Despite the proximity between Spain and Portugal, both countries apply very different models when it comes to taxing inheritances. While in Spain the Inheritance tax It depends on each autonomous community and can involve a significant cost even with bonuses, Portugal offers a more favorable system for direct families.
According to financial consultant Henry Kent, the Portuguese country does not have a traditional inheritance tax and leaves parents, children and spouses exempt. This difference places Portugal as a more advantageous system in general terms, especially for close relatives, who do not have to pay anything to receive an inheritance.
How the Inheritance Tax works in Spain
In Spain, when a person dies, his or her heirs must pay the Inheritance and Donation Tax in order to receive the estate. It is a state tax, but transferred to the autonomous communities, which causes its application to vary depending on the territory.
According to the Tax Agency, the tax rate ranges between 7.65% and 34% of the value of the inheritance. Reductions and bonuses are subsequently applied to this percentage that depend on each autonomous community, and in some cases can reach almost 100%.
As has been said, one of the key factors is the degree of relationship. The most benefited groups are groups I and II, which include descendants and adoptees (minors and adults over 21 years of age), as well as the spouse, ascendants and adopters. These are the bonuses that can be applied in each autonomous community.
Deductions for parents and children in inheritance tax by autonomous communities
These are the Autonomous Communities that apply bonuses of up to 100%, in some cases, on inheritance tax:
- Andalusia: 99% bonus on the fee for groups I and II, along with a reduction of up to 1,000,000 euros.
- Aragon: Reduction of up to €500,000 in the tax base for descendants, ascendants and spouse.
- Asturias: Exemption for inheritances of up to 300,000 euros in groups I and II.
- Cantabria: Bonus of between 90% and 99% for direct family members.
- Castilla-La Mancha: 100% bonus up to 300,000 euros and 80% from that amount.
- Castilla y León: 99% bonus for spouse, descendants and ascendants.
- Catalonia: Reductions in the tax base according to relationship, without general bonus of 99% or 100%.
- Extremadura: 99% bonus for groups I and II.
- Galicia: Reduction of up to 1,000,000 euros for group II (children, spouse, parents).
- Canary Islands: 99.9% bonus for groups I and II.
- Balearic Islands: 100% bonus for ascendants, descendants and spouse.
- La Rioja: 99% bonus for groups I and II.
- Madrid: 99% bonus for immediate family members.
- Murcia: 99% bonus for groups I and II.
- Navarra: Up to 250,000 euros exempt and the rest is taxed at very low rates (from 0.8%).
- Basque Country: Exemption up to 400,000 euros; from there, approximate rate of 1.5%.
- Valencian Community: 99% bonus for direct family members.
How the inheritance system works in Portugal
As stated in the analysis of the financial consultancy Henry Kent, Portugal does not have an inheritance tax as such, but rather taxes inheritances and donations through the so-called stamp tax (Imposto do Selo).
In this system, immediate family members, such as children, parents, grandparents or spouses, are completely exempt, so they do not have to pay anything when inheriting. However, when there is no direct relationship, a flat rate of 10% applies, which can be raised to 10.8% in the case of real estate.