Inheritance and Gift Tax Act

JUAN CARLOS I

KING OF SPAIN

To all who see and understand the present,

Know: That the Cortes Generales have passed and I come to pass the following Law:

EXPOSURE OF GROUNDS

I

The Inheritance and Donation Tax closes the framework of direct taxation, with the character of a supplementary tax on the Income Tax of Natural Persons; it taxes the free acquisitions of natural persons and their direct nature, which was already preached of the current General Inheritance Tax, also results in the configuration of the Law, since the tax burden is determined when the taxpayer's capacity to pay is increased.

The tax contributes to the redistribution of wealth, by attracting a percentage of it in each free acquisition in favor of the Public Treasury; for this purpose, and following the pattern that marks the Article 31 of the Constitutionthe two principles underlying the previous ordering of the tax are maintained, namely the amount of the acquisition of assets and the degree of kinship between the transferee and the acquirer, although the latter is combined to take into account the pre-existing assets of the taxpayer, when their amount exceeds fifty million pesetas. Furthermore, as will be indicated, the progressiveness of tariffs in major acquisitions is reinforced and rules of application are introduced, such as the one providing for the accumulation of the amounts received for life insurance to the rest of the assets and rights that make up the hereditary portion, which reinforce the redistributive character of the tax, while at the same time contributing to the maintenance of the justice of the tax.

It has sought harmony with the other taxes that comprise direct taxation, especially with the property tax to which the Law refers in matters such as presumptions of ownership, debts of the perpetrator and fixing the value of the domestic trowel. On the other hand, the valuation of the assets and rights transferred, for the purposes of establishing the tax base, follows the traditional criterion of the real value, which is, in principle, estimated by the interested parties, verified by the Administration.

II

Among the reforms introduced by this Act are the following:

1. A more precise definition of the taxable event, which includes, apart from the ‘mortis causa’ acquisitions themselves, those produced by acts ‘inter vivos’, thus responding to the nature of the tax, which will fall on all acquisitions of property free of charge; this leads to the overcoming of the previous legislation, which subject donations to a tax other than the General Inheritance Tax, even if the latter’s rates were applied when determining the tax debt; a situation which changed, temporarily, the Law 32/1980, of the Tax on Patrimonial Transfers and Documented Legal Acts, pending the definitive regulation that would establish the announced Tax on Inheritances and Donations. The specific mention of the acquisitions made by the beneficiaries of life insurance policies helps to clarify the tax framework, since the legislation so far in force only by way of deduction (obtaining from the acts exempted and subsidized, mainly) revealed the subjection of the aforementioned acquisitions.

2. In order to define the tax, it is emphasized that the tax is constituted as a tax whose taxable person is the natural person; hence, the free increases obtained by companies and legal entities are subject to the corporation tax, thus being coordinated with the tax on the income of physical persons, so that certain acquisitions, instead of taxing for this tax, do so for the inheritance and donation tax, whose special character with respect to the general is thus highlighted.

3. The territorial scope of the tax is also subject to significant innovation, as the criterion for the application of Spanish tax legislation is modified; the reference to nationality is replaced by effective residence, which results in not only an adaptation to the provisions of the Article 21 of the General Tax Act for taxes that have a personal nature, but also a connection, certainly necessary, with the nearest foreign legislation and with what has already been agreed in the Agreements signed by Spain to avoid double taxation.

4. The trend towards customisation of the tribute has its main manifestation in the abolition of exemptions. Since the increases in assets obtained by legal persons are excluded from the tax, the exemptions contained in the legislation in force to date in favour of them are rendered meaningless, but the other objective exemptions that would apply to natural persons (with the only exception of maintaining the benefits that the current legislation establishes in favour of agricultural family exploitation) are also eliminated, on the understanding that they do not fit well in the new tax system.

5. In regulating the quantitative elements of the tax obligation, the Act imposes on the parties the obligation to disclose in their declarations the real value they attribute to the acquired goods and rights, but reserves the authority of the Administration to verify that value by the general means referred to in the Article 52 of the General Tax Act. This is followed by the traditional view that the tax base in the Inheritance and Donation Tax is constituted by the real value of the goods and rights, and therefore the charges and debts that diminish that value are deducted. Moreover, changes in ownership of assets are used to update the tax base on the Property Tax, and consequently, the value obtained from the verification is declared applicable in the same for the purposes of the settlement to be carried out by the acquirers.

6. It is the tax rate that undoubtedly offers the most novelty, because it has reflected important advances in the tax technique to achieve the progressiveness and a better distribution of the tax burden, thus accentuating the social function that this tax pursues. First of all, the defects of the above rates, which did not allow for genuine progressivity, were eliminated; secondly, and in response to the need to improve the tax scale, certain rules which led to an unequal distribution of the tax were removed, such as the one which introduced a surcharge on abintestatous successions in favour of the third or fourth degree collateral relatives of the deceased and the one which provided for the application of a special charge on free purchases exceeding ten million pesetas.

But the fundamental novelty of the Act is the establishment of a single tariff, with progressive rates depending on the amount of the liquidated base, which replaces the seven previously existing ones. In order to achieve a first step forward, adapted to the current economic structure of Spanish society, the first ten steps of the tariff are made up of base sections of one million pesetas each, to which rates are applied that grow very moderately, which will benefit taxable persons who acquire smaller increases in assets. In order to emphasize, then, the progressiveness resulting from the simple application of the tariff and to adapt it, according to the traditional criterion, to the degree of kinship, the Law provides for the application of multiplier coefficients that are different for each of the groups that it establishes. Only when the pre-existing assets of the acquirer are of some importance, the coefficient increases slightly.

New, and of significant significance in the ordering of the tax, is the establishment, in the case of ‘mortis causa’ acquisitions, of a minimum exempt of considerable importance, which are structured in the form of reductions of the tax base and which are modulated according to the groups of relatives indicated, although in the case of descendants under twenty-one years of age, account is taken of the lower age of the acquirer in order to increase the reduction, on the understanding that the law must take into account situations of greater economic help.

Moreover, and of course, the Act equates the various species of filiation with the provisions of the Convention. Article 39 of the Constitution and on the Law 11/1981 of 13 May.

7. The Act devotes a chapter to the management of the tax, which contains general rules on the settlement and payment of the tax. As a new development, and regardless of whether the powers of the State Treasury or the Autonomous Communities are limited to liquidation, it is possible to introduce, in general or in particular, the system of self-liquidation and special cases where temporary partial settlements may be carried out on account of the final ones to be settled in due course.

Special attention is devoted to the rules on time limits for the payment of the tax and, where appropriate, on its postponement or fractionation. Following a trend that has already begun, the time limits for entry are unified with the general ones set out in the Collection Regulation, although it is envisaged that with the introduction of the self-liquidation regime special deadlines for the submission of the declaration-liquidation can be established.

With regard to the deferment and division of payment, the Act expressly provides that the general rules of the Collection Regulations may be applied, but without prejudice to this, it covers the two traditional cases of deferment and division of payment granted by the Liquidating Offices, and as a novelty it establishes a system that tends to facilitate payment of the tax in cases of transfer of family enterprises or transfer by inheritance of the habitual dwelling of the deceased.

8. This Law has sought to collect those matters that specifically affect the Tax, referring to the General Tax Actin order to ensure a homogeneous treatment of the components of the tax debt common to most of the taxes that are part of the tax system.

