Inheritance Tax

The local Balearic government have come through on one of their campaign promises. Namely, to reduce the level of inheritance tax to as low as 1%, based on the degree of kinship. However, the limited jurisdiction of local government means that the new rate is only applicable where the deceased had their primary residence on the Balearics.

So-called non-residents still have to declare their inheritance tax with the central tax authority in Madrid, which can sometimes mean extremely high rates of tax. Thus it is worth crunching the numbers and looking closely at whether it makes financial sense to declare the Balearics as your primary residence.

Be warned, however, that anyone who does get residence here is also liable to be taxed here on all their worldly possessions.