Last week the Canary Islands Government has modified the inheritance and gift tax allowances that are applicable in the Canary Islands: a 99.9% inheritance tax allowance is now generally applicable to Group II (children and adopted children of 21 years or more, spouses, parents) and Group III (brothers/sisters, uncles/aunts, nephews/nieces, etc.), and a 99.9% gift tax allowance is generally applicable to Group II (but not to Group III).
Because of the change of the law no inheritance / gift tax will be due, or a very small amount will need to be paid, when the assets are inherited by family members or gifted to them, however capital gains tax is still applicable to donations and must be taken into consideration.
The new allowances are the same that were applicable in 2019, before a variable progressive reduced relief was approved and applied from 01/01/2020 until 05/09/2023 to Group II and Group III’s inheritors, and to Group II’s donees, depending on the amount of the tax to be paid by each taxpayer. The general 99.9% allowance was only applicable to Group I (descendants/adopted children under 21 years) and is still applicable to them.
The change in the law has been made with the aim of reducing the Canary Islands citizens’ tax burden and the difference with other regions that had a more advantageous tax regime. In Spain there are many autonomous regions and inheritance / gift tax allowances are different depending on the region where the assets are situated or where the inheritor / donee is fiscally resident, for more information or a consultation with our Tenerife office specialists call us on (0034) 922 719520 or email [email protected]