III

Finally, it remains to be noted that the Act seeks to contain the basic legal regulation of inheritance and grant tax, covering those matters falling within the scope of the reservation of law referred to in the Article 10 of the General Tax Actthat is, the essential elements of the tax and those affecting the amount of the debt, forwarding its regulatory development to the Government, which, with the guarantee of the intervention of the Council of State, will draw up a text regulating in greater detail the different situations that may arise from the application of the Law.

CHAPTER I

General provisions

Article 1. Nature and object.

The Inheritance and Donation Tax, of a direct and subjective nature, taxes the property increases obtained for profit by natural persons, as provided for in this Law.

Article 2. Territorial scope.

1. The Inheritance and Donations Tax shall be required throughout Spain, without prejudice to the provisions of the foreign concert and Economic Convention tax regimes in force in the Historical Territories of the Basque Country and the Foral Community of Navarre, respectively, and to the provisions of the international treaties or conventions that have become part of the domestic law.

2. The transfer of the Tax to the Autonomous Communities shall be governed by the provisions of the rules governing the transfer of State taxes to the Autonomous Communities and shall have the scope and conditions laid down for each of them by its specific Assignment Act.

CHAPTER II

Taxable fact

Article 3. Taxable fact.

1. It is the taxable act:

(a) The acquisition of property and rights by inheritance, legacy or any other succession.

(b) Acquisition of assets and fees for donation or any other legal business free of charge, ‘intervivos’.

(c) The collection of amounts by beneficiaries of life insurance contracts, where the contracting party is a person other than the beneficiary, except for the cases expressly covered by article 16.2 (a) of the Convention; Law on Income Tax on Physical Persons and other Tax Regulations.

2. The increases in assets referred to in the previous number, obtained by legal persons, are not subject to this tax and will be subject to corporation tax.

Article 4. Presumptions of taxable facts.

1. The existence of a profit-making transmission shall be presumed where the tax records or data in the Administration result in a decrease in the assets of a person and simultaneously or subsequently, but always within the limitation period of Article 25, the corresponding increase in property in the spouse, descendants, heirs or legates.

2. In the acquisitions for a consideration made by ascendants as representatives of minor descendants, the existence of a gainful transfer in favour of them shall be presumed for the value of the goods or rights transferred, unless proof is given of the child's prior existence of property or means sufficient to carry it out and its application for this purpose.

3. The presumptions referred to in the above numbers shall be communicated to the interested parties so that they may make as many claims and evidence as they deem appropriate to their entitlement, before turning the corresponding settlements.

CHAPTER III

Passive and responsible subjects

Article 5. Passive subjects.

They shall be obliged to pay the Tax as taxpayers, where they are natural persons:

(a) In ‘mortis causa’ acquisitions, the successors.

(b) In the case of similar ‘inter vivos’ donations and other lucrative transmissions, the donor or the recipient thereof.

(c) In life insurance, beneficiaries.

Article 6. Personal obligation.

1. Taxpayers who have their habitual residence in Spain will be required to pay personal obligation tax, regardless of where the assets or rights that comprise the increase in the encumbered assets are located.

2. For the determination of the habitual residence, the rules of the Income Tax of the Physical Persons shall apply.

3. Representatives and officials of the Spanish State abroad shall be subject to this Personal Obligation Tax, in accordance with the same circumstances and conditions as those established for such taxable persons in the rules of the Income Tax of Physical Persons.

Article 7. Real obligation.

Tax on the acquisition of goods and rights, whatever their nature, which were located, could be exercised or were to be carried out in Spanish territory, and on the collection of amounts derived from life insurance contracts where the contract was concluded with Spanish insurance companies or was concluded in Spain with foreign entities operating in Spain.

Article 8. Subsidiary officers.

1. They shall be liable for the payment of the tax, unless the rules on joint and several liability for the General Tax Act:

(a) In the “mortis causa” transmission of deposits, guarantees or current accounts, financial intermediaries and other entities or persons that have delivered the cash and securities deposited or returned the security.

For this purpose, the issue of bank cheques against deposits, guarantees or the result of the sale of the securities required shall not be considered to be the delivery of cash or securities deposited, nor the return of guarantees, for the sole purpose of paying the inheritance and donation tax itself, which constitutes the transfer of "mortis causa", provided that the cheque is issued in the name of the tax-providing administration.

(b) In the delivery of amounts to those who are beneficiaries as heirs or designated in contracts, insurance institutions that verify them.

For this purpose, payment on account of the benefit for the sole purpose of payment of the Inheritance and Donation Tax itself, which causes the receipt of such a benefit, shall not be considered to be the delivery of sums to the beneficiaries of insurance contracts provided that it is effected by handing over to the beneficiaries of a bank cheque issued in the name of the tax-providing administration.

(c) Mediators in the transfer of securities forming part of the inheritance.

For this purpose, these mediators shall not be held liable for the tax where they are limited to making, in the order of the heirs, the sale of the necessary securities that have as sole purpose the payment of the own Inheritance and Donations Tax that seriouss the transfer "mortis causa", provided that against the price obtained at that sale the delivery to the beneficiaries of the bank cheque issued in the name of the Administration that is the creditor of the tax is carried out.

2. A subsidiary official shall also be responsible for authorizing the change of taxable person from any state, regional or local tax or levy, where such change involves, directly or indirectly, an acquisition taxed by this Tax and has not previously required the justification for the payment of this Tax.

CHAPTER IV

Tax base

Section 1.a General rules

Article 9. Tax base.

1. The tax base is:

(a) In the ‘mortis causa’ transmissions, the net value of the individual acquisition of each successor, the value of the goods and rights being measured by the charges and debts that are deductible, is understood as such.

(b) In donations and other profitable transmissions ''inter vivos'' comparable, the net value of the goods and rights acquired, being understood as such the value of the goods and rights diminished by the charges and debts that are deductible.

(c) In life insurance, the amounts received by the beneficiary. The amounts received for life insurance shall be settled by accumulating their amount to the rest of the assets and rights which comprise the beneficiary's hereditary portion where the person responsible is in turn the individual insurance employer or the insured person in the collective insurance.

2. For the purposes of this tax, unless any of the rules contained in the following paragraphs of this Article or in the following articles apply, the value of the goods and rights shall be considered as their market value. However, if the value declared by the interested parties is higher than the market value, that magnitude shall be taken as a taxable basis.

Market value shall mean the most likely price for which a cargo-free asset could be sold between independent parties.

3. In the case of immovable property, its value shall be the reference value provided for in the rules governing the real estate register, as of the date of accrual of the tax.

However, if the value of the immovable property declared by the interested parties is greater than its reference value, that value shall be taken as a taxable basis.

Where there is no reference value or the reference value cannot be certified by the Directorate-General for Land, the taxable amount, without prejudice to the administrative verification, shall be the largest of the following quantities: the value declared by the interested parties or the market value.

4. The reference value may be challenged only when the settlement made by the tax administration or at the time of the request for rectification of the self-liquidation is appealed, in accordance with the procedures regulated in the Act No. 58/2003 of 17 December 2003General Tax.

Where the tax payers consider that the determination of the reference value has harmed their legitimate interests, they may request the rectification of the self-liquidation by challenging that reference value.

