Introduction

Law 6/2025 of the General Budget of the Autonomous Community of the Balearic Islands for the financial year 2025 introduces important tax innovations in Inheritance and Gift Tax (ISD), highlighting key changes for non-residents that make the Balearic Islands a particularly attractive territory for estate planning.

1. Applicability to non-residents

The Balearic legislation extends tax benefits to non-residents, eliminating the requirement of tax residence in Spain in order to be able to apply deductions or regional allowances.

2. 100% allowance on inheritances

The 100% rebate of the ISD tax for direct relatives (children, parents, spouses, grandparents and grandchildren) is maintained, now also applicable to non-residents.

3. 100% deduction in inter vivos donations

Donations formalized in a public deed and complying with valuation criteria can apply a 100% deduction for spouses, descendants and collateral relatives up to the third degree.

4. Valuation

These tax benefits are conditional on the inherited or donated property being declared at the reference value set by the Cadaster, increased by a maximum of 20%, and on not declaring a value higher than the market value for properties that do not have a reference value.

There is an aspect that must be assessed in the case of a donation of a real estate property because it could generate capital gains for the donor subject to income tax.

Conclusion

The tax reform of the Balearic Islands for 2025 substantially improves the taxation of inheritances and donations, especially for non-residents. It constitutes a strategic opportunity to plan inheritance transfers at a reduced tax cost.

Please contact our team at PALMER LEGAL to clarify any doubts on this topic.