Castilla y León is one of the 17 regions in which Spain is divided. We talk about it here today because, in these days, its government has started the process of removing the succession tax. Actually, if we want to be strict, this region will not remove the tax, but it will reduce its rate to 99 percent.
This reduction will mean a loss of more than 200 million euros annually for the government balances. On the other hand, the tax reduction will affect the direct heirs: children and other descendants, parents and other ascendants, and the spouse; but not when the grantor leaves property to others.
In these days, the government is making a public consultation according to the open government initiative, in order to listen to the suggestions of citizens. With them in mind, they will proceed to create a new proposition of regulation in the coming weeks. Then the proposition will be reviewed by economy technicians and once approved sent to legal experts. Then it will be time for discussion, and other political parties will be able to ask for amendments and rectifications. Lastly, the law will be approved. As you see, the actual approval of the law can take months if all the people involved do not reach an agreement.
Usually, governments do not remove the tax completely because the need to report the succession tax helps them to control the ownership of property and avoid money laundry.
Although, of course, the opposition claims that the promise of the tax reduction was based on political interests, the party in the government assures that the reduction will help company owners pass their companies to the new generations, enhancing new ideas and economic development. It is also commonly said that the succession tax is against the double taxation logic because the grantor should have already paid taxes for the goods and assets that are going to be left to their heirs.
As a foreign non-resident in Spain, in principle, you should not be worried by regional regulations because the law that applies is a state law. However, the law of the state is usually stricter than the law of the regions, so it may be worth it to study if you can manage to be taxed by the regional law. If you happen to have properties in Castilla y León, do not hesitate to ask us about how you can ensure a smooth probate process to your heirs when the time comes.