Important Notice
Turner Insurance does not provide inheritance tax advice or services. This information is provided as a rough guide only for educational purposes, accurate as of 2026. Regional tax rules change — always consult a qualified gestoría, abogado or tax adviser for advice specific to your situation.
Canary Islands ISD — 99.9% Bonification, Extended to Group III
Under Decreto-Ley 5/2023 the Canary Islands apply a 99.9% bonification on inheritance tax to Groups I, II AND III — descendants, spouses, ascendants and now also siblings, nieces, nephews, uncles and aunts. In practice the effective tax on a typical family inheritance is just a few euros. The Canary Islands are one of the most favourable Spanish regions for inheritance in 2026, especially for extended family.
ISD Groups in the Canary Islands
Group I (direct descendants under 21): 99.9% bonification on inheritance. Effective rate: virtually zero.
Group II (direct descendants 21+, spouse, registered partner, ascendants): 99.9% bonification on inheritance. Effective rate: virtually zero.
Group III (siblings, uncles, aunts, nieces, nephews and in-laws): 99.9% bonification on inheritance — unusually generous, this is one of the few regions to extend the near-full bonification to Group III.
Group IV (unrelated persons): Standard high rates apply with minimal reductions.
Donations (gifts during lifetime)
For donations during lifetime the 99.9% bonification applies to Groups I and II only (not Group III, unlike inheritance). The donation must generally be formalised in a notarised escritura pública. Modelo 651 must be filed within 30 days. The donor should be able to document the source of funds.
Key Reductions Available in the Canary Islands
99.9% bonification on inheritance tax for Groups I, II and III
State minimum personal reductions still apply (Group I €18,500 + age uplift; Group II €18,500; Group III €9,300)
Habitual residence reduction up to 99% (subject to limits and 5-year hold period)
Family business and agricultural assets reductions up to 99%
For donations, the 99.9% bonification applies to Group I and II only
Life Insurance and Canary Islands ISD
Life insurance proceeds form part of the ISD base in the Canary Islands. With the 99.9% bonification for Groups I, II and III, the effective tax on most family life-insurance payouts is just a few euros — typically €2–€10 on a €200,000 payout. Direct beneficiary nomination in the policy remains best practice. Consult a Canary Islands tax adviser for non-family beneficiaries or non-resident scenarios.
Frequently Asked Questions — Inheritance Tax in the Canary Islands
Under Decreto-Ley 5/2023 the Canary Islands apply a 99.9% bonification on inheritance tax for Groups I, II AND III (descendants, spouses, ascendants, siblings, nieces, nephews, uncles, aunts and in-laws). The effective tax on a typical family inheritance is just a few euros — for example, on a €200,000 inheritance the actual ISD payable is often €2–€3. The Canary Islands are among the most favourable Spanish regions in 2026.
For inheritance to Groups I, II and III they are among the very best. The big differentiator is that Group III (siblings, nieces/nephews and similar) also receives the 99.9% bonification on inheritance — most other regions either don't bonify Group III at all or only modestly. For donations the picture narrows: only Group I and II benefit from the 99.9% bonification on donations. For typical direct-family planning the Canaries match the most favourable regions; for extended family they are uniquely generous.
Partially. The 99.9% bonification applies to donations to Group I and Group II beneficiaries (not Group III, which is unusual versus the inheritance treatment). Donations must generally be formalised in a notarised escritura pública with Modelo 651 filed within 30 days. The donor must also be able to document the source of funds.
No. The 99.9% bonification was introduced by Decreto-Ley 5/2023 (4 September 2023) and remains fully in force for 2026. The 2025 Canary Islands budget did not include modifications to ISD. Always verify with a local Canarian gestoría or tax adviser at the time of any inheritance event, since regional tax law can change.
Life insurance proceeds count toward the ISD base in the Canary Islands but the 99.9% bonification for Groups I, II and III applies — so the effective tax on most family life-insurance payouts is just a few euros. Direct beneficiary nomination in the policy keeps proceeds out of the wider estate calculation. For non-family beneficiaries the standard scale applies and specialist tax advice is essential.
EU/EEA non-resident beneficiaries can elect to apply the regional rules of the deceased's habitual residence under EU law. Non-EU non-residents historically were taxed under the less favourable national scale, although recent Spanish reforms have extended regional access in many cases. The position is technical — always seek specialist advice if the beneficiary is non-resident.
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