Spain is not only a desirable place to live or invest, but also a key destination for international donations. If you are a foreign national looking to donate money, real estate, or other assets in Spain, it is essential to understand the legal framework, donation taxes in Spain, and the tax implications based on your residency status.
What is considered a donation under Spanish law?
According to the Spanish Civil Code, a donation is an act of generosity in which one party transfers ownership of an asset or right to another party free of charge. There must be a clear intent to donate and acceptance by the recipient. Donations can include money, real estate, shares, or other movable assets.
It’s important to note that a donation is irrevocable, unless specific exceptions apply (e.g., ungrateful behavior of the recipient or breach of donation conditions). This legal nature requires careful documentation and legal counsel.
Legal framework applicable to donations by foreigners
-
Spanish Civil Code: governs the form and validity of donations.
-
Law 29/1987 on Inheritance and Gift Tax (ISD).
-
Regional legislation: each Autonomous Community sets its own tax reductions and benefits.
-
EU Directives and case law: such as the ECJ ruling C-127/12, which ensures EU citizens can access regional benefits under certain conditions.
If the donation involves international elements (e.g. donor in the UK, recipient in Spain), additional treaties or rules on double taxation may apply.
The Inheritance and Gift Tax (ISD)
Who is liable for the tax?
The recipient (donatario) of the donation is responsible for declaring and paying the ISD. Donors are not liable, but they may still face capital gains taxes.
Which rules apply if the donor or donee is a foreigner?
-
Spanish tax residents: regional rules apply based on the recipient’s residence.
-
Non-residents: state law generally applies, although EU/EEA residents may opt for regional rules if there is a valid connection (e.g., location of donated property).
This distinction can result in very different tax burdens, depending on whether regional reductions (up to 99%) are applicable.
Taxable base, rates, and tax benefits
-
Taxable base: actual market value of donated assets.
-
Progressive tax rate and multiplying coefficient: based on asset value and kinship group.
-
Regional benefits:
-
Madrid: up to 99% reduction between parents and children.
-
Andalusia and Valencia: similar deductions, but subject to conditions.
-
Tax benefits vary greatly. Consulting an expert ensures you apply the most favorable regime.
How to formalize a donation in Spain?
-
Real estate: must be executed in a public deed before a Spanish notary.
-
Movable assets and cash: written agreement and bank transfer with proper documentation are recommended.
Also:
-
All documents must clearly state the donation intent and the identification of the asset.
-
If the recipient is a minor, special procedures apply.
Additional taxes to consider
-
IRPF or IRNR for the donor: capital gains may be taxable depending on residence status and type of asset.
-
“Donors who are non-residents may also be subject to wealth tax in Spain, depending on the value and location of the assets donated.”
-
-
Municipal Capital Gains Tax (IIVTNU): due when donating urban property, calculated on cadastral value increases.
This means donors may still face tax liabilities even if the recipient gets the asset for free.
Requirements and documentation for foreigners
-
“A NIE (Número de Identificación de Extranjero) is required for both the donor and the recipient to formalize the donation.”
-
Documents:
-
Proof of ownership.
-
IBI (property tax) receipt.
-
Energy certificate (real estate).
-
Proof of payment (e.g., bank receipts).
-
Tax residency certificate (Form 720 if applicable).
-
-
Tax filing: ISD (Form 651) must be submitted within 30 business days of the donation.
-
Registration: real estate donations must be registered in the Land Registry.
Key tips for foreigners donating in Spain
-
Conduct cross-border tax planning to avoid double taxation.
-
Seek professional advice: legal and tax experts like LexTax can ensure compliance and reduce liabilities.
-
Be transparent regarding the origin of funds under anti-money laundering regulations.
-
Consider timing: executing donations in years of lower tax exposure or before significant legislative changes may reduce costs.
“Understanding the applicable double taxation treaties can help you reduce your overall tax burden when donating across countries.”
Common mistakes to avoid when donating from abroad
-
Assuming the same rules apply across all Spain (they don’t—regional rules matter).
-
Failing to register or declare the donation.
-
Forgetting donor’s capital gains liability.
-
Using informal agreements (e.g., private contracts without notarization).
-
Ignoring reporting obligations in the donor’s home country.
Conclusion
Making a donation in Spain as a foreigner involves several legal and tax considerations. However, with the right advice, the process can be smooth and tax-efficient. LexTax offers expert legal and tax advisory services tailored for international donations in Spain, including support through Extracts, our cross-border property and inheritance service.
Frequently Asked Questions (FAQs)
Can I donate to someone in Spain while living abroad?
Yes. You can donate from abroad, but you must comply with Spanish legal and tax obligations, including filing Form 651 and possible notarization of deeds.
Do EU residents have tax advantages when donating in Spain?
Yes. EU/EEA residents may apply for regional tax reductions if the donated asset or recipient has a regional connection.
Is it better to donate money or property?
It depends. Donating property usually incurs additional taxes like municipal capital gains. Donating money may be simpler but still requires formal documentation.
Does the donor pay tax too?
Yes, potentially. If there is a gain on the asset (e.g., real estate), the donor may pay capital gains tax under IRPF or IRNR.
How do I make sure the donation is legal?
Get legal advice, use a public notary when needed, and ensure proper documentation and registration are completed.