5. Where the tax payers request a rectification of self-liquidation on the grounds that the determination of the reference value is prejudicial to their legitimate interests or when they lodge an appeal against the settlement that is carried out in their case, contesting that reference value, the Tax Administration shall decide upon a mandatory and binding report from the Directorate-General of the Catastro, which shall ratify or correct the said value, in the light of the documentation provided.

The Directorate-General for Landscaping shall issue a binding report ratifying or correcting the reference value when requested by the Tax Administration responsible for the application of the taxes as a result of the allegations and evidence provided by the tax-paying parties.

It shall also issue a mandatory report, correcting or ratifying the reference value, when requested by the Tax Administration responsible for the application of the taxes, as a result of the filing of economic-administrative claims.

In the reports issued by the Directorate-General for Landscaping, the reference value ratified or corrected shall be motivated by the expression of the decision of which it brings cause, as well as by the medium value modules, minorization factors and other elements specified for determination approved in that resolution.

Article 10. Determination of the base.

In general, the tax base shall be determined by the tax administration on a direct basis without any exceptions other than those laid down in this Act and in the rules governing the indirect assessment of tax bases.

Section 2.a Special rules for “mortis causa” procurement

Article 11. Addendum of assets.

1. In ‘mortis causa’ acquisitions, for the purpose of determining the individual participation of each successor, they shall be presumed to be part of the hereditary flow:

(a) Property of all kinds belonging to the estate holder up to one year before his death, unless there is clear evidence that such property was transferred by the estate holder and that it is held by a person other than an heir, legatee, relative within the third degree or spouse of either of them or of the estate holder. This presumption shall be distorted by sufficient justification that the cash or other property subrogated at the place of missing persons with equivalent value is included in the flow.

(b) Property and rights which during the three years preceding death were acquired for a valuable purpose by the deceased and in bare ownership by an heir, legatee, relative within the third degree or spouse of either of them or of the deceased.

(c) The property and rights that had been transferred by the deceased during the four years preceding his death, with the retention of the use of the property or other rights of the acquirer or any other life rights, except in the case of life income insurance contracted with entities legally engaged in this type of operation; and

(d) The securities and effects of which have been deposited and endorsed, if prior to the death of the endorser, the securities or endorsements in the books of the depositary have not been withdrawn or taken into account, and the nominative values which have also been endorsed, if the transfer has not been recorded in the books of the issuing entity also prior to the death of the deceased.

This presumption shall not take place where it is sufficient to state that the price or equivalence of the value of the transferred goods or effects has been incorporated into the estate of the seller or assignor and is included in the inventory of its inheritance, which must be taken into account for the settlement of the tax, or if it is sufficiently justified that the withdrawal of securities or effects or the taking of the reason for the endorsement could not be verified prior to the death of the deceased for reasons independent of the will of the latter and the endorser. The provisions of this paragraph shall be without prejudice to the provisions of points (a), (b) and (c) above.

2. The acquirer and the endosatories referred to in subparagraphs (c) and (d) above shall be considered as legatees if they are persons other than the heir.

3. Where, in compliance with the provisions of this article, the inheritance and donation tax is required, a higher fee than that which has been obtained, where appropriate, in the tax on legal transfers and documented acts, the latter shall be deducted from the amount to be paid by the latter.

4. If the persons concerned refuse to include in the inheritance of goods and rights under the presumptions laid down in this Article, the value of the assets and rights shall be excluded from the taxable amount until the final administrative decision is taken on the question raised.

5. In addition, the presumptions of title or co-ownership contained in General Tax Act and the Net Asset Tax Act.

Article 12. Charges deductible.

The value of the goods shall be deductible only from the charges or charges of a perpetual, temporary or redeemable nature which appear directly on them and which actually diminish their capital or value, such as censuses and pensions, without such consideration being due to the burdens constituting the personal obligation of the acquirer or those which, such as mortgages and garments, do not entail a decrease in the value of the transfer, without prejudice, where appropriate, to the fact that the debts they guarantee may be deducted if the requirements set out in the following article are met.

Article 13. Deductible debts.

1. In the case of death-related transfers, for the purpose of determining the net worth of assets, the debts which the successor may incur may be deducted in general, provided that their existence is established by public document or by private document meeting the requirements of the law. Article 1.227 of the Civil Code or the existence of such a law is otherwise justified, except for those in favour of the heirs or legatees of aliquot and of the spouses, ascendants, descendants or brothers of those who renounce the inheritance. The Administration may require that the debt be ratified in public document by the heirs, with the appearance of the creditor.

2. In particular, the amounts owed by the deceased by way of State, Autonomous Communities or Local Corporation taxes or by social security debts shall be deductible and shall be satisfied by the heirs, executors or administrators of the hereditary wealth, even if they correspond to winding-up after death.

Article 14. Deductible expenses.

In the case of death-related acquisitions, the following are deductible for the determination of the tax base:

(a) any expenses incurred in the proceedings in the common interest of all heirs when the testament or abintestatate becomes a contentious or in litigation by the legitimate representation of such testaments or abintestatates, except those relating to the administration of the relict, provided that those expenses are duly justified by the evidence of the case.

(b) The expenses of last illness, burial and funeral, as soon as justified. In addition, funeral and funeral staff must keep the proper proportion to the hereditary flow, in accordance with the local customs and customs.

Article 15. Domestic trousseau.

The domestic rinsing shall be part of the hereditary mass and shall be valued at three per cent of the amount of the causative's relict flow, unless the interested parties assign to the causation a higher value or prove its non-existence or that its value is lower than that resulting from the application of the said percentage.

Section 3.a Special rules for ‘inter vivo’ lucrative transmissions

Article 16. Charges deductible.

The value of the goods and rights acquired shall be deducted from the “inter vivos” and other profitable transmissions of the same value in accordance with the requirements of Article 12 of this Law.

Article 17. Deductible debts.

From the value of goods donated or acquired by another equivalent ‘inter vivos’ profit title, only debts secured with real rights to the same goods transferred shall be deductible, if the acquirer has reliably assumed the obligation to pay the guaranteed debt.

If you do not assume this obligation reliably, the amount of the debt shall not be deductible, without prejudice to the right of the acquirer to refund the portion of the tax quota corresponding to that amount, if you prove that you have paid the debt on your own within the period of limitation of the tax. The way of returning will be regulated by regulations.

Section 4.a Checking values

Article 18. General rules.

1. The Administration may verify the value of the goods and rights transmitted by the means of verification established in the Article 57 of the General Tax Act, unless, in the case of immovable property, the taxable amount is its reference value or the value declared to be higher, in accordance with article 9 of this Law.

2. Interested parties must enter in the declaration which they are obliged to submit in accordance with Article 31 the value which they attribute to each of the goods and duties included in the tax declaration. This value shall prevail over the value tested if it is higher.

If the value referred to in the preceding paragraph has not been disclosed, they shall be granted a period of 10 days to remedy the omission.

3. If the new value thus obtained is higher than that resulting from the application of the corresponding rule of the Property Tax, it shall take effect in relation to the settlements to be carried out by the acquirer for the current and subsequent annuality tax.

4. No penalty shall be applied on the share corresponding to the higher value obtained from the verification of the declared amount when the taxable person has complied in his declaration with the valuation rules set out in the Net Asset Tax.

Article 19. Right of acquisition by the Administration.

(Repealed)

CHAPTER V

Liquidable basis

Article 20. Liquidable base.

