The Canary Islands apply a 99.9% inheritance and gift tax bonificación for Group I, II and III beneficiaries — the broadest regional regime in Spain. Tenerife, Gran Canaria, Lanzarote, Fuerteventura, La Palma, La Gomera and El Hierro estate inheritance is effectively tax-free for family members. Non-resident heirs elect Canary rules on Modelo 650. The regime has been stable across political cycles.
The Canary Islands — Tenerife, Gran Canaria, Lanzarote, Fuerteventura, La Palma, La Gomera and El Hierro — hold a substantial British, Irish, German, Nordic and Benelux expat population, concentrated in the south of Tenerife (Costa Adeje, Los Cristianos, Playa de las Américas, Callao Salvaje, Los Gigantes, San Eugenio), the south of Gran Canaria (Maspalomas, Playa del Inglés, Meloneras, Mogán, Puerto Rico), the east and south of Lanzarote (Playa Blanca, Puerto del Carmen, Costa Teguise, Puerto Calero), and the growing Corralejo and Costa Calma corridors of Fuerteventura. Property ownership is often held for retirement or second-home use; a material proportion of our Canary caseload involves British retirees with long-held island properties.
The Canary IHT regime is the most generous in Spain. A 99.9% bonificación applies to Group I, Group II and (uniquely across regions) Group III beneficiaries. The same bonificación applies to lifetime gifts. The mechanism is a post-quota credit: state allowances apply, tariff and coefficient run, then 99.9% of the resulting tax is extinguished by the regional bonificación. On a €600,000 Costa Adeje villa inherited by an adult child, the post-bonificación Spanish IHT is typically under €200. On the same property passing to a niece, the outcome is essentially identical. Only Group IV (unrelated beneficiaries, cousins) falls outside the bonificación.
This page covers the Canary IHT framework, the Group III inclusion (broader than any other region), the interaction with the Régimen Económico y Fiscal de Canarias (REF) and IGIC rather than IVA, and filing mechanics at the Canary regional tax office. If your matter involves Canary property, open a file with us.
The Canaries operate the broadest Group coverage in Spain. Six rules drive every calculation.
Applies to Groups I, II and III — broader than any other Spanish region. Post-quota credit extinguishes 99.9% of the tax after all other mechanics.
Broadest creditUnique across regions: the Canaries have always included Group III at 99.9%. Siblings, nieces, nephews, in-laws all access the full credit.
Full familySame 99.9% bonificación applies to ISD gift tax for Group I, II and III recipients. Lifetime transfer planning materially efficient.
Gift parityNon-resident heirs of Canary property elect Canary rules on Modelo 650 under the 2014 ECJ principle. Full 99.9% bonificación accessible cross-border.
Cross-borderThe Canaries operate a distinct fiscal regime (REF) with IGIC (6.5% / 7%) instead of IVA (21%). IHT sits alongside REF rules; property-transfer consequences differ from peninsular Spain.
Regional tax systemFiled with Agencia Tributaria Canaria (ATC). Tenerife and Gran Canaria main offices. Six-month deadline from death.
Regional filingThe Canary Islands' inclusion of Group III in the 99.9% bonificación is unique across Spanish autonomous regions. Madrid extended Group III coverage to 99% only in 2024; the Canaries have operated Group III inclusion for longer. The practical significance for our caseload is substantial: childless retired expat couples in Costa Adeje or Maspalomas whose wills leave property to siblings, nieces or nephews face essentially no Spanish IHT regardless of estate value. Pre-bonificación effective rates on Group III could exceed 25% on moderate estates; post-bonificación the same estate pays near zero.
The Canary Islands run their own pareja de hecho register. Registration brings Group II treatment. Post the 99.9% bonificación including Group III, the incremental benefit of registration has narrowed — an unregistered partner sits in Group IV (full marginal rate), but if there are siblings or nieces in the beneficiary structure, the family pathway to the survivor via Group III is already tax-efficient. For unmarried couples planning directly between themselves, registration remains essential.
