Spain: The Balearic Islands remove the Gift Tax

published on 28 August 2025 | reading time approx. 1 minute

The government of the Balearic Islands has enacted a significant tax reform introducing new reliefs in the Inheritance and Gift Tax. The measure, set out in Law 6/2025 of 23 July, aims to reduce the tax burden on families and facilitate the transfer of assets within the family unit.

The key innovation of the reform is the 100 percent tax exemption for gifts between parents, children, and spouses made without a succession agreement. For relatives in Group III — including siblings, uncles, aunts, nephews, and nieces — tax reductions of 60 percent apply if there are no direct descendants, and 35 percent if there are. Previously, inheritances between family members in the Balearic Islands were already subject to tax relief, while gifts remained taxable.

Extension of Tax Relief for Inheritances

The law also strengthens existing reliefs for inheritances, including those made through succession agreements. For Group III relatives, the tax rate is reduced to 60 percent when there are no direct descendants, and to 35% when such descendants exist. Transfers of assets between parents, children, and spouses remain fully exempt from tax, representing a significant fiscal benefit for families.

With this reform, the Balearic Islands join the ranks of autonomous communities that have eliminated taxation on inheritances and gifts between family members — such as Madrid, Andalusia, and the Canary Islands — thereby enhancing their fiscal competitiveness.

The legislative change is already in effect and applies to asset transfers made from 25 July 2025 onwards. Taxpayers must follow the standard procedures with the Balearic Islands Tax Agency, taking into account the new reliefs.