Heirs have saved 808 million euros thanks to the Prohens tax reduction.
The 175 recipients of assets exceeding four million euros are those who have failed to pay the most money into the public accounts.
PalmThe wealthy are the main beneficiaries of the tax cuts that Marga Prohens's government has implemented during her term, especially with regard to the reduction in inheritance and gift tax, which has resulted in a loss of €808 million in public accounts over the last two years. An example is the three heirs who saved nearly €55 million in this tax in 2024, while the two who stopped paying €27 million respectively, according to data obtained by the PSIB through a parliamentary question and confirmed by the Ministry of Finance. However, sources within the government maintain that the tax reform also benefits the middle class and ensures that assets "remain in the hands of families on the islands, avoiding the need to sell them."
Between July 2023—when the tax reform was implemented—and July 18, 2025, 20,646 people in groups I and II (who receive inheritances between parents and children, godparents and grandchildren, and spouses) saved €758 million. In that case, they didn't have to pay anything. On the other hand, 2,346 taxpayers in group III (inheritances between siblings, aunts and uncles, and nephews, which are taxed at 25% or 50% depending on whether or not they have offspring) stopped contributing €50 million. This is reflected in the data provided by the Regional Ministry in the ARA Baleares (Argentine Taxpayer Registry). The vast majority of these citizens received assets worth less than €700,000: 18,559 from groups I and II and 2,202 from group III. On the other hand, 175 taxpayers in groups I and II received an inheritance of more than four million euros without paying anything in inheritance tax to the Treasury, while three people with similar inheritances, but in group III, benefited from the discounts.
Increase in lifetime donations
On the other hand, there has been an increase in inheritance agreements, the lifetime inheritances permitted by traditional Balearic law. Since the tax reform, more have been carried out than in the previous two years. Thus, a total of 7,593 people decided to give their lifetime inheritance to their relatives in 2024, along with 4,615 in 2023 and 4,698 in 2022. The increase is not out of line with the figures for 2021 (7,982) and 2020 (7,37). However, the Government believes it demonstrates a change in trend due to the PP's fiscal policies.
Meanwhile, 1,452 young people under 30 and people with disabilities have avoided paying a total of €21 million (€14,462 on average per person) due to the elimination of the property transfer tax for this age group. Similarly, 2,402 people under 36 and large families, single parents, or those with disabled dependents benefited from the 50% reduction in this tax, with a total saving of €24 million (€10,000 on average). Regarding deductions from the Personal Income Tax (IRPF), 101,839 benefited, resulting in the government losing €32.33 million in lost revenue. The reduction applied by Prohens is 0.5% in the regional income bracket for incomes under €30,000, and 0.25% for those above €30,000. This means that those earning more than 30,000 euros pay 0.5% less on income up to 30,000 euros, and 0.25% less on income above that amount, and therefore benefit from both deductions.
A call effect
Executive sources defend the tax reform as an "ideological" commitment. Regarding inheritance tax, they believe that, despite the fact that the wealthiest save larger amounts, "the impact of the tax on middle- or low-income earners could be greater." Similarly, they warn that "higher income earners have never paid" inheritance tax, as they tend to keep their assets in companies and do not transfer them as individuals. "If large heirs have signed inheritance agreements, it is because they shouldn't have to pay: in this sense, a pull effect has occurred," they insist. The same will happen with the reductions in the gift tax agreed between the PP and Vox in July, the Government estimates: "Many people used the formula of a loan between individuals, and they will resort to donations."
Professor of Applied Economics at the UIB and former Socialist MP Maria Antonia Truyols believes that the Government's tax reform does not benefit middle- and low-income earners. "Taxes are intended for redistribution: with these drops, the system is more unfair," he explains. The 853 million euros—including inheritances and property transfers—that have ceased to be collected in the public accounts "directly affect fundamental public services," he insists. Regarding inheritance tax, he gives an example. Before the tax reform, an inheritance of 5,000 euros paid 1% tax: 50 euros. In contrast, the heir to a property worth one million euros had to pay, according to the economist's calculations, around 5,840 euros. "Inheritance tax was fueled by high incomes," Truyols concludes.
On the other hand, economist and UIB professor Pau Montserrat views the tax cut positively. "Housing is heavily taxed," he explains. "Helping those under 36 acquire a home is good," he explains. "The tax rebates on property transfers could even be increased," he says. He also points out that the government's revenue collection "has increased as a result of rising prices." Similarly, he advocates eliminating inheritance tax. "The property has already paid a huge amount of tax, so the transfer mortis causa "It should have low taxes," he believes. "We have a housing problem and we should make these inheritances easier, because it's the only way for younger people to own property," he argues. For this reason, he believes that "the first home should not be taxed." "All taxation should go to second- and third-income earners... and for their part. For their part, they are "confronted with the possibility of there being tax benefits for lower income earners."