The Régimen Económico y Fiscal de Canarias (REF) governs a distinct tax regime for the archipelago: IGIC (Impuesto General Indirecto Canario) at 6.5% or 7% standard rate replaces the peninsular IVA at 21%. Transfer tax on resale property sits within the regional ITP framework at Canary rates. IHT itself runs on the national Impuesto de Sucesiones framework with Canary regional overlays — the same statute as peninsular Spain, but with the generous 99.9% bonificación applied. When planning a Canary inheritance the practitioner must track the distinct REF/IGIC/ITP interaction for any post-death sale or transfer; this is outside IHT but materially affects net outcome.
Canary rules retain habitual-residence (95%) and family-business (95% / 99%) reductions at the base-reduction stage. With the 99.9% bonificación already absorbing the bulk of the tax, these targeted reductions are marginal to outcome but remain relevant for base calibration and for the Group IV scenarios where they are the only access to relief.
We confirm the deceased's habitual residence in Canary Islands (or the property's location for non-resident matters) and classify each beneficiary by group for allowance purposes.
Valor de referencia checked for Spanish property. We screen for the habitual-residence reduction, family-business reduction and region-specific allowances.
Filed with the Canary Islands regional tax office (or AEAT with regional election for non-residents). UK IHT credit claimed where applicable.
Tax receipts delivered to the notary for inclusion in the escritura. Land Registry transfer lodged. Closing pack to the family in English.
The 2014 ECJ principle applies in the Canaries. A UK-resident adult child inheriting a Los Cristianos apartment from a Tenerife-resident parent elects Canary rules on Modelo 650 to capture the 99.9% bonificación. Silent filings default to state rules and lose the credit. Explicit election is the hinge of the mechanism for cross-border matters — and this is the bulk of our Canary caseload given the dominance of British and Irish expats.
UK-domiciled deceased with Canary property: UK IHT applies to the worldwide estate including Canary real estate. Spanish IHT post-bonificación is near zero. Article 23 credit applies but with minimal Spanish tax to credit. UK IHT dominates. The planning focus shifts to UK-side structuring: nil-rate band, residence nil-rate band where a main home forms part of the estate, business property relief, and so on.
One nuance: the Canaries' year-round warm climate and distinct air-link pattern mean some clients establish Canary residence in later life specifically for tax reasons. For clients considering this, the IHT position is materially favourable; however UK IHT domicile rules will not automatically follow, and the deemed-domicile clock (17 out of 20 years) runs through presence in the UK or long-term UK domicile ties. A Canary-domiciled deceased with pure Canary-situated assets sees very little Spanish and potentially no UK IHT — but achieving this status requires long-term planning and factual substance.
Valor de referencia applies in the Canaries as elsewhere. Tenerife and Gran Canaria premium coastal areas have valor de referencia figures that have risen sharply in recent cadastral updates. Lanzarote and Fuerteventura figures are lower reflecting the quieter markets. La Palma's figures took a dislocation through the 2021 volcanic eruption recovery; properties near the Cumbre Vieja event zone have valor de referencia discrepancies that still need individual assessment.
Post-bonificación the valuation matters less for IHT but drives plusvalía and future CGT base, as elsewhere.
Each municipality — Adeje, Arona, San Miguel de Abona (Tenerife), San Bartolomé de Tirajana, Mogán, Las Palmas (Gran Canaria), Teguise, Yaiza, Tías (Lanzarote), La Oliva, Pájara, Antigua, Tuineje (Fuerteventura) — sets its own plusvalía rates within the post-2021 national framework. The election between objective and real-gain calculation applies. Costa Adeje and Maspalomas municipalities have historically higher rates; Lanzarote and Fuerteventura lower. We screen both calculations.
The Canary Islands apply wealth tax at approximately the national framework. The federal solidarity tax on fortunes above €3m applies nationally from 2023. For most British retiree clients in Costa Adeje or Maspalomas the solidarity threshold is not engaged; wealth tax may be at modest levels. For the premium end of the Canary market — Abama, Bahia del Duque, Anfi Tauro, Puerto Calero — both taxes can feature.
