In July this year, the new Prime Minister of the Canary Islands announced that a 99% reduction for succession and gift tax will be introduced for children and spouses. This extends to UK residents with assets in the Canary Islands.

The regional tax minister confirmed that this reduction will be included in the 2016 budget and expected to be approved in October 2015. Further tax reductions are also planned.

At the moment where assets are based in the Canary Islands the beneficiaires of the inheritance or gifts, wherever they live, are responsible for the taxes payable in Spain.  Further, a resident of the Canary Islands who inherits or receives a gift from outside of Spain is liable to succession taxes in the Canary Islands.

There are minor allowances but no relief for spouses as in the UK. The turnaround time for paying the tax is short too.

The new regime will benefit non-residents with assets in the Canary Islands and residents receiving assets from elsewhere.

All good news for UK residents with holiday homes in the Canaries.

Now you need to check your Will to see if the correct beneficiaries are named to inherit your Canary Island assets.