Spanish gift tax: who pays it, how much, and why the deed changes everything

What Spanish gift tax charges

Spanish gift tax charges what one person receives for nothing from another during that person's lifetime. Article 3.1.b of Act 29/1987 puts it this way: the acquisition of assets and rights by donation or by any other gratuitous transaction between the living.

It is the other half of the same tax that charges inheritances, and that is where the confusion starts, because the statute is the same but the rules are not.

The first thing to fix is who pays. Article 5.b names the donee, the person receiving, as the taxpayer. Not the donor. That allocation cannot be changed by agreement between the parties: even where a father undertakes to pay his son's tax, the son remains the person liable as far as the tax office is concerned, and what the father hands over to pay it is itself another gift.

Four things a gift does not have

Almost everything people know about Spanish inheritance tax stops being true when you move to gifts.

There is no household-goods presumption. The 3 % that article 15 adds automatically to an estate lives in the section on acquisitions on death. Nothing is added to a gift.

There is no state kinship reduction. This is the most important difference and the least often stated. Article 20.5 is categorical: on acquisitions by way of gift, if the region has not legislated reductions, "the net base shall coincide, in every case, with the taxable base". It is not that the reduction is smaller: it does not exist. The 15,956.87 € a child deducts on inheriting has no equivalent on receiving during life, and only two regions, Aragon and the Valencian Community, have written one of their own.

Almost no debts come off. On an inheritance you deduct the deceased's debts and the costs of the last illness, burial and funeral. On a gift, article 17 admits only a debt secured by a real right over the very asset given, and only where the recipient has formally assumed the obligation to pay it. Receiving a flat with a mortgage and taking the mortgage on does reduce the base; any other debt of the donor does not.

There is no extension. Article 67.1.b of the Regulation gives thirty working days from the day after the act, against six months for an inheritance. And article 68.1 offers the extension to "acquisitions on death" alone. An heir running late can buy six more months; a recipient cannot buy a day.

Which region charges: here there is some room

For an inheritance the region is where the deceased lived, and nobody decides that. For a gift the connecting factor is different, and it has practical consequences.

Article 32.2 of Act 22/2009 splits two cases:

• Gift of real property: taxed in the region where the property is located (letter b).
• Gift of anything else, money included: taxed in the region where the recipient lives (letter c).

The donor's region appears in neither. A father resident in Oviedo who gives money to a daughter living in Santander does not apply Asturian rules: he applies Cantabrian ones, because where she lives decides. And if what he gives is the Oviedo flat, Asturian rules apply, because where the flat is decides.

Where one document gifts assets falling in different regions, article 32.3 splits the revenue between them by applying to each part the average rate its own rules would give the total value transferred.

How the figure is built

The chain is short, because two of the links an inheritance has are missing.

1. Taxable base. The net value of what is given (art. 9.1.b). For real property that value is the Catastro's valor de referencia unless the declared value is higher (art. 9.3), the same rule that governs transfer tax. Only the article 17 debt comes off it.

2. Net base. Equal to the taxable base, except in Aragon and the Valencian Community, or where a specific reduction applies such as the article 20.6 one for gifting a family business, which requires the donor to be 65 or over or permanently and wholly incapacitated, to stop performing management functions, and the recipient to hold what they receive for ten years.

3. Gross tax. The scale applies. This is where four regions have a reduced tariff for children, parents and spouses, and all of them condition it on a public deed except Cantabria.

4. Tax due. Multiplied by the article 22.2 coefficient, which rises with the recipient's own prior wealth and with kinship distance: 1 for children, parents and spouses, 1.5882 for siblings, uncles, aunts, nephews and nieces, and 2 for everyone else.

5. Tax payable. The regional rebate comes off. In eleven regions that rebate runs from 99 % to 100 % and takes practically everything, provided the formal conditions are met.

The condition almost nobody explains properly

Here is the part that separates a three-hundred-euro bill from a thirty-thousand-euro one.

