exemption. The exemption applies to transfers from parents to children.
Beneficiaries
Ministry of Finance data show the following: 77,507 Alicante residents filed an Inheritance Tax declaration. Since there is usually more than one heir per inheritance, only 9,498 were required to make a payment, equating to about 12%. The bonus means a majority of these cases benefit, with 5,695 avoiding tax entirely or paying only a minimal amount. The department, led by Ruth Merino, estimates the annual national beneficiary figure under this measure at roughly five percent of heirs paying the tax after the change.
What does the change entail?
The draft approved by Consell introduces a 99% discount on the tax payable by heirs, with rates ranging from 7.65% to 7,993 euros depending on the tax base, and 34% for amounts over 781,000 euros. This effectively leaves only about 1% of the calculated amount payable in many cases.
Who is affected by the discount in inheritance cases?
The bonus applies to heirs in Groups I and II, including children, adoptees, parents, and spouses. The measure expands on the existing exemption for the first 100,000 euros transferred from parents to children, meaning in practice the improvement mainly benefits those receiving more than this threshold.
Who benefits from the change in donations?
The donation bonus covers the same groups: parents, children, and spouses. The draft also introduces a notable improvement: grandparents will be able to donate up to 100,000 euros to their grandchildren without any tax on this transfer. Until now, this option existed only after the parent’s death.
In which autonomous community should taxes be paid?
Pérez Rovira notes that Inheritance Tax is governed by the law of the autonomous community where the deceased resided, while donations follow the recipient’s community rules, except for property-specific cases where local law applies.
What happens to other taxes on donations or inheritances?
They remain unchanged. For inheritances involving real estate, municipal capital gains may apply. For donations, the donor must declare any capital gain from the property’s increase in value during ownership if applicable.
What about civil partners who inherit?
Delfín Martínez explains that the bonus does not apply to de facto couples, who receive the same treatment as unrelated heirs in inheritance matters.