Taxation changes in the Balearics for 2016

On the 30th of December 2015 the taxation changes for the Balearics included in the Budget Law were published.
We would like to mention the following ones, due to their relevance regarding property investment:

Wealth tax:

In December 2014 the Balearic authorities announced that the wealth tax would be cancelled by January 2016. This has not only not been the case, but the tax free amount has been reduced from 800.000€ to 700.000€.
The tax rates go from 0,28% up to 3,45%, depending on the wealth’s value.
We would like to remind you that this tax affects not only to residents in the Balearics, but also to non residents who have wealth here.

Tax on Property Transfers:

The previous scale is kept the same, this is, from 8% to 10%, depending on the properties’ value, but there is a new rate for the part of the property’s value which amounts more tan 1.000.000€, which is 11%.
For the transfer of cars the rate goes up to 8%, for motorbikes it is 0%.

Donation and inheritance tax:

We already informed in a previous post that the taxi s now the same for residents and non residents in the Balearics. We also informed that the rate for relationships in group I and II was 1% in case of inheritance.
The rate has been changed and there is a new scale now, which goes from 1% for values up to 700.000€ to 20% for values above 3.000.000€.
Regarding the donation tax the rate is still 7% for the groups I and II.
Observation: if someone is willing to make a donation which value is over 1.975.000€ it would be better to make a normal donation subjected to 7% than a so called in Mallorca donation as part of the legitimacy, which was previously subjected to 1% regardless the donations value.

Should you have any question or need any assistance regarding these subjects mentioned in the present post, please get in touch with us: nicole@mollmertens.com