On 27 July 2025, the Balearic Islands introduced a major change to their inheritance and gift tax system. Under the new rules, money gifts between close family members are now completely tax-free — provided the paperwork is done correctly.
That means parents can gift money to children, grandparents to grandchildren, or spouses to each other without paying a cent in gift tax. Partial exemptions also apply to more distant relatives, making the Balearics one of the most attractive regions in Spain for family wealth transfers.
For families thinking of relocating to Mallorca or the wider Balearics, this reform is big news. It makes moving money within families far easier, and positions the Islands as one of Spain’s most tax-efficient regions.
What has changed?
Spain’s inheritance and gift tax (known as Impuesto sobre Sucesiones y Donaciones or ISD) has always been complex. Each region sets its own reliefs, leading to very different outcomes depending on where you live.
Until now, the Balearics had a more traditional approach, with relatively high gift tax compared to places like Madrid or Andalusia. But the new Decree-Law 4/2025 changes that:
- 100% exemption for gifts of money between parents and children, grandparents and grandchildren, spouses, or long-term partners
- 60% exemption for gifts between siblings, aunts/uncles and nieces/nephews
- 35% exemption for more distant relatives or unrelated individuals
In short, if you’re giving money to your immediate family, there’s now no gift tax at all.
What are the conditions?
As with all good tax news, there are a few rules to follow. To benefit from the exemption, the gift must:
- Be made through a notarial deed (so it’s official and recorded)
- Come from a bank account held by the donor
- Be traceable — either via transfer, nominative cheque, or delivery at the notary’s office
These steps ensure transparency, protect against fraud, and give you peace of mind if the tax office ever asks questions.
Who qualifies?
The exemption only applies if the Balearic Islands are the competent region for the tax. That usually depends on the tax residence of the recipient (the person receiving the money).
So, for example:
- If your children have been tax residents in Mallorca for most of the last five years, the Balearic rules apply.
- If neither party is a tax resident in Spain, the rules depend on where the donor’s bank account is located.
It’s important to note that tax residence is not the same as civil law residence (vecindad civil). The latter matters for inheritance law, but not for gift tax.
Why does this matter?
For expats and international families, this reform is a game-changer. It allows:
- Parents to support children financially in a tax-efficient way
- Families to repatriate capital to Mallorca without a gift tax burden
- High-net-worth individuals to plan succession more effectively
Combined with Spain’s “Beckham Law” expat regime (which offers reduced income tax rates for qualifying newcomers), Mallorca now offers a powerful combination of lifestyle and financial advantages.
Looking ahead
Across Europe, many countries are tightening inheritance and gift tax rules. Germany, France, and the UK all have significant burdens for family transfers. Against that backdrop, the Balearic Islands now stand out as a safe and efficient location for wealth planning.
If you’re considering relocating, investing, or passing wealth to family in Spain, this reform makes Mallorca one of the most attractive destinations to do so.
Final thought
The new exemption is a golden opportunity for families — but only if the formalities are handled correctly. Always use a notary, keep your documentation clear, and get professional advice to make the most of the rules.
