Canary Islands approved a bonus on inheritance and donations. The Regional Government, during today’s Governing Council session, announced a change to the Inheritance and Gift Tax by adjusting the tax rate and subsidizing it at a rate of 99.9 percent. The subsidy is set to revert to the national regime on December 31, 2019. To implement this, the Government issued a decree backing the tax changes, applying the measure according to kinship. The projected cost to the public treasury is estimated at 18 million euros annually.
Finance Minister Matilde Asian outlined after the meeting that the tax, as it has evolved in recent years, effectively acts as an unfair extra charge on Income and Equity, since it taxes incoming wealth when it is earned rather than when it is saved. Asian argued that in a region known for favorable tax treatment like the Canary Islands, residents should not bear higher costs for this concept than in other Spanish communities where tax relief is already available. The decree is framed to reduce disparities among residents and align tax treatment with the autonomous community’s broader fiscal advantages.
The change is described as a safeguard for middle and low income households with business income. Notaries’ data indicate that in 2022 nearly 2,000 Canary residents refused inherited property. This figure places the region among those with high rates of heirs declining inheritance due to costs associated with admission and related formalities. The move aims to lessen these non-financial burdens that weigh on families during succession.
The inheritance tax discount applies to relatives up to the fourth degree, while donations are eligible up to the second degree. The administration notes that one reason behind the decision is the substantial non-financial cost shouldered by beneficiaries at the time of succession, including advisory and administrative expenses that disproportionately affect middle and low income earners. The policy also intends to cushion the impact of a sharp rise in direct taxes caused by updated reference values for real estate that began on July 1, 2021, by reducing accompanying obligations as much as possible.