1. In the case of acquisitions taxed by this tax, the liquidated base shall be obtained by applying to the taxable base the reductions which, as provided for in the Act No. 21/2001 of 27 December 2001regulating the fiscal and administrative measures of the new system of financing for the Autonomous Communities of the Common System and Cities with Statute of Autonomy, have been approved by the Autonomous Community. These reductions will be carried out in the following order: first, those of the State and then those of the Autonomous Communities.

2. In the case of "mortis causa" acquisitions, including those of beneficiaries of life insurance policies, where the autonomous community has not regulated the reductions referred to in the preceding paragraph or where the Community's own rules do not apply to taxable persons, the following reductions shall apply:

(a) Relevant for those in the following groups:

Group I: acquisitions by descendants and adopted children under 21 years of age: EUR 15,956.87, plus EUR 3,990.72 for each year below 21, subject to a maximum reduction of EUR 47,858.59.

Group II: acquisitions by descendants and adopted persons aged twenty-one or more, spouses, ascendants and adopters, EUR 15,956.87.

Group III: acquisitions by collateral of second and third degree, ascendants and descendants by affinity, 7,993,46 euros.

Group IV: In acquisitions by fourth grade collateral, more distant and strange degrees, there will be no reduction.

A reduction of EUR 47,858.59 shall be applied, in addition to those which may correspond to the degree of kinship with the perpetrator, to persons who have the legal status of disabled persons, with a degree of disability equal to or greater than 33 per 100 and less than 65 per 100, in accordance with the scale referred to in the Article 148 of the consolidated text of the General Social Security Act, approved by Royal Legislative Decree 1/1994 of 20 June 1994 ; the reduction shall be EUR 150,253.03 for those persons who, under the abovementioned regulations, prove a degree of disability equal to or greater than 65 per 100.

(b) Regardless of the above reductions, a reduction of 100 per cent, with a limit of 9,195,49 euros, shall be applied to the amounts received by beneficiaries of life insurance contracts, where their kinship with the deceased contractor is of spouse, ascendant, descendant, adopter or adopted. In collective insurance or contracted by companies in favour of their employees, the degree of kinship between the deceased and beneficiary insured person shall be maintained.

The reduction shall be unique for each taxable person irrespective of the number of life insurance contracts for which he is a beneficiary, and shall not apply where he is entitled to that provided for in the fourth transitional provision of this law.

The same reduction shall in any case apply to life insurance that brings cause in acts of terrorism, as well as in services provided in international humanitarian or peace missions of a public character, and shall not be subject to the quantitative limit set out in the first paragraph of this paragraph, being extended to all potential beneficiaries, without applying the provisions of the fourth transitional provision of this law.

(c) In cases where the taxable amount of a "mortis causa" acquisition corresponding to the spouses, descendants or adopted of the deceased person was included in the value of an individual undertaking, of a business or of participations in entities, to which the exemption provided for in paragraph 8 of the Article 4 of Act No. 19/1991 of 6 June 1991, of the Tax on the Property, or the value of usufruct rights over them, or of economic rights arising from the extinction of that usufruct, provided that upon death the full dominion in the spouse, descendants or adopted, or they receive the rights due to the termination of the usufruct in the form of participations in the undertaking, business or entity concerned, in order to obtain the liquidated basis, shall apply to the taxable person, irrespective of the reductions that proceed in accordance with the preceding paragraphs, another one of 95 per 100 of that value, provided that the acquisition is maintained, for the ten years following the death of the deceased, unless the acquirer dies within that period.

In the cases of the preceding paragraph, where there are no descendants or adopted, the reduction shall apply to acquisitions by ascendants, adopters and collaterals, up to the third degree and with the same requirements as previously mentioned. In any event, the surviving spouse shall be entitled to a reduction of 95 per 100.

The same percentage of reduction, with the limit of 122,606.47 euros for each taxable person and with the requirement of permanence indicated above, will enjoy the acquisitions "mortis causa" of the habitual dwelling of the deceased person, provided that the successors are spouse, ascendants or descendants of the deceased, or collateral relative over sixty-five years of age who had lived with the deceased during the two years preceding his death.

Where the taxable amount for a "mortis causa" acquisition of the spouse, descendants or adopted of the deceased person includes property falling within paragraphs 1, 2 or 3 of the Article 4 of Act No. 19/1991 of 6 June 1991the Tax on Heritage, as members of the Spanish Historical Heritage or of the Historical or Cultural Heritage of the Autonomous Communities, will also apply a reduction of 95 per 100 of its value, with the same requirements of permanence mentioned in this section.

Where the requirement of permanence referred to in this paragraph is not fulfilled, the part of the tax which was not paid due to the reduction and the interest on delay shall be paid.

3. If the same goods within a maximum period of 10 years are the subject of two or more "mortis causa" transmissions in favour of descendants, the second and subsequent transmissions shall be deducted from the taxable amount, in addition to the amount of the tax satisfied in the previous transfers. Subrogation of property shall be permitted where it is reliably established.

4. In the case of a real obligation to contribute, the applicable reductions shall be those set out in paragraph 2. The same reductions shall apply in the case of a personal obligation to contribute where the taxable person or the deceased is not resident in Spanish territory.

5. In the case of acquisitions by grant or equivalent, if the Autonomous Community has not regulated the reductions referred to in paragraph 1 or if the taxable persons are not covered by Community rules, the liquidated basis shall in any event be the taxable basis, except as provided for in the following paragraphs and in the first final provision.

6. In cases of transfer of "intra-living" shares in favour of the spouse, descendants or adopted, of an individual undertaking, a business or shareholdings in donor entities to which the exemption provided for in paragraph 8 of the Article 4 of Act No. 19/1991 of 6 June 1991a reduction in the taxable amount shall be applied in order to determine the amount of 95 per 100 of the acquisition value, provided that the following conditions are met:

(a) The donor was sixty-five years of age or older or was permanently incapacitated, in absolute or high degree of disability.

(b) If the donor is acting as the director, he or she ceases to exercise and to receive remuneration for the performance of those functions from the time of transmission.

For this purpose, the mere membership of the company's Board of Directors shall not be understood as part of the management functions.

(c) With regard to the donor, he shall maintain the acquisition and be entitled to exemption from the Property Tax for 10 years after the date of the public deed of donation, unless he died within this period.

Likewise, the donor may not carry out acts of disposition and corporate transactions which, directly or indirectly, may lead to a substantial reduction in the value of the acquisition. That obligation shall also apply in the cases of "mortis causa" acquisitions referred to in paragraph 2(c) of this Article.

Where the requirements referred to in this paragraph are not met, the part of the tax which has been discontinued as a result of the reduction and the interest on late payment shall be paid.

See, in relation to paragraphs 2(c) and 6, Resolution 2/1999 of 23 March 1999 of the Directorate-General for Taxation, on the application of reductions in the inheritance and grant tax base, in respect of habitual housing and family business. Ref. BOE-A-1999-8180

7. The same reduction in the taxable amount referred to in the preceding paragraph and in accordance with the conditions laid down in points (a) and (c) thereof shall apply, in the case of a donation, to the spouse, descendants or adopted, of the goods referred to in paragraphs 1, 2 and 3 of the first subparagraph of Article 4(2) of Regulation (EU) No 1303/2013. Article 4 of Act No. 19/1991 of 6 June 1991, of the Tax on Heritage, as members of the Spanish Historical Heritage or of the Historical or Cultural Heritage of the Autonomous Communities.

