Inheritance Tax DeductionsIn The Canary Islands
This presentation has been updated and is valid for 2014.
Inheritance Law in Canary Islands
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There are special regional tax deductions and exemptions
passed by the local Canary Islands government that only
apply to those beneficiaries who have been resident in the
region over the balance of the previous five years.
Inheritance Taxes in the Canary Islands
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If you have NOT been resident in the Canary Islands over
the balance of the last five years then, when determining
your inheritance tax liability, you may only apply the
deductions and exemptions approved by the CENTRAL
government.
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Inheritance Taxes in the Canary Islands
The central government exemptions and deductions are not
as generous as the regional exemptions.
This has caused complaints that the inheritance tax laws in
Spain are discriminatory against non-residents.
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Inheritance Law in the Canary Islands
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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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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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
10-15 years old
Deduction of 100% up to a maximum of €92,150
15-18 years old
Deduction of 100% up to a maximum of €57,650
18-21 years old
Deduction of 100% up to a maximum of €40,400
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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 the 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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If the beneficiary is disabled:
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)
If the disability is > 66% then the additional discount
increased to €400,000 (in addition to the amount provided
at State level: € 150,253) 10
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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Deductions in transfer of Family Business
Tax deduction of 99% of the value of the business
Must be children or spouse to inherit
If no child or spouse any relative 'to third degree of
sanguinity' may benefit from exemption
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Deductions in transfer of Family Business
The business may not be sold for a period of no less than
10 years
The maximum value of the business may be €3,000,000
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Inheritance of the Family Home
Deductions exists for children under the age of majority
99% of value of the property up to a limit of 200,000€
Property may not be sold for 5 years after inheritance
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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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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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Other Deductions Cntd:
Debts held be the deceased that are evidenced by public
documents e.g. a mortgage
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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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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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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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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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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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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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