The document summarizes inheritance tax deductions in the Canary Islands. Some key points: - In 2001, Spain devolved inheritance tax powers to regional governments. Most regions only granted deductions to beneficiaries resident in the region for 5+ years, but the ECJ ruled this was discriminatory in 2014. - Under new legislation, any deductions given to residents must also be given to non-resident EU citizens. Deductions include up to 100% exemption for children under 21, a 99.9% discount for close relatives, and deductions for inheriting a family business or home. - Tax rates range from 7.65-34% depending on the value of the inheritance, with coefficients that increase the rate

1. Inheritance Tax Deductions
In The Canary Islands

2. This presentation has been updated and is valid for 2017.*
*Advocate Abroad does not accept responsibility for losses of any type consequent upon reliance on the
information contained in this presentation. Please consult a lawyer before acting.
Inheritance Law in the Canary Islands
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3. In 2001 the Spanish government devolved the power to set
inheritance tax rates and deductions o the regional
parliaments.
Inheritance Law in the Canary Islands
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4. Most regions enacted tax laws that applied generous
deductions only to those beneficiaries who were resident in
the region over the balance of the previous five years.
Inheritance Law in the Canary Islands
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5. On September 3rd 2014, the European Court of Justice ruled
that such laws were discriminatory and contrary to European
Law.
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Inheritance Law in the Canary Islands

6. Accordingly, the Spanish government has enacted new
legislation (Ley 26/2014) which makes any deductions that
may be applied to residents also available to non-residents
who are EU citizens.
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Inheritance Law in the Canary Islands

7. The main impact of the new legislation is as follows:
1) If the deceased was a non-resident, living in another
European country then the beneficiary may apply those
deductions and exemptions provided by the regional
government in which the majority of the inherited assets
are located.
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Inheritance Law in the Canary Islands

8. 2) If none of the assets to be inherited are located in Spain,
then the resident beneficiaries should apply the legislation
enacted by the regional government where they are normally
resident.
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Inheritance Law in the Canary Islands

9. 3) If the deceased was resident in one of the Spanish regions
and the beneficiaries were non-resident, and living in another
European Union country, then they may apply those
deductions and exemptions available to residents of the
region in which the deceased was resident.
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Inheritance Law in the Canary Islands

