“Comunidades Autónomas” have their own inheritance and gift tax regulations as a result of the Spanish State ceding the tax revenue of inheritance and gift tax to the “Comunidades Autónomas”, along with some regulatory autonomy to adapt tax to the particular circumstances of each.

This means that most of them have ruled new (and huge) benefits compared to those established by the Spanish State.

While the tax scheme and regime is the same in all parts of Spain, the “Comunidades Autónomas” took advantage of their new powers to fix higher thresholds, or different rates or direct reductions on the amount to be paid (and sometimes all of these) to benefit close relatives of the deceased or disabled people. There are also benefits that help promote local business, farming, etc. as well as in the acquisition of cultural assets of each Comunidad Autónoma.

However, the regulations change quite frequently so it is necessary to check the regulation in force at the time the tax is due.

The gift tax regulations in Extremadura are as follows:

Deductions for descendants, ascendants, and spouses 

These taxpayers benefit from a deduction of 99% of the tax due when the taxable amount is 300,000€ or less.  The deduction is 50% on taxable amounts over 300,000€ up to a limit of 600,000€.  For disabled people the limits are 450,000€ and 750,000€ respectively.  The total amount of successive donations will be taken into account.

The gift must be recorded in a public deed within one month of receipt.  The origins of cash gifts must also be recorded in the deed.

Reductions for cash gifts to descendants for the acquisition of a first residence

For gifts to adult children, descendants, or minors “legally emancipated”, of money to buy a house to be a first habitual residence there is a reduction of 99% for the first 122,000€, with the following conditions:

a) The gift must be recorded in a public deed stating that the gift is to be used for the purposes of acquiring a first habitual residence for the recipient.
b) The residence must be acquired within 6 months of the date of the gift or of the first gift if more than one. The reduction is not applicable to gifts made after purchase.
c) The residence must be in Extremadura and the ownership must be retained for 5 years.

A first habitual residence is considered to have been acquired if the entire property is under full ownership, or ownership of a part that cannot be divided shared with a spouse or registered unmarried partner.

This reduction is not applicable to taxpayers with existing wealth of over 402,678.11€.

Reductions for the gift of a house to be a first habitual residence

For gifts to adult children, descendants, or minors “legally emancipated”, of a house to be a first habitual residence (if the entire property is under full ownership) there is a reduction of 99% for the first 122,000€, with the following conditions:

a) The residence must already be built and be located in Extremadura.
b) Full ownership must be transferred without the donor retaining any part or rights of usofructo, use or habitation.
c) Ownership must be retained for 5 years.
d) If the one house is donated to more than one descendant, the reduction will only be applied to the part that fulfils the conditions of being a first habitual residence and retained for 5 years.
e) The gift must be recorded in a public deed stating that the gift is to be first habitual residence for the recipient/s and will be retained for 5 years. No omissions can be added to rectify the deed at a later date.

This reduction is not applicable to taxpayers with existing wealth of over 402,678.11€.

Reductions for the gift to descendants of a plot or right to build for the construction of a first habitual residence

For donations to children and descendants of plots of land or rights to construction there is a reduction of 99% for the first 80,000€ on condition that:

a) The plot or rights are located in Extremadura
b) Full ownership of the whole must be transferred without the donor retaining rights of usofructo, use or habitation.
c) The residence must be constructed within 4 years of the public deed recording the gift. For accreditation the certificate of habitability or the license of first occupation must be provided.
d) The recipient is not the owner of any other residence at the date of the donation.
e) The recipient must retain ownership for 5 years from the date of accreditation apart from certain circumstances such as divorce, or related to employment.
f) If the plot or rights are donated to more than one descendant, the reduction will only be applied to the part acquired by those that individually fulfil the above conditions.
g) The gift must be recorded in a public deed stating that the gift is to be first habitual residence for the recipient/s. There is a period of one month only to rectify the deed if this statement has been omitted.

This reduction is not applicable to taxpayers with existing wealth of over 402,678.11€.

