Gift Tax on the Canary Islands
Tenerife – Fuerteventura – Gran Canaria – Lanzarote – La Palma – La Gomera – El Hierro
Noteworthy Aspects of Gift Tax
Is Spanish or Canary Islands Gift Tax Law Applicable?
Across Spain uniform regulations concerning the taxation of gifts generally apply. However, such autonomous regions of Spain as the Canary Islands are entitled to enact their own regulations. The Canary Islands last exercised this right in 2015 by implementing special provisions for inheritance and gift tax.
Is There a Free Choice of Legislation?
When a gift is made, the donees, including those not residing in Spain, are sometimes entitled to decide in favour of the law of an autonomous community within the Canary Islands. This option will depend on the following criteria:
- If the donor was a resident of an autonomous community of Spain, the recipient residing in the EU or the EEA can choose the law of the autonomous community where the donor resided.
- If the donor did not reside in Spain but was a resident of another EU or EEA state, the recipient can choose the law of the autonomous community of Spain where the majority of the assets in question are located.
- If the donor has neither residence nor assets in Spain, the law of the autonomous community where the recipient resides will apply.
Does the Canary Islands Gift Tax Law Have any Distinctive Features?
As a general rule, the national rules apply to gift tax, yet there are some exceptions:
- The main residence can be transferred tax-free to a descendant with a degree of disability of at least 65%. The general government-mandated rules apply in this case.
- For acquisitions by way of a gift, a 99.9% deduction from the tax liability applies for taxpayers in tax categories I and II, provided that unlimited tax liability has been established.
- Group I: descendants and adopted children under 21 years of age
- Group II: descendants and adopted children aged 21 and older, spouses, and ascendants
How is the Spanish Increment Value Tax Calculated?
In addition to the gift tax, a municipal increment value tax is also due when assets are transferred. This tax is levied by the local municipality and is based on the official increase in the value of the land from the time of purchase to the time of transfer. The tax is calculated in accordance with the cadastral value of the land, as determined by the respective municipality. However, this tax will be levied for a maximum period of 20 years.
Is the National Capital Gains Tax also Applicable?
Gifting on the Canary Islands is also subject to the Spanish capital gains tax.
Is There Double Taxation in Germany?
If either the donor or the donee are Spanish taxpayers, German gift tax may be incurred in addition to Spanish gift tax. In such cases, double taxation can often be avoided or reduced by means of offsetting. Since there is no double taxation agreement between Germany and Spain for inheritance and gift tax, the offsetting will be based on the respective national provisions. Tax credit in Germany is only granted in the case of unlimited gift tax liability in Germany.
When is Gift Tax Due in Germany?
Gift tax in Germany is due within one month after the tax assessment notice has been issued.
Table of Content
CPA Nyikolaj Szmolenkov M.A.
Your tax law specialist
Tel.: +49 (0)172 / 712 0558
Settling an estate in the Canary Islands can be complex and demanding. There are a number of legal and administrative hurdles that need to be overcome. We can help you.
Our direct contact person for you in Tenerife and Malaga is Mrs Svetlana Evgrafova.
She speaks German, English, Spanish and Russian and can also support you in emergencies.
Tel.: +49 (0)172 / 923 1838
Overview of topics Canary Islands
Inheritance law
Find out now about the most important questions regarding inheritance law in the Canary Islands: Who is entitled to inherit in the Canary Islands if the deceased had neither children nor a spouse? Is a German will valid in the Canary Islands?
Estate settlement
Find out now about the most important questions regarding the settlement of estates in the Canary Islands: How is the inheritance accepted? Does a Spanish tax declaration have to be submitted when the heirs are entered in the land register?
Inheritance tax
Find out now about the most important questions regarding inheritance tax in the Canary Islands: How are the tax-free amounts determined? Is there a tax exemption for the family home?
Gift tax
Find out now about the most important questions regarding gift tax in the Canary Islands: Are there any special features of Canary Islands gift tax law? Is there double taxation in Germany?
Property law
Find out now about the most important questions regarding property law in the Canary Islands: How does the purchase of a property work in principle? How high is the property transfer tax in the Canary Islands?
Inheriting property
Find out now about the most important questions regarding property inheritance in the Canary Islands: Which law applies to inheritance cases in the Canary Islands? When and how is the property transferred to the heirs?
Your tax law specialist
CPA Nyikolaj Szmolenkov M.A.
- Tax consultant
- Company valuations
- Preparation of inheritance and gift tax returns
- Cooperation partners of the firm
- Registered office: Augsburg
- Location: Balearic and Canary Islands
- Tel.: +49 (0)172 / 712 0558
