As we head into the new tax year let's see what the local government has approved in their regional budget and what it means for you.
There are 2 parts to you income tax - regional and state rates - this year it’s good news for low earners. For those with an income below €12,450 the rate has reduced from 9.5% to 9% and for those with an income of between €12,450 and €17,707 the reduction is from 12% to 11.5%
Last year for these lowest two brackets the state rates were 9.5% and 12% respectively
For the remainder of the regional brackets there is no change and again they all need to be added to the state rates for the final applicable income tax rates for residents of Lanzarote.
Succession and gift tax
From 1st January 2019, the 99.9% relief for succession and gift tax has been extended to 'group III beneficiaries'. This includes brothers and sisters, nephews and nieces, cousins, and aunts and uncles. This is in addition to 'group I & II beneficiaries'. This covers spouses, children and other descendants (i.e. grandchildren) and parents and other ascendants (i.e. grandparents). For these groups it applies to both inheritances and lifetime gifts.
Note that for group III beneficiaries, the relief only applies to inheritances.
The local VAT known as IGIC has been reduced from 7% to 6.5%.