Summary of tax reform (ISD) inheritance and gift tax and (ITP) transfer of assets Balearic Islands

(07/18/2023) The new Balearic Islands Government has approved the first Decree Law that modifies the effective taxation of inheritance and gift tax as well as the tax on property transfers.


Objectives of the reform:

    • To facilitate transfers of wealth between immediate family members and reduce the tax burden on these transactions.
    • Stimulate the purchase of homes for young people and people with disabilities, as well as for large families and single-parent families with disabled dependents.
    • Incentivise the purchase of housing as a first residence, especially for the aforementioned groups.

Approved measures:

Inheritance and gift tax (ISD):

  1. Abolition of the tax between the following family members:
    • Parents and children.
    • Grandparents and grandchildren.
    • Spouses.
  2. 50% reduction in tax between siblings and between uncles, aunts and nephews if the deceased person has no descendants.
  3. 25% reduction reduction in tax between siblings and between uncles and nephews and nieces if the deceased person has descendants.
  4. Applicability in:
    • Inheritances by cause of death.
    • Inheritance by virtue of inheritance agreements or inheritance during life under the civil law of the Balearic Islands.

Transfer tax (ITP):

  1. Total abolition of the tax on the purchase of the first habitual residence for the following groups:
    • Under 30 years and people with disabilities.
    • Income limit of 52.800€ in individual declarations or 84.480€ in joint declarations.
    • Price of the home not exceeding 270.151,20€.
  2. 50% reduction in the tax for the purchase of the first main residence in the following cases:
    • Young people under 35 years of age.
    • Large families, single-parent families and families with disabled dependents.
    • The price of the property must not exceed 270.151,20€.
    • For large families, the housing price limit is up to 350.000€.

Implementation procedure:

  • Approval of the Decree Law in an extraordinary consell de govern.
  • Entry into force after publication in the Official Gazette of the Balearic Islands (BOIB).
  • Need for validation by the Parliament of the Balearic Islands within one month.