Donations and money gifts in Spain: If you are donating or receiving a donation in Spain, it is essential to understand the Spanish taxation system regarding this matter. Whether you are planning to donate money or real estate, it is crucial to gather information about the potential taxes in Spain you might have to pay, whether you are the giver or receiver, to avoid any surprises.
What type of donation are you about to make or receive?
Firstly, the Spanish taxation system distinguishes between the donation of movable goods, such as money, and immovable goods, like real estate, which cannot be moved from their original location.
How does the tax on donations work?
Accordingly, if you donate movable goods, you will have to pay the tax on donations, known as the “Impuesto sobre Donaciones.” The amount of this Spanish tax will vary depending on the relationship between the giver and the receiver, as well as the value of the goods donated. Usually, if the donation is between close relatives, such as parents and children or spouses, the tax will be lower than for unrelated individuals. Moreover, this Spanish tax is progressive, meaning its rate rises according to the value of the donation. However, each Autonomous Community can apply specific tax rules, substantially impacting the amount paid for the donation.
On the other hand, if you are donating immovable goods in Spain, the value taken into account for the tax is the one estimated by the municipality at the time of donation. Similarly, family members often benefit from tax exemptions. Additionally, in some Autonomous Communities, the tax for donations of real estate properties will be lower if the property is intended for use as a main residence.
Additional information and advice
The tax on donations will affect both the giver and the receiver. For the giver, the tax may deter them from donating altogether, which is why it is important to be informed about all the implications in advance. As for the receivers, they may also decide to refuse the donation if the tax implications are too significant, so it is crucial to gather all the necessary information about the specific donation you are making or receiving.
Therefore, the receiver who accepts a donation must pay the related tax within one month and declare it as part of their Donation and Successions Tax Return. Moreover, the goods donated must exist at the time of the donation, meaning you cannot donate money or real estate property if you are not yet its sole owner.
Finally, it is important to note that any donation can be taxed, regardless of its value, so we advise you to seek the advice of a tax expert to determine how much you will need to pay to make or receive a donation. Our team at Marfour can guide you through the whole process, so do not hesitate to contact us at info@marfourlaw.com to get tailored advice on your specific case.