Economic donations or donations of properties in Spain, which are understood as an assignment and free acceptance in which a person assigns money or property to another person, is regulated under the inheritance and donation tax in our Civil Code. The main difference between a donation and an inheritance is that, under the donation, the gifted property or asset is owned immediately by the recipient, while this is not the case when a person leaves property to another individual by means of a will.
Typically speaking, gifts are made to relatives or friends, but they can also be made to ONGs and foundations. In the latter case, these gifts are given for humanitarian reasons and are legally called ‘Donativo’ in Spanish, rather than ‘Donación’ (meaning charitable donations). For tax purposes, these charitable donations may be deducted from one’s. Spanish income tax (IRPF). Depending on the sum that was donated, between 30 and 75% of the donation can be deducted.
What is the donation tax in Spain on a property?
If the donation is a Spanish property, the taxation falls under the legislation of the autonomous community in which the property is situated. The recipient or donee must undergo an enrichment and assume the payment of the Plusvalía municipality tax.
Although we know that there is a national law regulating inheritance and gift taxes, each autonomous community may adapt the tax rate to their own needs. Throughout Spain, this tax rate ranges from 7.65% to 34%, depending on the autonomous community and the sum or value of the assets that are donated.
Age and kinship in gifts and donations.
Another interesting aspect to take into account when granting a gift or receiving a donation, is the degree of kinship and age of the donee. The reductions and bonuses are higher when the recipient is more than 21-years-old and is a direct relative.
Is it possible to cancel a donation in Spain?
In certain occasions, it is possible to grant the donation under certain conditions, such as donating the bare ownership. In other words, this would involve donating the property and reserving for yourself the usufruct and enjoyment of the property while you continue to live. It is also possible to cancel a donation when the donor is without descendants or has posthumous children. Another reason to revoke a donation is the ungratefulness or criminal attitude of the donee towards the donor or the donated property.
Need of a public deed.
One of the requirements for a donation’s validity is that it must be executed in a public deed. This notarial deed must specify the assets that are being donated and its existing charges.
Should you wish to obtain more information regarding taxation, how a gift tax must be filed or have any other questions related to the inheritance and gift tax, please do not hesitate to contact our law firm and team of advisers who will be pleased to attend you.