Reductions for cash gifts to family members to start up or expand an individual enterprise, a professional business or acquire shares in a company

Adults or minors “legally emancipated”, who receive cash gifts from ascendants, descendants, siblings, aunts and uncles, nephews and nieces including relations by marriage, for the above can apply a reduction of 99% ( with a limit of 300,000€ or 450,000€ for disabled recipients, the limits being the same for one or the sum of more than one donation from one or more donors) as long as the following conditions apply:

a) The business or individual enterprise is based physically or for tax purposes in Extremadura.
b) The gift is recorded in a public deed stating that it is to be used exclusively for the purposes of establishing or expanding the individual enterprise or professional business and that it complies with the conditions stated here.
c) The individual enterprise or professional business must be established or expanded within six months of the registering of the donation
d) The individual enterprise or professional business does not have as its main activity only the possession of assets.
e) The individual enterprise or professional business established or expanded or shares acquired as a result of the gift is kept for five years from the date of the public deed which records the gift, unless the recipient dies within this period.
f) For cash gifts to acquire shares in a company there are further conditions including that of having a managerial role in the company.

Reductions for gift of an individual enterprise, a professional business or shares in a company

For gifts made to a spouse, ascendant or descendant or close relatives including siblings, nephews and nieces (3rd grade), a reduction of 99% of the value of the gift can be applied. The following must be complied with to apply the reduction:

a) The activity of the business or enterprise takes place in Extremadura.
b) The donor is 65 years of age or over, or has a permanent or severe disability. At the time of the gift the donor ceases to be active in the business or enterprise (this does not include being on the Board of Directors), and receives no more income from the same.
c) The recipient must retain ownership and registration for tax purposes in Extremadura for at least 5 years from the date of the public deed formalizing the gift, unless they die within this period.
d) For gifts of shares the recipient must have a holding of at least 50% in the equity of the company, whether individual or together with that other family members.

Reductions for gifts to descendants of movable assets to develop a business or professional enterprise

For gifts of assets to develop a business (excluding lettings) or professional enterprise there is a reduction of 99% for the first 300,000€ of the value of the assets, (the limit being the same for one or the sum of more than one donation from one or more donors) on condition that:

a) The gift is recorded in a public deed stating that it is to be used exclusively for the purposes of establishing the first individual enterprise or professional business of the recipient.
b) The recipient must be an adult or minor “legally emancipated”, and be registered in the appropriate business – the registration details being recorded in the notary deed recording the gift and must have existing assets of less than 402,678.11€.
c) The business or enterprise must be established within 6 months of the donation and the assets retained for 5 years from the recording of the gift.
d) If the assets are donated to more than one descendant, the reduction will only be applied to the part acquired by those that individually fulfil the above conditions.

Reductions for gift of an individual enterprise, a professional business or shares in a company to unrelated recipients

A reduction of 95% will be applicable to those people who do not have a family relationship with the donor as long as they comply with the following at the date of donation:

a) They have worked or provided a service to the gifted enterprise or business for a minimum of five years.
b) They have designated job responsibilities in the running of the enterprise or business and have had that role for a minimum of three years.

Reductions for gifts of agricultural businesses.

There is a reduction of 99% for gifts to descendants and spouses of agricultural businesses or for the rights of “usofructo” in Extremadura.

Reductions for gifts to descendants for postgraduate study

There is a reduction of 99% for adult children or descendants, or minors “legally emancipated”, for the first 120,000€ of any gift (the limit being the same for one, or the sum of more than one donation, from one or more donors) provided that the gift is recorded in a public deed stating that it is to be used exclusively for the purposes of postgraduate study and the beneficiary has existing assets of less than 402,678.11€

NB

There is a limit of 300,000€ in total in reductions for gifts to ascendants, descendants or family members up to the third grade (siblings, nephews, nieces etc) for study or an economic activity.
Registered unmarried partners are deemed equivalent to spouses.

Unmarried couples have the same rights as married couples provided their relationship had been Constituted and Inscribed as being ruled under Extremadura Law “ Parejas de Hecho”. And even, in any Council or Comunidad Autónoma, from 31 March 2023. From this date, an inscription in an EU or EEE country registry will be enough. And also the notarial deed where the pareja de hecho was agreed will be valid.

• The question now is when can these benefits be taken advantage of?
  When the gift is of immovable assets located in Extremadura or the gift is of other kinds of assets when the beneficiary is a resident in Extremadura.

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