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Catalonian Inheritance Taxes (IHT) 'almost abolished'

Fri 15th Apr 2011

The Catalan Government has officially announced the 'almost total' elimination of the Inheritance Tax for first and second-degree relatives.

The Regional CiU lead Government, has upheld it's electoral promise - a measure largely criticised in the last few weeks by Left Wing parties and trade unions.

Opponents of the move have questioned the logic of reducing public spending on healthcare and education while at the same time eliminating a tax that is currently only applicable to the richest beneficiaries.

Following what many other Autonomous Community Governments have already done, the Catalan Executive has set a fiscal bonus of 99% on the tax amount, which in practical terms corresponds to almost the total elimination of the Inheritance Tax. This tax cannot in fact be completely eliminated, as technically the Catalan Government can only manage fiscal bonuses, tax base deduction and the types of relatives affected, but not the existence of the tax itself.

The President of the Catalan Government Artur Mas stated that this modification of the Inheritance Tax means "the end of discrimination". It's revision will affect inheritance among married couples, between parents and their children, and between grandparents and grandchildren - siblings, nephews, cousins, other relatives or friends will not benefit from this change.

The measure will be backdated to January 1st 2011.

The previous regioal government had already approved a reduction of the Inheritance Tax in 2009, which will completely come into force on July 1st 2011. This more recent decision extends the previous reduction, which focused on reaching a minimum base amount to pay the tax. With current forecasts, today's decision means that the Catalan Government will no longer receive 150 million euros in 2011 and 102 million in 2012. In 2008, before the previous Government modification, the Inheritance Tax was adding more than 800 million euros per year to the budget. In 2011 it 'would have' brought in 258 million. After the revision, this sum will be reduced to 150 million euros.

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