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Frequently asked questions about Gift Tax in Spain
WHO pays the Gift Tax in Spain?
In Spain, the Gift Tax is always paid by the donee. That is, the person who receives and benefits from the gift. In the Valencia Region, this tax must be declared through form 651, within 30 days fol lowing the gift. Which agency is in charge of processing the Gift Tax?
Although the Gift Tax is a ‘State Tax’, the government has transferred it to the different Regions or ‘Comunidad autónomas’ and each one has its own regulation. Depending on the circumstances of each case, the agency in charge of this tax, and the applicable regulation will be one (regional) or another (state owned).
What documents do I need to make a gift in Spain?
If the donation is formalised before a notary, it will be necessary to provide the identity document or passport of both (donee and donor), the NIE (if either of them is a foreigner), proof of the transfer (if the gift consists of money), title deeds and cadastral reference (if it is a property), etc. Depending on the case (gifts from parents to children that are exempt from tax) it will also be necessary to provide a copy of the birth certificate, which must be duly apostilled and translated if it was not issued in Spain.
How much Gift Tax is payable in the Valencian Region?
In the Valencian Community, gifts of less than €100,000 between certain family members are exempt from taxes. For instance, if a father donates a house valued at
€200,000 to his two children, they won’t have to pay gift tax. Above this amount, tax is payable at a rate ranging from 7.65 per cent to 34 per cent, depending on the value of the assets gifted.
What is the ‘Reference Value’ and how does it affect the Gift of a property in Spain?
The Reference Value is an indicator used by the Tax Administration for the payment of several taxes. Among them, the Gift Tax. If, when submitting the tax, the donee declares an amount lower than the Reference Value, the administration will most likely initiate a verification procedure and claim the payment of the difference.
If the gift consists only of money, is it compulsory to sign a deed in front of a Spanish Notary?
No. If the gift is monetary, it could be formalised in a simple private document or made verbally. However, by law, if the donee wants to benefit from the reductions foreseen in the Valencian Regulations, he/she will be compelled to formalise the donation in a public deed. Therefore, although it is not compulsory, it is highly advisable.
What other taxes must be paid when making a gift in Spain?
When the gift consists of a real estate property, it will be necessary to pay the Municipal ‘Plusvalía’ and the Capital Gains Tax. The Plusvalia is paid by the donee, within 30 days. The capital gains tax is payable by the donor. The deadline will depend on whether the donor is resident or nonresident. If he/she is resident in Spain, he/she must declare the possible gain in his/her an nual tax return the following year. If, on the other hand, he/she is a nonresident, the deadline for declaring the gain is four months from the signing of the deed.
What is more tax beneficial, receiving assets through an inheritance or through a gift?
Although it is difficult to give a generic answer (because each case has its own particularities), it can be stated that inheriting is usually more fiscally beneficial than receiving a donation/gift. The number of deductions and allowances applicable in inheritances is higher. Also, the capital gain is not taxable in inheritances.
I am a British citizen, resident in Spain, and I want to gift money to my children, who are nonresidents, and live abroad. Do they have to pay taxes?
If the funds you wish to gift to your nonresident child are not located in Spain, the transaction would, in principle, be exempt from taxation in Spain.