10. The regional level deductions available in Canary Islands
were enacted by the parliament in Santa Cruz and in their
current form are specified in Legislative Decree 1/2009.
The most important changes to State laws can be
summarised as follows:
Inheritance Tax Law in the Canary Islands
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11. Spanish Inheritance law first assigns beneficiaries to groups
according to the degree of kinship with the deceased:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents,
aunts and uncles
Group IV More distant relatives
Personal Exemptions
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12. Personal deductions as amended by Ley 04/2012:
Personal Exemptions – Children Under 21
Deductions
Under 10
years old
Deduction of 100% up to a maximum of €138,650
11-15 years
old
Deduction of 100% up to a maximum of €92,150
16-18 years
old
Deduction of 100% up to a maximum of €57,650
19-21 years
old
Deduction of 100% up to a maximum of €40,400
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13. The following are the personal deductions as amended by
regional law in the Canary Islands:
Personal Exemptions – Other Relatives
Deduction
Group II For those children over the age of 21 including adopted children, the
maximum deduction shall be €23,125 and for spouses the maximum
deduction shall be €40,400. Other descendants & parents: €18,500
Group III Deduction of €9,300.
Group IV No deductions available
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14. Special Discounts for Groups I & II
● Any inheritance tax that falls due to be paid under the
Succession Tax rules in the Canary Islands, as laid out
here shall be discounted by 99,9%.
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15. If the beneficiary has a disability:
● An exemption of €72,000 additional to any personal
exemption if disability > 33% and < 66% (in addition to
the amount provided at State level: €47,858)
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16. If the beneficiary has a disability:
● If the disability is > 66% then the additional discount
increased to €400,000 (in addition to the amount
provided at State level: € 150,253)
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17. If the beneficiary is elderly:
● An exemption of €125,000 to any beneficiary more than
75 years old
● This exemption is not compatible with the deduction for
disablity
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18. Tax deductions on income from Life Insurance:
● Where the beneficiary is a descendant, spouse or parent of
the deceased, an exemption of 100% of all income up to
€23,150 may be applied.
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19. Inheritance of the Family Home
● Deduction of 99% of value of the property up to a limit
of 200,000€ for children under the age of majority
● Property may not be sold for 5 years after inheritance
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20. Inheritance of the Family Home
● The same deduction may be applied to those blood
relatives over the age of 65 who have lived in the family
home for two years prior to the date of death
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21. Deductions in transfer of Family Business
● Tax deduction of 99% of the value of the business
● Must be children or spouse to inherit
● Any relative 'to third degree of sanguinity' may benefit
from exemption (95%)
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22. Deductions in transfer of Family Business
● The business may not be sold for a period of no less
than 5 years
● The maximum value of the business may be €3,000,000
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23. Other Deductions:
As a general rule the following deductions may be made on
any estate:
● Funeral Expenses
● Final Medical Expenses of the Deceased
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24. Other Deductions Cntd:
● Debts held be the deceased that are evidenced by
public documents e.g. a mortgage
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25. Special Rules
● Where the same assets are subject to two or more
processes of inheritance by Groups I & II beneficiaries
within a period of 10 years, in the second and any
subsequent inheritance processes, the taxable amount
shall be reduced by any amount of tax paid in previous
inheritance processes. A scale is applied as follows:
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26. Special Rules
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Reduction % When the inheritance takes place:
50
In the 12 months following the previous
inheritance
30
Between 1 year and 5 years following the
previous inheritance
10
More than 5 years since the previous
inheritance

27. Tax Rates in the Canary Islands
Taxable Sum Tax Payable On This Sum Any Remainder Up To Applicable Rate on
Remainder (%)
0 0 7993,46 7,65
7993,46 611,5 7987,45 8,5
15980,91 1290,43 7987,45 9,35
23968,36 2037,26 7987,45 10,2
31955,81 2851,98 7987,45 11,05
39943,26 3734,59 7987,46 11,9
47930,72 4685,1 7987,45 12,75
55918,17 5703,5 7987,45 13,6
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28. Tax Rates in the Canary Islands Cntd
Taxable Sum Tax Payable On This Sum Any Remainder Up To Applicable Rate on
Remainder (%)
63905,62 6789,79 7987,45 14,45
71893,07 7943,98 7987,45 15,3
79880,52 9166,06 39877,15 16,15
119757,67 15606,22 39877,16 18,7
159634,83 23063,25 79754,3 21,25
239389,13 40011,04 159388,41 25,5
398777,54 80655,08 398777,54 29,75
797555,08 199291,4 And Above 34
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29. Existing Wealth
Once the relevant tax rate has been applied the result is
multiplied by a coefficient determined by the existing wealth of
the beneficiary as well as the group to which they belong:
Existing Wealth Groups
(In Euros) I & II III IV
0 to 390,657 1 1.5882 2
390,657 to 1,965,309 1.05 1.6676 2.1
1,965,309 to 3,936,629 1.1 1.7471 2.2
More than 3,936,629 1.2 1.9059 2.4
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30. Existing Wealth
The Groups referred to consist of the following beneficiaries:
Group I Children, including adopted children, under the age of 21
Group II All other descendants, spouses and parents
Group III Close relatives such as brothers and sisters, grandparents,
aunts and uncles
Group IV More distant relatives
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31. Each year in Spain thousands of expats pay more
tax on inheritance than they should – simply
because they fail to follow some simple rules.
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32. To find out where to get expert advice, in English, about how
to reduce your liability for inheritance tax, go to:
Probate Services in the Canaries
Expert Probate Services in the Canary Islands
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