Dealing with inheritance in the Canary Islands can be confusing, especially when the rules differ significantly from those in the UK. Many British families are surprised to learn that Inheritance Tax (IHT) in the Canaries can often be reduced to a minimal amount for direct descendants. This is a genuine advantage, but the proper steps must be followed from the beginning. If the process is not handled correctly, things can become unnecessarily complicated and costly.

Why Canarian Inheritance Tax Can Be Very Low

The Canary Islands offer generous allowances for children, parents and other close family members. When everything is prepared correctly, the amount of IHT they pay can be minimal. In some cases, it is close to nothing.

However, to benefit from these reductions, the estate must meet all applicable legal and tax requirements. Missing a form, filing something late or using incorrect documents can result in higher tax, penalties or long delays.

The Six-Month Deadline for Modelo 650

When someone inherits an asset in the Canary Islands, they must submit the Modelo 650 tax declaration within six months of the date of death. This deadline is strict. If it is missed, the tax office can apply penalties and interest, and heirs may lose access to regional tax allowances.

Until the Modelo 650 is filed and accepted, the heirs cannot legally take ownership of the property, sell it or make changes to the official records. For families dealing with both UK and Spanish paperwork, this is often where problems begin.

Capital Gains Tax When Selling Spanish Property

If the heirs decide to sell a property in Spain, Capital Gains Tax (CGT) may apply. To avoid paying more than necessary, the following need to be handled carefully:

  • The correct valuation at the date of death
  • Any improvements or allowable expenses
  • Resident or non-resident tax rates
  • Reclaiming the 3 percent retention applied to non-resident sellers

Even simple errors can make the difference between a smooth sale and an expensive one.

Read our article on understanding CGT on Spanish property for British owners in Tenerife – https://richmondprobatetenerife.com/capital-gains-tax-canary-islands/

Why British Families Often Need Help With This

Spanish authorities require documents that differ from those produced by the UK probate system. These often include:

  • Apostilled UK certificates
  • Certified translations
  • The UK Grant of Probate
  • Spanish legal certificates
  • NIE numbers for each heir

If any document does not match, or the sequence is wrong, the process can stall for months. This is the most common source of stress for families managing both systems independently.

Final Thoughts

Canarian IHT and CGT need not be difficult. With proper guidance, most families can complete the inheritance process smoothly and minimise their tax bill. The key is to get everything organised early and ensure the legal and tax requirements in both countries are met.

If you are unsure where to begin or want help meeting the deadlines, Richmond is here to support you and explain everything clearly.