Taxes in Andalucía go down

A reduction in taxes is always good news and this time, it’s taxpayers in Andalucia who enjoy the benefits. Under the latest regional government measures, three taxes in Andalucia see a reduction: income tax, inheritance tax and capital gains tax.

Important: Spanish succession follows two distinct paths depending on whether the deceased left a valid will (testate) or not (intestate). The intestate path requires a Declaration of Intestate Heirs (Declaración de Herederos Abintestato) — a step not needed when a will exists. Learn more about the succession process →

The latest reductions come hot on the heels of other recent cuts in taxes in the region – read about how real estate taxes in Andalucia are now much lower.

Lower-income tax in Andalucia

The region has reduced its proportion due to income tax as well as improved several taxable deductions. Specifically, the minimum amount of earnings you have to declare and pay taxes on in Andalucia goes up to €25,000 for a single person and to €30,000 for a couple (up from €19,000 and €24,000, respectively in the 2021 tax year.

More generous deductions

The regional government has also increased deductions for several concepts. They include:

Deduction for the purchase of social housing or by the under 35s

The deduction is now 5%, up from 2-3% previously. It can be applied to the purchase or refurbishment of a principal home when it is classed as social housing or the buyers are under 35.

Deduction for renting your principal home

This too goes up and widens its base. Among the taxpayers eligible for this tax benefit are the disabled, the over 65s and victims of domestic violence or terrorism. The deduction is now €600 (up from €500) for most tenants and €900 for disabled tenants.

Deduction for children

Child benefit now includes your own children as well as fostered minors and the discount is €200, up from €50. The deduction increases to €400 for the birth, adoption or fostering if you live in an area with problems of depopulation.

Deduction for disabled taxpayers

The discount goes up to Є150 from €100 and disabled taxpayers also benefit from higher tax margins.

Need help with your Spanish taxes? Find out how we can help

Deduction for taxpayers with disabled spouses or partners

From this tax year onwards, taxpayers with disabled partners are now eligible for associated deductions. To qualify, the partnership must be registered in an officially recognised registry such as the Registro de Parejas de Hecho de Andalucía.

Deduction for disabled care

This figure increases from 15% to 20% of the amount paid to Social Security. To qualify, you must prove that the disabled person requires care from third parties. The maximum discount is €500.

Deduction for home help

This concept increases to 20% (up from 15%) and is applicable to the annual Social Security contributions you pay for home help. The maximum discount also goes up and now stands at €500.

Read our guide to double-tax residency in Spain

New regional deductions for taxes in Andalucia

The regional government has also introduced two new concepts for deductions on your income tax bill in Andalucia.

Deduction for costs of education

You may now apply up to 15% of costs for schooling and extra-curricular language and computer lessons. The maximum amount permitted is €150.

Deduction for environmental donations

You can deduct 10% of financial donations made to any state or charity organisation for the defence and protection of the environment up to €150.

Fewer capital gains for disabled taxpayers

Disabled taxpayers in Andalucia are now eligible for a higher tax exemption when they pay capital tax gains.

• Disability between 33 and 65% – the exemption now stands at €1,250,000.
• Disability over 65% – the exemption is now €1,500,000.

Lower inheritance taxes in Andalucia

The third type of taxation is to see a reduction in inheritance tax. The main modification benefits all heirs because it reduces the actual tax rate. The lowest now stands at 7% (down from 7.65%) and the highest is 26% (down from 36.5%).

In addition, the changes included the following:

Purchase of principal home

The exemption for the principal home is now 99%, regardless of the property’s value.

Read about inheritance tax and laws in Spain

Higher exemptions on inheritance tax

Exemptions have risen in the three main relationship groups. In the case of relatives of the first and second degree (Grupo 1 and II), it goes up to €1 million. For Grupo III (third-degree relatives), it increases to €10,000.

Lower taxes for disabled heirs

• Disability between 33 and 65% – the exemption now stands at €250,000.
• Disability over 65% – the exemption is now €500,000.

In addition, disabled heirs qualify for this exemption regardless of their relationship with the deceased.

Consult the professionals

Ensuring you apply all the tax deductions you are eligible for requires the help of expert tax advice, particularly when you’re dealing with a tax return in Spanish. If you’d like to get the maximum benefit from your next tax declaration, aka paying less tax, get in touch with our team now.

For a complete overview of taxation in Spain, see our Your Guide to Spanish Tax.