Significant Tax Amendments in Valencia: A Comprehensive Overview for Expats

The Valencian Community has recently enacted substantial changes to its tax legislation through Ley 5/2025, which came into effect on June 1, 2025. These modifications impact several key ceded taxes, and it is imperative for expatriates residing or with interests in Valencia to understand their implications.

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Let’s delineate the most significant amendments across various tax categories:

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Amendments to Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)

This tax category introduces notable bonifications, extending relief beyond direct lineal relatives:

• Acquisitions from June 1, 2026: A 25% bonification on the tax liability for acquisitions mortis causa (inheritance) and inter vivos (gifts) made by second or third-degree collateral relatives (i.e., siblings, aunts/uncles, and nieces/nephews).
• Acquisitions from June 1, 2027: This bonification will increase to 50% for the aforementioned collateral relatives.

It is crucial to note the prerequisites for applying these bonifications:

• The donation must be formalized through a public document (notarized deed).
• The tax self-assessment must be submitted within the established deadline and, invariably, prior to any administrative request.
• For cash donations, it is mandatory to specify the provenance of funds and the methods employed for delivery.

These new bonifications supplement the existing 99% bonification applicable to lucrative acquisitions by spouses, ascendants, and descendants.

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Elevation of the Minimum Exemption in Wealth Tax (Impuesto sobre el Patrimonio)

A significant adjustment has been approved for the Wealth Tax. The minimum exempt amount will increase from €500,000 to €1,000,000. This change will be effective for tax events accrued from December 31, 2025, thereby applying to tax declarations corresponding to the 2025 fiscal year and subsequent periods.

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Modifications to Property Transfer Tax and Stamp Duty (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados)

Individuals engaged in property transactions within Valencia should be aware of the following adjustments, effective for tax events accrued from June 1, 2026:

• General Rate Reduction for Onerous Property Transfers (TPO): The general rate will decrease from 10% to 9%.
• High-Value Properties: The 11% rate will be maintained for properties or rights exceeding a value of €1,000,000.
• Reduced Rate for Agricultural Parcels: A new reduced rate of 4% is established for physical persons acquiring plots designated for agricultural use. This is contingent upon maintaining the agricultural use for a period of five years, fostering competitiveness in agricultural exploitations.
• Stamp Duty (AJD) Reduction: The general rate applicable in the Actos Jurídicos Documentados modality will be reduced from 1.5% to 1.4%.
• 50% Bonification for Strategic Investment Initiatives: A 50% bonification is introduced on the gradual quota of Stamp Duty (notarial documents) for first copies of deeds and notarial acts documenting acquisitions, groupings, segregations, and divisions of immovable properties designated for investment initiatives recognized by the Consell as a Project of Autonomic Interest or similar strategic territorial designation.

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Enhancement of Deductions in Personal Income Tax (Impuesto sobre la Renta de las Personas Físicas)

Within the scope of Personal Income Tax, the legislation highlights an increase in the amount of several existing deductions:

• Deductions related to birth, adoption, and foster care, encompassing all forms of family fostering.
• Deductions for donations with ecological purposes, for the conservation of Valencian cultural heritage, and for those directed towards promoting the use of the Valencian language.

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Concluding Remarks

These legislative revisions will undoubtedly influence the financial and fiscal landscape for expatriates in the Valencian Community. A thorough understanding of these changes is essential for effective financial planning and compliance.

While this overview provides a comprehensive summary, it is always advisable to seek counsel from a qualified tax advisor in Spain to ascertain how these specific amendments apply to your individual circumstances.

Costaluz Lawyers specializes in international taxation for both residents and non-residents. We invite you to contact us for a personalized tax consultation to address your specific needs and ensure compliance with these new regulations.

Should you have any inquiries or wish to share your experiences regarding these tax amendments, please engage in the comments section below.

Valencia is not the only region to have moved on inheritance tax; what Madrid did to its inheritance and gift tax.

Reviewed by María Luisa de Castro, CEO at CostaLuz Lawyers — Updated 2026

This is general information, not definitive legal advice — every case requires individual analysis.