For the purposes of free acquisitions of the property belonging to the Spanish Historical Heritage or the Historical or Cultural Heritage of the Autonomous Communities, the donor shall be deemed not to violate the duty to maintain the acquired property when he donates, in a pure, simple and irrevocable manner, the goods acquired with a reduction of the tax base to the State or to the other territorial or institutional public administrations.

Failure to comply with the requirements will lead to the payment of the no-entry tax and the corresponding interest on late payment.

Written according to the bug correction published in BOE No. 184 of 2 August 1990. Ref. BOE-A-1990-18512

Written according to the bug correction published in BOE No. 9 of 10 January 1990. Ref. BOE-A-1990-512

CHAPTER VI

Type of levy

Article 21. Tarifa.

1. The full amount of the tax shall be obtained by applying to the liquidated basis, calculated in accordance with the provisions of the preceding Article, the scale which, as provided for in the Act No. 21/2001 of 27 December 2001regulating the fiscal and administrative measures of the new financing system for the Autonomous Communities of the Common System and Cities with Autonomy Statute, has been approved by the Autonomous Community.

2. If the Autonomous Community has not approved the scale referred to in the preceding paragraph or if it has not assumed regulatory powers in the field of inheritance and donation tax or if the rules of the Community itself do not apply to taxable persons, the liquidated basis shall be taxed at the rates indicated in the following scale:

3. In the case of a real obligation to contribute, the applicable tariff shall be as set out in the preceding paragraph. The same tariff shall apply, in the event of a personal obligation to contribute, in the case of donation of real estate located abroad or where the taxable person or the cause is not resident in Spanish territory.

Written according to the bug correction published in BOE No. 65 of 17 March 1999. Ref. BOE-A-1999-6373

Written according to the bug correction published in BOE No. 16 of 18 January 1996. Ref. BOE-A-1996-1219

Written according to the bug correction published in BOE No. 38 of 14 February 1995. Ref. BOE-A-1995-3864

CHAPTER VII

Tax debt

Article 22. Tax assessment.

1. The tax quota for this tax shall be obtained by applying to the full quota the multiplier coefficient according to the amount of the pre-existing estate tranches which, as provided for in the Act No. 21/2001 of 27 December 2001regulating the fiscal and administrative measures of the new system of financing for the Autonomous Communities of the Common System and Cities with Statute of Autonomy, have been approved by the Autonomous Community and the group, according to the degree of kinship referred to in Article 20.

2. If the autonomous community has not approved the coefficient or the amount of the tranches referred to in the preceding paragraph, or if the taxable persons are not covered by the Community's own rules, the corresponding amount of the instalments set out below, based on the pre-existing assets of the taxpayer and the group, shall apply, according to the degree of kinship referred to in Article 20:

Where the difference between the tax contribution obtained by applying the relevant multiplier coefficient and that which would result from applying the lower immediate multiplier coefficient to the same full quota is greater than that existing between the amount of pre-existing assets taken into account for the settlement and the maximum amount of the pre-existing equity tranche which would justify the application of the lower multiplier coefficient, the latter shall be reduced by the amount of the excess.

In the case of life insurance, the coefficient corresponding to the pre-existing assets of the beneficiary and to the group in which it was related to the employer shall apply. Collective insurance or insurance contracted by companies in favour of their employees shall be subject to the coefficient corresponding to the beneficiary's pre-existing assets and to the degree of kinship between the beneficiary and the insured person.

If the successors in a succession are not known, the coefficient established for fourth degree collaterals and strangers shall be applied when the pre-existing assets exceed EUR 4,020,770.98, without prejudice to any refund that may be made once they are known.

3. In the valuation of the taxpayer's pre-existing assets, the following rules shall apply:

(a) The valuation shall be carried out in accordance with the rules of the Property Tax.

(b) In the case of “mortis causa” acquisitions, the value of the goods and rights for which the tax has been paid as a result of an earlier donation made by the deceased shall be excluded. The same rule shall apply in the case of cumulation of donations.

(c) Pre-existing assets shall include the value of the property and rights which the spouse who inherits shall receive as a result of the dissolution of the conjugal partnership.

4. In the case of a real obligation to contribute, the multiplier coefficient shall be that set out in paragraph 2 above. The same multiplier coefficient shall apply in the case of a personal obligation to contribute, in the case of donation of immovable property located abroad or where the taxable person or the deceased is not resident in Spanish territory.

Written according to the bug correction published in BOE No. 65 of 17 March 1999. Ref. BOE-A-1999-6373

Article 23. International double taxation deduction.

1. Where the tax is subject to personal obligation, the taxpayer shall have the right to deduct the lesser of the following two amounts:

(a) The actual amount of what is satisfied abroad by similar tax affecting the increase in assets taxed in Spain.

(b) The result of applying the effective average rate of this tax to the property increase corresponding to assets or rights that may be exercised outside Spain, when they have been taxed abroad by a similar tax.

2. As foreseen in the Act No. 21/2001 of 27 December 2001, which regulates the fiscal and administrative measures of the new system of financing of the Autonomous Communities of Common System and Cities with Statute of Autonomy, the Autonomous Communities may approve the deductions and bonuses they deem appropriate.

In any event, they will be compatible with the deductions and bonuses laid down in the state tax regulations without any modification of them. These regional deductions and bonuses shall apply after those regulated by the rules of the State.

Article 23 bis. Quota bonus in Ceuta and Melilla.

1. In the contributions to this tax arising from "mortis causa" acquisitions and the amounts received by the beneficiaries of life insurance, which are accumulated to the rest of the assets and rights that comprise the hereditary portion of the beneficiary, a bonus of 50 per 100 of the quota shall be made, provided that the deceased had his habitual residence on the date of the accrual in Ceuta or Melilla and during the previous five years, counted to date, ending the day preceding the date of the accrual.

However, the bonus referred to in the preceding paragraph shall be increased to 99 per cent for the successors covered, according to the degree of kinship, in groups I and II referred to in article 20 of this Act.

2. In the case of "inter vivo" acquisitions, a bonus of 50 per cent of the share corresponding proportionately to the buildings located in Ceuta or Melilla shall be applied. For the purposes of this bonus, the free transfer of the securities referred to in the Article 108 of Law 24/1988 of 28 July 1988, from the Securities Market.

3. In the case of other "inter vivo" acquisitions, a bonus of 50 per 100 of the corresponding quota shall apply where the acquirer has his habitual residence in Ceuta or Melilla.

4. For the purposes of applying these bonuses, account shall be taken of the rules on habitual residence and points of connection in the Act No. 21/2001 of 27 December 2001regulating the fiscal and administrative measures of the new system of financing for the Autonomous Communities of the Common System and Cities with Statute of Autonomy.

Text added, published on 31/12/2002, in force from 01/01/2003.

CHAPTER VIII

Evidentiary and prescription

Article 24. Devengo.

1. In the case of acquisitions by death or life insurance, the tax shall be accrued on the day of the death of the deceased or of the insured person or when the declaration of death of the absent person becomes final, in accordance with the Article 196 of the Civil Code. However, in the case of acquisitions produced in the life of the deceased as a result of contracts and inheritance agreements, the tax shall be accrued on the day on which the said agreement is caused or concluded.

