Gift tax on money or property given to family in Spain

Terms used

• ISD — ISD is Spain's gift and inheritance tax, paid by the person who receives the gift, with reliefs set by each region.
• Modelo 651 — Modelo 651 is the state form for declaring a gift for gift tax.
• Plusvalía — The plusvalía is a municipal tax on the increase in value of urban land when a property is transferred.
• AEAT — The AEAT is Spain's state tax agency.

Key rules

• Deadline: File the gift tax return within 30 working days of the date of the gift.
• Who pays: The person receiving the gift files and pays, not the giver.
• Relief: Most regional reliefs for family gifts need a public deed and a bank transfer.
• Declaring: Declare every gift, even when relief means little or no tax is due.

Gifts to family are taxed, and you must declare them

Money or property given to a child or other relative is subject to gift tax, called ISD. The person who receives the gift files and pays, not the giver. Regions control most of the detail, and many of them cut the bill to almost nothing for close family. The relief only helps if you declare the gift and do the paperwork correctly.

Which region's rules apply

For money, the region is generally the one where the person receiving the gift lives. For property, it is the region where the property sits. If the person receiving the gift is not a Spanish resident, they file with the state tax agency (AEAT).

Examples of what regions offer:

• Madrid: a 99% bonus on the tax for gifts between close relatives, meaning children, spouses and parents.
• Andalucía: a 99% bonus for close relatives, with conditions such as a public deed and limits by group.
• Catalonia: reduced rates for children and close relatives, with a public deed and limits on the amount.
• Valencia: reductions and bonuses for gifts to children, with caps on the recipient's assets or income and a public deed.
• Galicia: reductions for close relatives, mainly for money to buy a first home or for family businesses.

Other regions have their own schemes. Where there is no regional benefit, the state rules apply. Regional rules change often, so read the ISD page of your region's tax agency before you give or receive anything.

Gifts of money: declare them

A cash gift from a parent must be declared, even when the relief means little or no tax is due. If you do not declare it, the tax office can treat the money as unexplained income (ganancia patrimonial no justificada) and tax it as income instead.

Formalities decide whether you keep the relief

• Property: the gift must be made in a public deed before a notary to be valid.
• Money: a gift can be valid without a deed if a bank transfer documents it. But most regional reliefs require a public deed, so use one.
• Origin of funds: the deed should state where the money comes from.
• Payment: send money by bank transfer, never in cash. The deed or transfer should name giver and recipient and show the amount and that it was accepted.

Without a deed or a traceable transfer, you may lose the relief.

Deadline and form

File within 30 working days of the date of the gift. Use Modelo 651 where the state agency handles the tax, or your region's own form where the region manages it.

Extra costs on property

A gift of property also brings notary and land registry fees, and municipal plusvalía. These come on top of any gift tax.

Gift now or leave it by will

If you are deciding between giving now and leaving something in a will, use the comparison below. The timeline, documents and checklist below cover the steps.

Gift now or leave by will: Spanish tax compared

Short answer

Inheritance usually costs less in tax than a gift. The tax on the later sale works the same way for both. Which is cheaper in your case depends on your region and your town hall.

ISD: where the two differ

The scale is the same, but each region sets its own reductions, rates and bonuses. That is where gifts and inheritances split apart.

• Inheritance: most regions give large reductions for a spouse and children. Several, including Madrid, Andalusia and Valencia, give a 99% bonus. For a main home inherited by close relatives, the state-level reduction is 95% up to €122,606, and you must keep the home for 10 years.
• Gifts: reductions are usually smaller. Madrid and Andalusia also give a 99% bonus on gifts to close relatives, but often only if the gift is in a public deed and the money is declared. A gift of a main home to a descendant can carry regional conditions on age and value.
• Accumulation: gifts from the same donor in the previous three years are added together for tax. An inheritance is added to earlier gifts, so a gift now can raise the tax on a later inheritance.

Navarre and the Basque Country have their own regimes. In the rest of Spain, the region of the person receiving the property and the location of the property decide which rules apply. Check the current figures with your region's tax agency, because they change often.

Plusvalía: both trigger it

A gift of urban property triggers plusvalía, the municipal tax on the rise in urban land value, just as an inheritance does. The person receiving the property pays it. The donor pays nothing and is not taxed as a seller.

The difference is in timing and relief. Many town halls give a bonus of up to 95% on inheritances to close relatives for the main home. The bonus for gifts is usually smaller or absent. Ask your town hall which bonus applies.

Base cost: what you pay tax on when you later sell

Gift and inheritance work the same way here, and neither carries over the previous owner's original purchase price.

• Your starting value is the value declared for ISD, which is the property's real value. The ISD and the costs and taxes you paid are added to it.
• The clock starts on the date of death for an inheritance and on the date of the gift for a gift.
• Your taxable gain on a later sale is the sale price minus that starting value.

Declare the true market value. If you declare less, the tax office can check and correct it.

Two reliefs may apply when you sell. If you are 65 or over, selling your main home is tax-free. If you reinvest the proceeds in a new main home, reinvestment relief applies. Non-residents follow similar rules for the starting value.

What this means for your choice

If the aim is the lowest tax and your region gives a big inheritance bonus, leaving the property by will is often cheaper. A gift can work well where your region gives a 99% gift bonus, but only if you meet its conditions, such as a public deed and declared funds. Compare your region's gift and inheritance rules before you sign anything.

Timeline and deadlines

• Sign the public deed and move the money by bank transfer: before or on the day the gift is made

Documents you need

• Public deed of gift signed before a notary, required for any gift of property and needed for most regional reliefs on gifts of money. It names donor and donee, states the amount or property, and shows the gift was accepted.

• Bank transfer record for a gift of money, issued by your bank, showing donor, donee and amount. It is the minimum proof of a money gift and should match what the deed says.

• Gift tax return (Modelo 651, or the regional form where your region manages the tax), filed with the tax office that is competent for the gift.

Checklist

• Find out which region's rules apply: where the person receiving the gift lives for money, or where the property sits for real estate.

• Check the ISD page of that region's tax agency for the relief on gifts to children or close relatives, and its limits.

• Ask a notary to prepare a public deed, with the origin of the funds stated.

• Declare the gift on Modelo 651 or your region's form, even if the relief means little or no tax is due.

Frequently asked questions

Which region's rules apply to a gift of money to my child?

The rules of the region where your child lives usually apply to a gift of money. For a gift of property, the region where the property sits applies. Someone who does not live in Spain files with the AEAT, Spain's tax agency, instead.

Can a gift from my parents be treated as income if I do not declare it?

Yes, an undeclared cash gift can be treated as unjustified income and taxed under income tax, on top of the gift tax problem. Declaring the gift and moving the money by bank transfer gives you a clear paper trail.

Do I pay other costs when I receive a gift of property?

Yes, a gift of property also brings notary and land registry fees and the municipal plusvalía, a local tax on the rise in land value. These come on top of any gift tax, so ask the notary for a full estimate before signing.

Is the regional relief the same for gifts to children in every region?

No, each region sets its own relief and conditions. Madrid and Andalucía give a 99% bonus on the tax for children, spouses and parents, while Catalonia, Valencia and Galicia use reduced rates or reductions with limits. Regions without a scheme follow the state rules.