On 5th September 2023, the Decree Law 5/2023 of 4th September, which modifies the tax rate reductions for the Inheritance and Gift Tax, was published in the Official Gazette of the Canary Islands. It came into effect on the day following its publication, namely on September 6, 2023.
Since 2019, only a 99.9% reduction on a tax base of €55,000 has been applicable, which means the first €300,000 of the inheritance or gift was only subject to 0.1% tax. Beyond this amount, the reduction in tax rate reductions progressively applied according to the tax base.
This Decree Law amends articles 24 and 26 of the current legal provisions and now stipulates a 99.9% reduction on the entire tax base derived from inheritance acquisitions in groups I, II (ascendants, descendants, or adopted children, and spouses of the deceased) and III (second-degree relatives – siblings, and third-degree relatives – aunts, uncles, and in-laws), as well as inter vivos acquisitions included in groups I and II.
This decision is motivated by the increase in inflation, and it is proposed to maintain this modification until the rise in prices stabilizes and the available income for families in the Canary Islands begins to recover.
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