2. In the case of ‘inter vivo’ profit transfers, the tax shall be accrued on the day on which the act or contract is caused or concluded.

3. Any acquisition of property whose effectiveness is suspended by the existence of a condition, a term, a trust or any other limitation shall always be deemed to have been made on the day on which such limitations are removed.

Article 25. Prescripción.

1. The statute of limitations shall apply in accordance with the provisions of the Articles 64 et seq. of the General Tax Act.

2. In the event of deeds authorized by foreign officials, the limitation period shall be calculated from the date of its submission to any Spanish administration, unless a treaty, agreement or international agreement, signed by Spain, sets another date for the commencement of that period.

CHAPTER IX

Special rules

Article 26. Usufructo and other institutions.

The rules contained in the following paragraphs shall apply to the taxation of the right of usufruct, both to the constitution and to the extinguishment, of substitutions, reserves, trusts and foreign successor institutions:

(a) The value of the temporary usufruct shall be assessed in proportion to the total value of the property, by 2 per 100 for each period of one year, not exceeding 70 per 100.

In life usufructs, it will be estimated that the value is equal to 70 per 100 of the total value of the goods when the usufruct is less than twenty years old, decreasing as the age increases, in the proportion of 1 per 100 less for each year, with the minimum limit of 10 per 100 of the total value.

The value of the right of nudity ownership shall be calculated by the difference between the value of the usufruct and the total value of the goods. In life-long usufructs which, in turn, are temporary, the nudity of property will be valued by applying, from the previous rules, the one that attributes less value to it.

When acquiring the naked property, the settlement shall be carried out, taking into account the value corresponding to that particular property, minus, where appropriate, the amount of all the reductions to which the taxpayer is entitled and with application of the effective average rate of taxation corresponding to the full value of the goods.

(b) The value of the real rights of use and habitation shall be that which results from applying to 75 per cent of the value of the goods on which the rules corresponding to the valuation of temporary or life-saving usufructs were imposed, as the case may be.

(c) At the termination of the usufruct, the tax shall be required according to the title of incorporation, applying the effective average rate of taxation corresponding to the dismemberment of the domain.

(d) Provided that the acquirer has the power to dispose of the goods, the tax shall be settled in full control, without prejudice to any refund, if any.

(e) The attribution of the right to the enjoyment of all or part of the property of the inheritance, temporarily or for life, shall be regarded for tax purposes as usufruct, and shall be assessed in accordance with the above rules.

(f) In vulgar substitution, the substitute shall be understood to inherit the deceased and in the pupil and exemplary substitutions inherited from the substitute.

Article 27. Partitioning and excesses of award.

1. In the case of death successions, whatever the partitions and awards made by the persons concerned, the tax shall be regarded for the purposes of the tax as having been made with strict equality and in accordance with the rules governing succession, whether or not the property subject to payment of the tax is subject to the condition of the territory or for any other reason, and, accordingly, the increases resulting in the verification of securities shall be apportioned among the different acquirers or heirs.

2. If the assets in which the verification results in an increase in securities or to which the non-subjection is to be applied are specifically attributed by the testator to a person determined or awarded for the purpose of inheritance, increases or decreases shall affect only those who acquire such assets.

3. Excesses of award shall be settled, in accordance with the rules laid down in the Tax on Patrimonial Transfers and Documented Legal Acts, where there are differences, according to the declared value, in the awards made to heirs or legatees, in relation to the hereditary title; excesses of award shall also be settled where the proven value of the award to one of the heirs or legatees exceeds 50 per cent of the value to be due under its title, except where the declared values are equal to or greater than those resulting from the application of the rules of the Net Asset Tax.

Article 28. Repudiation and renunciation of inheritance.

1. In the pure, simple and free repudiation or renunciation of the inheritance or legacy, the beneficiaries of the same shall be liable for the acquisition of the repudiated or renounced party, always applying the coefficient corresponding to the amount of its pre-existing assets. As regards the relationship with the deceased, account shall be taken of that of the renouncer or of the repudiator when he or she has identified a higher relation than that which would be the responsibility of the beneficiary.

2. In other cases of waiver in favour of a particular person, the tax shall be imposed on the renouncer, without prejudice to what is to be settled, in addition, by the assignment or donation of the renounced party.

3. Rejection or waiver made after the prescribed tax on inheritance or legacy shall be recognized for tax purposes as a donation.

Article 29. Special donations.

Donations with onerous cause and remuneratives shall be taxed for this and for their total amount. If there are reciprocal benefits or if any tax is imposed on the donor, they shall pay for the same concept only for the difference.

Article 30. Accumulation of donations and contracts and inheritance agreements.

1. Donations and other ''inter vivos'' transmissions that are comparable to those granted by the same donor to the same donor, as well as acquisitions produced in the life of the deceased as a result of contracts and inheritance agreements formalized between the same persons, all within three years, from the date of each, shall be considered as a single transmission for the purpose of the tax settlement. In determining the tax quota, the average rate corresponding to the theoretical liquidated base of the total cumulative acquisitions shall apply to the liquidated basis of the current acquisition.

2. The provisions of the preceding paragraph, for the purposes of determining the tax quota, shall also apply to donations and other equivalent ''inter vivos'' transmissions and acquisitions produced in the life of the deceased as a result of contracts and inheritance agreements cumulative to the succession caused by the donor or cause in favour of the donor or successor 'mortis causa', provided that the period between the donor and the deceased does not exceed four years.

3. For this purpose, the theoretical liquidated basis of the total accumulated acquisitions shall be the sum of the liquidated bases of the previous ''inter vivos'' transmissions, of the inheritances, legacies or any other inheritance titles and of the current acquisition.

CHAPTER X

Formal obligations

Article 31. Declaration and liquidation.

1. The taxable persons shall be obliged to submit a tax declaration, including the taxable facts referred to in this law, within the time limits and in the manner laid down by law. Notwithstanding the foregoing, they may choose to submit a self-liquidation, in which case they shall carry out the transactions necessary to determine the amount of the tax debt and accompany the document or declaration containing or recording the taxable act.

2. The taxable persons must apply the system of self-liquidation of the tax on a compulsory basis in the autonomous communities in which this law is established.

The taxable persons shall apply the system of self-liquidation for the taxable acts in which the tax return is considered to have occurred in the territory of those autonomous communities under the connecting points applicable in accordance with the provisions of the Convention. Act No. 21/2001 of 27 December 2001regulating the fiscal and administrative measures of the new system of financing for the Autonomous Communities of the Common System and Cities with Statute of Autonomy.

Article 32. Duties of authorities, officials and individuals.

1. The judicial bodies shall transmit to the tax authorities of their respective jurisdiction a monthly account of the enforceable decisions or decisions having the character of a final judgement from which the existence of increases in assets taxed by the inheritance and donation tax is revealed.

2. The registrars shall send to the same bodies, within the first half of each month, a nominal list of those who died in the previous month and of their domicile.

3. Notaries are obliged to provide the data required by the tax authorities concerning the acts in which they have intervened in the exercise of their functions, and to issue free of charge within 15 days copies of documents authorized or contained in their protocol, except in the case of the public instruments referred to in articles 34 and 35 of the Act of 28 May 1862 and those relating to matrimonial matters, with the exception of those relating to the economic regime of the conjugal company.

