As part of Spain's Balearic Islands, Ibiza follows specific regional inheritance tax regulations that apply to both residents and EU citizens who are non-residents.
Following a landmark European Court of Justice ruling and subsequent Spanish legislation, these regulations ensure equal treatment regardless of residency status within the EU.
The inheritance tax system in Ibiza operates under the framework established by the Parliament of the Balearic Islands through Decree Law 1/2014, most recently updated through Law 11/2023. This comprehensive system includes various deductions, exemptions, and special provisions designed to benefit different categories of inheritors.
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1. Key Concepts in Inheritance Taxation
Before diving into specific rates and exemptions, it's important to understand two fundamental concepts in Ibiza's inheritance tax system:
- Deductions: These reduce the taxable base before applying the tax rate. For example, with a €100,000 inheritance and a 95% deduction, tax would only be calculated on €5,000.
- Rebates: These reduce the final tax payable. If your calculated tax is €1,000 and you qualify for a 99% rebate, your final tax payment would be €10.
2. Beneficiary Classifications and Deductions
The tax treatment of inheritances in Ibiza varies based on the beneficiary's relationship to the deceased. The classification system includes:
- Group I: Children, including adopted children, under the age of 21
- Group II: All other descendants, spouses and parents
- Group III: Close relatives such as brothers and sisters, grandparents, aunts and uncles
- Group IV: More distant relatives
3. Personal Deductions by Group
The following are the additional deductions available in Ibiza:
- Group I: €25,000, plus €6,250 for each year under 21, with a maximum limit of €50,000
- Group II: €25,000
- Group III: €8,000
- Group IV: €1,000
4. Standard Tax Rates and Calculations
For inheritors who are not close family, the following progressive tax rates apply:
| Base up to € | Base Tax € | Remaining Base up to € | Marginal Rate % |
| 0 | 0 | 8,000 | 7.65 |
| 8,000 | 612 | 8,000 | 8.50 |
| 16,000 | 1,292 | 8,000 | 9.35 |
| 24,000 | 2,040 | 8,000 | 10.20 |
| 32,000 | 2,856 | 8,000 | 11.05 |
| 40,000 | 3,740 | 8,000 | 11.90 |
| 48,000 | 4,692 | 8,000 | 12.75 |
| 56,000 | 5,712 | 8,000 | 13.60 |
| 64,000 | 6,800 | 8,000 | 14.45 |
| 72,000 | 7,956 | 8,000 | 15.30 |
| 80,000 | 9,180 | 40,000 | 16.15 |
| 120,000 | 15,640 | 40,000 | 18.70 |
| 160,000 | 23,120 | 80,000 | 21.25 |
| 240,000 | 40,120 | 160,000 | 25.50 |
| 400,000 | 80,920 | 400,000 | 29.75 |
| 800,000 | 199,920 | and above | 34.00 |
As an example, an inheritance of €20,000 (after all other deductions applied) would attract inheritance tax of €1,292 (tax applicable up to €16,000) + €4000 @ 9.35% = €1,666.
5. Special Tax Rates for Groups I & II
For children under the age of 21 and other children, spouse and parents of the deceased, the following rates apply:
| Base up to € | Base Tax € | Remaining Base up to € | Marginal Rate % |
| 0 | 0 | 700,000 | 1 |
| 700,000 | 7,000 | 300,000 | 8 |
| 1,000,000 | 31,000 | 1,000,000 | 11 |
| 2,000,000 | 141,000 | 1,000,000 | 15 |
| 3,000,000 | 291,000 | and above | 20 |
6. Existing Wealth Multipliers in Ibiza
In Spain, inheritance tax accrues to the individual beneficiary, and as a result, in order to calculate the inheritance tax payable, it is necessary to take into account the both the existing personal wealth of the beneficiary and the group of beneficiaries (as defined above) that they belong to. In Mallorca, the coefficients are as follows.
| Pre-existing Wealth € | Groups I & II | Group III (2nd & 3rd degree collateral by blood or affinity) | Group III (2nd & 3rd degree collateral by affinity) | Group IV |
| 0 to 400,000 | 1.0000 | 1.2706 | 1.6575 | 1.7000 |
| 400,000 to 2,000,000 | 1.0500 | 1.3341 | 1.7000 | 1.7850 |
| 2,000,000 to 4,000,000 | 1.1000 | 1.3977 | 1.7850 | 1.8700 |
| More than 4,000,000 | 1.2000 | 1.5247 | 1.9550 | 2.0400 |
To take the previous example of an inheritance of €20,000, if the beneficiary is the sibling of the deceased, with existing wealth (including all assets) of €1,000,000, then as a sibling they would be in Group 3 and with an existing wealth as stated, a multiplier of 1.3341 would be applied to the inheritance tax payable i.e. €1,666 x 1.3341 = €2,222.61.
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7. Special Provisions and Reductions
Primary Residence Benefits
Inheriting a primary residence can qualify for a 100% reduction up to €270,151.20 per beneficiary, provided:
- The inheritor is a spouse, ancestor, descendant, or relative over 65 who lived with the deceased
- The property is retained for at least 5 years
- For relatives over 65, cohabitation for 2 years before death is required
Business Asset Inheritance
A 95% reduction applies when inheriting:
- Business enterprises
- Professional practices
- Company shares
Requirements include:
- Meeting Wealth Tax exemption criteria
- Maintaining ownership for 5 years
- Extended availability to third-degree relatives if no direct descendants exist
Additional Reductions
Disabled Beneficiaries
- 33-65% disability: €48,000 reduction
- Over 65% physical/sensory or 33% mental disability: €300,000 reduction
Vehicle Inheritance
- Zero-emission vehicles: 50% reduction
- ECO-classified vehicles: 25% reduction
Life Insurance Benefits
- 100% reduction up to €12,000 for close family
- Full reduction for terrorism victims and humanitarian service
- Special provisions for international peace mission casualties
8. Recent Tax Reforms and Rebates
Following Law 11/2023, significant tax rebates are available:
- 100% rebate for children, spouses, and parents
- 50% rebate for siblings and blood nephews/nieces
- 25% rebate for relatives by marriage
Double Transmission Protection
When assets are transmitted multiple times within a 12-year period to descendants, special reductions apply based on previously paid taxes.
9. International Inheritance Considerations
Foreign Asset Inheritance
For Ibiza residents inheriting foreign assets:
- Regional Balearic regulations apply
- Double taxation treaties may affect tax treatment
- Form 720 declaration requirements apply
- Special considerations for foreign property inheritance
Cross-Border Inheritance Management
- Applicable double taxation treaties (France, Sweden, Greece)
- Primary taxing rights determination
- Foreign asset declaration requirements
- Penalties for non-compliance
10. Processing an Inheritance
Essential steps for processing an inheritance in Ibiza:
- Obtain death certificate
- Secure Certificate of Last Wills
- Locate and verify the will
- Gather required documentation
- Obtain NIE numbers for heirs
- Calculate applicable inheritance tax
- Complete inheritance deed
- Pay required taxes
- Register asset transfers
- Submit any required international declarations
11. Strategic Gift Planning
Alternative to Inheritance: Lifetime Gifts
Gift tax rates in Ibiza:
- 0-200,000€: 5%
- 200,000-600,000€: 7%
- Over 600,000€: 9%
Important Gift Tax Considerations
- One-month payment deadline
- Proper documentation requirements
- Registration obligations
- Plus Valía tax implications
- Municipal tax variations