The Agencia Tributaria Canaria operates main offices in Santa Cruz de Tenerife and Las Palmas de Gran Canaria, plus smaller offices in the other islands. Modelo 650 filings go to the relevant office based on the deceased's residence or property location. E-filing via the regional portal with Spanish digital certificate is also available. Processing times are typically 6 to 12 weeks, with slower throughput during the peak tourist and holiday seasons.
Tenerife south (Adeje, Arona, San Miguel) is our busiest Canary inheritance caseload — long-standing British retiree property base. Gran Canaria south (San Bartolomé de Tirajana, Mogán) is similarly expat-dominated. Lanzarote and Fuerteventura have higher per-property values in premium spots (Puerto Calero, Club La Santa, Playa Blanca frontline) but a smaller expat inheritance volume. La Palma caseload is small and disproportionately affected by the 2021 volcanic event. La Gomera and El Hierro are rare for cross-border inheritance work.
Heirs who inherit Canary property and sell subsequently engage ITP or IGIC depending on the transaction type (second-hand vs new-build-related). The rates differ from peninsular Spain. For a UK-resident heir planning to sell an inherited Costa Adeje apartment, the post-transfer sale cost structure will differ from the equivalent mainland calculation. We build this into the post-inheritance disposal plan.
The Canaries deliver the most generous IHT outcome in Spain — near-zero Spanish tax for Groups I, II and III. We add value in election discipline, cross-border coordination and REF navigation.
Request a Canary Islands CalculationParents resident in Canary Islands with children abroad; non-resident owners of Canary Islands property; surviving spouses, siblings, grandparents — the applicable rules vary with the family configuration.
€650,000 Costa Adeje villa, two UK-resident adult children, British-domiciled deceased. Post-bonificación Spanish IHT under €500. UK IHT dominates.
€320,000 Maspalomas apartment, Spanish-resident surviving spouse. 99.9% bonificación applies. Spanish IHT effectively zero.
€250,000 Playa Blanca flat, pareja de hecho registered Canary register before death. Group II treatment. Post-bonificación Spanish tax near zero.
€500,000 Puerto Calero villa, Group III niece. Canary 99.9% bonificación covers Group III. Effective Spanish tax under €500.
€400,000 Corralejo property, Group III brother. 99.9% bonificación applies. Spanish tax under €500.
€280,000 Los Gigantes apartment, surviving unregistered partner in Group IV. No bonificación access. Full marginal tax — registration during lifetime would have prevented.
Non-resident heirs default to state rules on silent filings. Regional election captures the 99.9% bonificación; omission costs the credit.
Older advice sometimes assumes the Canaries match other regions' pattern of excluding Group III. The Canaries include Group III — this is unique and planning-relevant.
Canary transactions use IGIC, not IVA. Estate planning advice sometimes assumes peninsular rates; Canary rates differ.
Canary regional register. Registration must be effective at date of death for Group II treatment.
Triggers re-assessment. Post-bonificación the IHT saving is negligible anyway — not worth the risk.
Canary clock runs from death. Spanish file in parallel, not sequential.
The core Canary caseload. Long-standing British retiree property base. Costa Adeje, Los Cristianos, Playa de las Américas, San Eugenio, Callao Salvaje.
Maspalomas, Playa del Inglés, Meloneras, Mogán, Puerto Rico. Retirement and second-home mix. Post-bonificación Spanish IHT effectively zero.
Premium property market. Puerto Calero, Playa Blanca frontline. Same 99.9% bonificación as other islands.
Quieter market, growing expat base. Full bonificación applies.
Group III inclusion in the 99.9% bonificación is transformational. Wills leaving to siblings or nieces face effectively no Spanish tax.
Spanish IHT near zero; UK IHT dominant. Planning focus on UK-side structuring, not Spanish-side.
Regional allowances applied, group classifications checked, habitual-residence and family-business reductions screened, deadline tracked.