They shall also be required to forward, within the first half of each quarter, a comprehensive list or index of all documents authorized in the previous quarter that relate to acts or contracts that could give rise to the property increases that constitute the taxable act of the tax. They are also obliged to submit, within the same time limit, a list of private documents with the contents indicated to them for their knowledge or legitimization of signatures.

4. Judicial bodies, financial intermediaries, associations, foundations, companies, officials, individuals and any other public or private entities shall not agree to supply goods to persons other than the holder without prior proof of payment of the tax or exemption, unless authorized by the Administration.

5. Insurance institutions may not settle and pay those concluded on the life of a person unless it is justified to have submitted the relevant documentation to the settlement or, where appropriate, the entry of the self-liquidation effected.

6. Except as provided in the two preceding issues, the cases referred to in article 8 (1) of this Act are excluded, in accordance with the terms and conditions laid down therein.

7. Failure to comply with the obligations set out in points 1 to 5 above shall be punished in accordance with article 40 of this Act.

In the case of judicial bodies, the competent authority of the Ministry of Finance shall bring the facts to the attention of the General Council of the Judiciary, through the Public Prosecutor ' s Office, for appropriate purposes.

Article 33. Effects of non-submission.

Documents containing acts or contracts subject to inheritance and donation tax shall not be admitted or take effect in public offices or registers without the presentation of the document to the competent bodies for its liquidation, except as provided for in the mortgage law or express authorization of the Administration. The Courts and Courts shall transmit to these bodies an authorized copy of the documents which they admit in which they do not record the note of having been submitted to liquidation.

CHAPTER XI

Tax Management

Section 1a Liquidation

Article 34. General rules.

1. The powers for the management and settlement of the tax shall be vested in the delegations and administrations of the Treasury or, where appropriate, offices with similar functions of the autonomous communities which have the management of the tax.

2. The Autonomous Communities may regulate the management and settlement aspects of this tax as provided for in the Act No. 21/2001 of 27 December 2001regulating the fiscal and administrative measures of the new system of financing for the Autonomous Communities of the Common System and Cities with Statute of Autonomy. Where the Autonomous Community has not regulated these aspects, the rules laid down in this Law shall apply.

3. Notwithstanding the provisions of the preceding paragraph, the competence to establish the system of self-liquidation of the tax as compulsory is vested in the State, which shall be introduced in the Tax Act by the Autonomous Communities in which the system has been established.

4. In accordance with the provisions of the preceding paragraph, the system of self-payment of the tax is established as a compulsory requirement in the following Autonomous Communities:

– Autonomous Community of Andalusia.

– Autonomous Community of Aragon.

– Autonomous Community of the Principality of Asturias

– Autonomous Community of the Balearic Islands.

– Autonomous Community of the Canary Islands.

– Autonomous Community of Cantabria.

– Autonomous Community of Castile-La Mancha.

– Community of Castile and Leon.

– Autonomous Community of Catalonia.

– Autonomous Community of Galicia.

– Autonomous Community of Murcia Region.

– Autonomous Community of La Rioja.

– Community of Madrid.

– Valencian Community.

Article 35. Partial settlement on account.

1. Those interested in inheritance may apply for a partial settlement of the Tax only for the purposes of collecting life insurance, claims of the deceased, assets accrued and not received by the deceased, withdrawal of assets, securities, effects or money held in deposit and other similar cases.

2. The form and time limits for carrying out these liquidations and the requirements for the recovery of the amounts or withdrawal of the money or property deposited shall be regulated by regulation.

Partial settlements for the collection of life insurance of any kind shall take into account the reductions provided for in Article 20 of this Law, with the requirements and limits laid down therein.

3. Partial settlements shall be treated as income on account of the final settlement resulting from the hereditary succession concerned.

Section 2a Payment of the Tax

Article 36. Tax payment.

1. Exception from the self-liquidation cases, which will be governed by their specific rules, the payment of the liquidations carried out by the Administration by the Inheritance and Donation Tax shall be made within the time limits specified in the General Collection Regulations.

2. (Cancelled)

3. The payment of the tax debt may be made by the delivery of goods belonging to the Spanish Historical Heritage that are registered in the General Inventory of Furniture Property or in the General Register of Goods of Cultural Interest, in accordance with the provisions of Article 69, 2, of the Law 16/1985 of 25 June 1985, of the Spanish Historical Heritage.

Section 3.a Postponement and payment fractionation

Article 37. General rule.

Without prejudice to the provisions of the following Articles of this Section, the rules on deferment and fractionation of payment laid down in the General Collection Regulations.

Article 38. Postponement and division by management offices.

1. The bodies responsible for managing and settling the tax may agree to defer payment of the death-related settlements for up to one year, provided that there is no effective inventory or easy-to-realize goods sufficient to pay the assessed contributions and that the payment period is requested before the expiry of the statutory payment period. The granting of the deferral shall entail the obligation to pay the corresponding interest on delay.

2. In the same cases and conditions, they may agree to the payment split, in no more than five annuities, provided that payment is guaranteed in the manner determined by regulation.

3. The postponement of payment may also be agreed, under the same conditions as the above numbers, until the successors in a succession are known.

Article 39. Special postponement and fractionation assumptions.

1. The payment of the winding-up as a result of the transfer by inheritance, legacy or donation of an individual undertaking engaged in an industrial, commercial, craft, agricultural or professional activity or of participations in entities to which the exemption provided for in point 2 of paragraph 8 applies. Article 4 of Act No. 19/1991 of 6 June 1991, the property tax may be deferred, at the request of the taxable person deducted before the expiry of the statutory payment period or, where appropriate, the payment period, for the five years following the date on which the payment period ends, with an obligation to provide sufficient security and without the payment of interest during the period of deferral.

2. At the end of the five-year period, the payment may be divided into ten six-monthly instalments, subject to the same conditions and requirements, with the corresponding payment of the legal interest of the money during the period of division.

3. The provisions of the previous issues on deferment and payment division shall also apply to settlements rotated as a result of the hereditary transmission of a person's habitual dwelling, provided that the deceased is a spouse, ascendant or descendant of that person, or collateral relative over sixty-five years of age, who had lived with the deceased during the two years preceding his death.

4. In life insurance in which the person responsible is in turn the employer or the insured person in the collective insurance and whose amount is collected in the form of income, payment of the corresponding tax shall be divided at the request of the beneficiary in the number of years in which the pension is received, if the income is temporary, or in a maximum number of 15 years if it is life-time, until the right of redemption is exercised.

The postponement shall not require the creation of any type of security without any interest being accrued.

Due to the termination of the pension, the outstanding participated payments will no longer be due, however, in the event of the exercise of the right of redemption.

The procedure for the application of this paragraph shall be determined by regulation.

CHAPTER XII

Violations and penalties

Article 40. Penalty regime.

1. Tax infringements of the tax regulated by this law shall be qualified and punished in accordance with the provisions of the General Tax Actwithout prejudice to the specialities provided for in this Act.

2. Failure to comply with the obligation referred to in Article 18(2) of this Act shall be regarded as a serious offence and the penalty shall be a fixed financial fine of EUR 500.

The penalty will be graduated by increasing the resulting amount by 100 per cent if the repeated commission of tax offences occurs.

The penalty imposed in accordance with this paragraph shall be reduced in accordance with paragraph 3 of this Article. Article 188 of the General Tax Act.

Additional provision one.

The transfer of the income from the Tax to the Autonomous Communities shall be governed by the relevant Law on Assignment.

