Why the debate on a state “minimum tax” coming from Madrid is becoming a real planning issue especially for foreign property owners and families with real estate on the islands—and why certain windows of opportunity still remain.
On the Balearic Islands, where many foreign residents concentrate their wealth in property and retirement savings, any change to the Inheritance and Gift Tax (ISD) is a real concern, not an abstract debate. The Ministry of Finance, led by María Jesús Montero, has once again reaffirmed its intention to limit the scope of regional tax benefits in order to prevent the tax from becoming practically ineffective in certain regions. In an archipelago with such high international mobility, this uncertainty affects both large fortunes and families with only one property.
The potential scale can be illustrated with a concrete figure. According to financial press reports, if the tax benefits applied in various regions were neutralised, taxpayers would pay up to 520 million euros more per year in inheritance and gift tax, increasing total revenue from this tax by around 16%. In practice, the discussion is about a state mechanism acting as a “minimum tax”, which would reduce the autonomous regions’ room for tax reductions almost to zero, similar to the state tax created to offset exemptions from wealth tax.
In the Balearic Islands, the possible impacts are obvious, as the current framework for transferring family assets is particularly favourable. The Balearic Tax Agency grants taxpayers in Groups I and II (descendants) a 100% tax relief on the tax due for acquisitions by death and, by extension, through certain inheritance agreements. For certain relatives in Group III, the ATIB establishes significant tax reductions and will apply a 60% rate in specific cases from 25 July 2025 onwards. The government has also indicated that autonomous legislation has consolidated 100% tax relief between ascendants, descendants, and spouses, and 50% between siblings, with nuances when direct descendants are involved.
For foreign clients, the challenge is not only “how much must be paid”, but also “how it must be paid” and “who must pay it”. In inheritances with international elements—heirs in Germany or another country, property in the Balearics, bank accounts in various jurisdictions, or documents issued by foreign authorities—certifications, sworn translations, apostilles, and submission deadlines are required, leaving no room for improvisation. Added to this are the fiscal valuation of the property, coordination with the notary and land registry, and sometimes the need to align civil‑law planning with tax obligations in the country of origin.
It is useful to distinguish between two levels. The first is the legal one: as of today, no law has been passed that automatically “cancels” Balearic tax benefits. What exists is a political direction linked to the debate on the new regional financing system and the idea of strengthening the tax co‑responsibility of the autonomous communities. The second level is the practical one: when the situation is uncertain, it may be advisable to act quickly if the current framework is more favourable than what may come.
At Omnia, we see this every day: tax savings arise not from rushed action, but from good documentation and intelligent decisions. The Balearic Islands remain a competitive environment for arranging a family inheritance, but the national debate calls for caution. In matters of inheritance, professional advice prevents costly mistakes—especially at times when families need peace of mind.