Amadeo Fuenmayor publishes an article in “Expansión” on the “death subsidy” present in the current inheritance taxation system.
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EvalPub researcher Amadeo Fuenmayor discusses the current taxation of individuals in Spain, which revolves around the income-wealth-inheritance axis.

The author’s aim is, by contextualising the current tax system and presenting a practical example, to show the reader the non-existent taxation that lucrative capital gains can face.

Over the years, the taxation of individuals has gradually evolved into a “subsidy at death”, as the author describes. Looking at taxes as a whole, the Wealth Tax is analysed first. This tax has a minimum exemption (which varies depending on the region), as well as exemptions on business assets and the main residence, which can exempt certain assets from taxation.

With regard to personal income tax, this tax is not levied on unrealised capital gains generated by the revaluation of an asset year after year; it is only levied on capital gains at the time they are realised. Once the owner of an asset has died, when the descendants file the personal income tax return for the asset, the capital gains would not be taxed either, as it is considered that there is no capital gain or loss when there are lucrative transfers due to death. Even when the heir (or donee) registers an asset in his or her estate, he or she will do so for the current amount, without declaring for personal income tax purposes the capital gains generated by that asset since its acquisition.

Finally, reviewing inheritance tax, the set of reductions (of base and coefficient) and allowances regulated in some Autonomous Regions can considerably reduce, and even completely reduce, the tax burden to be assumed by the heir.

To conclude, the author stresses the need to reform wealth and inheritance taxation in order to simplify and modernise both taxes, to strengthen the taxation of large fortunes and to increase the tax capacity of the Autonomous Regions.

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