Second additional provision. Adjustment of the tax rules to the provisions of the judgment of the Court of Justice of the European Union of 3 September 2014 (Case C-127/12), and regulation of the declaration of liquidation of taxpayers to be taxed by the tax administration of the State.

One. In accordance with the judgment of the Court of Justice of the European Union of 3 September 2014.

1. The settlement of the tax applicable to the acquisition of goods and rights for any gainful title in the following cases shall be in accordance with the following rules:

(a) In the case of the acquisition of property and rights by inheritance, legacy or any other title of succession, if the deceased has been a non-resident in Spain, taxpayers shall be entitled to the application of the own legislation approved by the Autonomous Community where the highest value of the assets and rights of the relict located in Spain is found. If there is no property or right situated in Spain, the rules of the Autonomous Community in which it resides shall apply to each taxable person.

(b) In the case of the acquisition of property and rights by inheritance, legacy or any other title of succession, if the deceased had been resident in an Autonomous Community, non-resident taxpayers shall be entitled to the application of their own legislation approved by that Autonomous Community.

(c) In the case of the acquisition of real estate located in Spain by donation or any other legal business free of charge and ''inter vivos'', non-resident taxpayers shall be entitled to the application of the own legislation approved by the Autonomous Community where the said real property is located.

(d) In the case of acquisition of real estate located outside Spain by donation or any other legal business free of charge and ''inter vivos''', taxpayers resident in Spain shall be entitled to the application of the own legislation approved by the Autonomous Community in which they reside.

(e) In the case of the acquisition of movable property located in Spain by donation or any other legal business free of charge and ''inter vivos''', non-resident taxpayers shall be entitled to the application of their own legislation approved by the Autonomous Community where the said movable property has been located for a greater number of days from the period of the immediate five years preceding, from date to date, ending the day preceding the accrual of the tax.

2. For the purposes of this Article, natural persons resident in Spanish territory shall be deemed to be resident in the territory of an Autonomous Community when they remain in their territory for a greater number of days from the period of the immediate preceding five years, counted from date to date, ending the day preceding the day of accrual.

3. Where a single document is donated by the same donor in favour of the same donor, different goods or rights and by application of the rules set out in paragraph 1 above the rules of different Autonomous Communities apply, the tax quota to be entered shall be determined as follows:

1. The average rate resulting from applying to the value of all the assets and rights donated shall be calculated according to the rules of the State and that of each of the Autonomous Communities in which part of the goods and rights are or are located.

2. The average rate obtained by the application of its own legislation shall apply to the value of the goods and rights which are or are located in each Autonomous Community, from which a tax quota to be entered shall be obtained, corresponding to those goods and rights.

Two. Regulation of the declaration-liquidation of taxpayers to be taxed to the State Tax Administration.

Taxpayers, who must fulfil their obligations for this tax to the tax administration of the State, will be obliged to submit a self-liquidation, carrying out the transactions necessary to determine the amount of the tax debt and accompanying the document or declaration containing or recording the taxable act. At the time of submission of their self-liquidation, the resulting tax debt must be paid in the place, form and time limits determined by regulation by the Minister of Finance and Public Administrations.

Transitional provision 1st.

The provisions of this Law shall apply to taxable acts which have occurred since its entry into force. Those who have previously been committed shall be regulated by the preceding legislation, except as regards the period of limitation to which the provisions of article 25 of this Law shall apply. In any event, competence for management and liquidation shall be conferred on the bodies referred to in Article 34 from the time of entry into force of this Law, except in the case of documents submitted prior to liquidation, in which case the competence of the offices in which they were submitted shall continue to be maintained until their final liquidation.

Transitional provision 2nd.

The rights acquired under the exemptions and reductions set out in the consolidated text of the Tax Act and the provisions referred to in the first final provision shall continue to exist. Acquired rights shall mean only those which are established that they have actually begun to be exercised before the entry into force of this Law, without the mere expectation being recognized as acquired rights.

Transitional provision 3

Notwithstanding the above, acquisitions by inheritance, legacy or donation of the cash bonds of the industrial and business banks referred to in the Decree-Law of 29 November 1962 shall be exempted, provided that they were acquired by the deceased or donor prior to 19 January 1987 and had remained in their assets for a period not less than two years immediately prior to the date of the transfer.

In the event of amortization of the securities referred to in the preceding paragraph, the proceeds may be reinvested in other industrial and business bank cash bonds to satisfy the requirements for exemption or to retain the right to their enjoyment.

Transitional provision 4

Similarly, where the contract had been concluded before the publication of the draft of this Law in the Official Gazette of the Courts, the collection of amounts by beneficiaries of life insurance contracts will continue to enjoy the tax benefits set out in Articles 19, 1, 3 and 20, 1, 1, 3, 4 and 5 of the consolidated text of the General Inheritance Tax Act, approved by Decree 1018/1967 of 6 April. For the transitional application of these benefits, in cases where the event is established on the life of a person other than the contractee, the insurance shall have been concluded at least three years before the date on which the contract takes place, unless it has been contracted collectively.

Transitional provision fifth.

The references in this Law to the Net Asset Tax shall be understood to be made to the Extraordinary Tax on the Heritage of Physical Persons until such time as the Tax enters into force.

Transitional provision 6th.

The compulsory introduction of the tax declaration/liquidation scheme in the different Autonomous Communities shall be established by the State as they establish a service to assist the taxpayer in completing such self-liquidation.

Final provision one.

1. The provisions of this Act shall begin to apply on 1 January 1988, the recast text approved by the Commission being repealed as from the date of its entry into force. Decree 1018/1967 of 6 Aprilas well as the other previous provisions opposing the provisions of the Convention. However, the tax benefits set out in the Treaty shall apply on their own terms and under the conditions and conditions laid down in each case. Act No. 49/1981 of 24 December 1981, for the acquisition by inheritance, legacy or donation of agricultural family farms.

2. Without prejudice to the provisions of the previous issue, the amendments made to the consolidated text of the Tax on Patrimonial Transfers and Legal Acts Documented by the second additional provision shall enter into force on the day following the publication of this Law in the Official Gazette of the State.

3. At the entry into force of this Law, the Property Tax of Legal Persons shall cease to apply.

Final provision two.

Until the adoption of the Inheritance and Donation Tax Regulations, it shall remain in force on 15 January 1959 as soon as it does not oppose the provisions of this Law.

Final provision three.

The General State Budget Laws may amend the tax base reductions, the tranches of the liquidated base, the rates of the tariff, the amount of the pre-existing estate tranches and the multiplier coefficients referred to in Article 22.

Final provision four.

Increases in assets acquired free of charge by the entities referred to in Articles IV and V of the Agreement on Economic Affairs between the Spanish State and the Holy See of 3 January 1979 shall be exempt from the Company Tax, when the conditions and requirements of that Agreement for exemption from the tax imposed on inheritances and donations are met.

The same benefit shall apply to recognized non-Catholic faith associations, where the conditions and requirements laid down in the Articles 6 and 7 of Organic Law 7/1980 of 5 July, about Religious Freedom.

Therefore,

I command all Spaniards, private individuals and authorities to keep and enforce this law.

Palacio de la Zarzuela, Madrid, 18 December 1987.

JUAN CARLOS R.

The President of the Government,

FELIPE GONZALEZ MARQUEZ