Updated 3 January 2020: Thanks to Paul Montague of Blevins Franks for this confirmation and explanation of the revised measures for inheritance and gift tax contained in the regional 2020 budget approved by the Canarian Government. The rules apply from 1 January 2020, and BF recommends that anyone who is concerned about inheritance issues should review their affairs to make sure they understand the changes and how they might be affected because their tax bills could be higher than they originally anticipated.

Succession & Gift Tax

The biggest changes approved in the new 2020 Canary Islands budget affect the SSGT rules.

 Inheritances

  • Group I beneficiaries: 99.9% relief is still applicable.
  • Groups II and III beneficiaries:

–       First €55,000 of tax due (i.e. after applying the tax rates and multipliers) always get a 99.9% relief.

–       Any excess over €55,000 of tax due will get a variable relief depending on the calculated tax due, as follows:

TAX DUE (CUOTA TRIBUTARIA)

% RELIEF

€55,000 – €65,000

90%

€65,000 – €95,000

80%

€95,000 – €125,000

70%

€125,000 – €155,000

60%

€155,000 – €185,000

50%

€185,000 – €215,000

40%

€215,000 – €245,000

30%

€245,000 – €275,000

20%

€275,000 – 305,000

10%

More than €305,000

No relief applicable

 Lifetime gifts

  • Group I beneficiaries: 99.9% relief is still applicable.
  • Group II beneficiaries:

–       First €55,000 of tax due (i.e. after applying the tax rates and multipliers) always get a 99.9% relief.

–       Any excess over €55,000 of tax due will get a variable relief depending on the calculated tax due, as follows:

TAX DUE (CUOTA TRIBUTARIA)

% RELIEF

€55,000 – €65,000

90%

€65,000 – €95,000

80%

€95,000 – €125,000

70%

€125,000 – €155,000

60%

€155,000 – €185,000

50%

€185,000 – €215,000

40%

€215,000 – €245,000

30%

€245,000 – €275,000

20%

€275,000 – 305,000

10%

More than €305,000

No relief applicable

In order to obtain the relief for gift tax purposes, it must be recorded in a public deed (i.e. a notary will have to be involved).

 Updated 20 December 2019: I’m grateful once again to Paul Montague of Blevins Franks who has advised me that the Canarian Government has now confirmed that from 1 January 2020 the 99.9% relief for inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones -ISD) will no longer be available. As I explained in October, this was planned by the new PSOE Government in order to budget for a 12% increase in social spending. BF says that the new rules are not completely straightforward, with what looks like progressive relief rather than a complete ban on any relief. Indeed, a part is always relieved at 99.9% and the balance will depend on the total value of the estate, though it appears that the threshold for tax to be applied will be €55,000. BF will be preparing detailed advice in the near future and I’ll post what they say at that point. For the moment, though, it is now clear that inheritances and gifts in the Canaries are no longer virtually tax free. As I said in the previous information, however, this discount has been removed before and reinstated so it could well be restored in the future.

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