Did you know that if you are a foreigner residing in Mallorca, you can transfer your property or assets to your children while paying only 1% in taxes? Thanks to pactos sucesorios — a legal instrument unique to Balearic civil law — it is possible to legally and securely transfer assets in advance, with significant tax advantages.

This legal tool, regulated under Law 8/2022 of the Balearic Islands, allows you to carry out a lifetime transfer — similar to an anticipated inheritance — through a notarized public deed. The most common form, the universal donation, allows you to transfer your entire estate (or a substantial part of it) with full legal effectiveness and with the acceptance of the beneficiary.

What’s most interesting is that you don’t need to be Spanish or have Balearic civil status. It is sufficient for your habitual residence to be in the Balearic Islands and for your succession to be governed by Balearic law in accordance with the European Succession Regulation. This enables an increasing number of foreign residents to use this mechanism to efficiently organize their succession.

The main appeal lies in the fiscal treatment: since this is considered a succession agreement and not a simple gift, the transfer from parent to child is taxed under the Inheritance and Gift Tax at a reduced rate of only 1%. This represents a substantial saving compared to traditional donations, which can be taxed at significantly higher rates.

Rather than waiting until death and facing the complexity of a future inheritance, you can act now, plan ahead, and have everything legally settled with minimal tax impact.

If you are considering donating a property, your estate, or part of it to your children or heirs, and wish to do so safely and with a reduced tax cost, feel free to contact us. We will be pleased to inform you, assess your situation, and provide professional advice to help you make the best decision for you and your family.