A donation is a free transmission of ownership of assets or rights.It differs from an inheritance as the donation is an acquisition inter vivos, i.e. made between living persons. The donations can be simple (where the only requirement is the acceptance), or onerous (which imposes some burdens or conditions to the beneficiary. Until the donation is accepted by the receptor, it remains a unilateral contract.
The Tax must be paid by the beneficiary of the donation. Whether the donation is taxable in respect to ISD, depends on:
- whether the receptor is resident or non-resident in Spain and in which Autonomous Community,
- where the real estate or the rights donated are situated (Spain/ Autonomous Community or abroad),
- the grade of relationship between donor and receptor and the
- regulations established by the Autonomous Community.
lf the beneficiary is non-resident in Spain, but the property or right is situated in Spain, the national regulations apply, however, the receptor has the option to apply reductions that of the respective Autonomous Community where the property or right is situated.
Since 2019 there is a significant reduction (99% exemption) on this tax in Andalusia, under some conditions such if the donation is made between spouses and direct relatives (children and adopted children, parents and adopters) up to an amount of 1.000.000 €.
The transfer must be formalised in a title of deeds, and if the donation is cash or deposits, the donor needs to justify the origin of the funds.
If the donation is made to other relatives or people not belonging to the family, ISD tax (impuesto de sucesiones y donaciones ) will apply according to different rates and multiplying factors, depending on the grade of relationship.
If the value of the property donated is lower than the minimum taxable value (cadastre value multiplied by a coefficient given by the Junta de Andalusia for properties located in this region), the tax office can revise the values given and tax accordingly. The deadline to pay the tax is thirty business days.
Capital gains tax IRPF
Donors, who are resident in Spain, must declare the donation in the next income tax retum (IRPF), and if there is a gain between the price the property was bought and the value of the donation pay taxes (Tax rate 19-23 % ). However, there are some possibilities of reduction and/or exemptions. If what is generated is a loss (because the current actual value is less than the acquisition value) this loss will not be deductible in the IRPF.
If the donation is a transmission of an urban property, there will be municipal plusvalía to be paid by the receptor. (There are exemptions to the payment if the transmission is made between spouses or were no increase of the cadastral value or if the transmission does not imply a capital gain, but a loss. In any case donation deeds will need to be filed at the local town hall within 30 days.