Ten of the fifteen regions condition their rebate on the gift being recorded in a public document. And several add a second condition where what is given is money or a bank balance: the origin of the funds must be evidenced and stated in the deed itself.

It is not a formality. It is the difference between paying and not paying:

• Madrid requires a public document where the taxable base passes 10,000 €, counting what the same person gave over the preceding three years, and requires the origin of the money to be evidenced. Below that 10,000 € it asks for no deed, and gifts that do not reach 1,000 € are rebated 100 % with no condition at all.
• Andalusia sets the threshold at 5,000 €, with the same three-year count, and allows one month to raise a cash transfer to a public deed.
• Murcia and Castilla y León require a public document and an evidenced origin, with no threshold.
• La Rioja requires a notarial document, with one escape for money: a bank transfer plus a self-assessment filed inside thirty working days, accompanied by the transfer receipt and a private document declaring the origin.
• Castilla-La Mancha requires a deed recording the origin and situation of the assets, and that anything given other than money be held for five years.
• The Canary Islands require a public document and add a condition of their own: the rebate does not apply if the recipient already used it in the previous three years.

On a 200,000 € gift from father to daughter in Madrid, with a deed and an evidenced origin the bill is 316.21 €. Without the deed it is 31,621.21 €. A hundred times more, for a piece of paperwork.

The cheap scale is not the cheap region

Catalonia and Galicia apply to gifts to children, parents and spouses recorded in a public deed a scale of 5 % up to 200,000 €, 7 % up to 600,000 € and 9 % thereafter. Beside the 7.65 to 34 % state scale that looks like a giveaway, which is why they are often described as the cheapest regions to give in.

It is exactly the reverse, and the reason is that they are pulling the wrong lever.

On that same 200,000 € gift from parent to child:

Cutting the rate is a discount. Rebating the tax due is a pardon. Eleven regions chose the second.

Asturias deserves a note of its own, because its reduced scale is also the most demanding: it needs a public deed before the filing deadline expires and the recipient's own wealth, excluding their main home, not to exceed 402,678.11 €. Without either, you fall back to the general scale, which reaches 36.50 %.

Splitting a gift across years does not work

It is the most repeated piece of advice in forums and offices: give a little at a time so as not to climb a progressive scale.

Article 30.1 disarms it. Gifts a single donor makes to a single recipient within a three-year period, counted from the date of each, count as one transmission. And to determine the tax you apply, to the net base of the current gift, the average rate corresponding to the theoretical net base of the accumulated total.

An example shows the effect. An uncle gives his nephew 100,000 € in Madrid and another 100,000 € two years later. The second gift, looked at alone, would produce gross tax of 12,407.03 €. Accumulated, the theoretical total of 200,000 € produces an average rate of 15.81 %, and that rate on the current 100,000 € gives 15,810 €. The accumulation adds 3,402.97 €.

And there is a second turn of the screw: if the donor dies within the following four years, article 30.2 adds the gifts to the estate with the same average-rate mechanism.

Aragon and the Valencian Community additionally measure their own ceilings over a five-year window, so in those two regions an earlier gift can consume the next one's reduction even after the article 30 three years have passed.

Gift tax is not the whole bill

The tax coming to zero does not mean giving is free.

The donor may pay income tax. Articles 33.1 and 34.1.a of Act 35/2006 treat a gift as a disposal: if the asset is worth more than when it was bought, the donor declares a capital gain on the difference, even though nothing was received. And article 33.5.c refuses the opposite case: if the asset is worth less, the loss does not count. The asymmetry is deliberate.

None of this happens on death. The so-called plusvalía del muerto is exempt, which is why, for a heavily appreciated property, the comparison between giving and leaving can tip towards the inheritance even where gift tax comes to zero.

The recipient may pay municipal plusvalía. If what is given is urban property, article 106.1.a of the consolidated Local Finance Act places the tax on the increase in land value on the acquirer in gratuitous transfers. It is a municipal tax, with its own thirty-working-day deadline, and it is payable even where gift tax came to zero.

When and how to file

Thirty working days from the day after the act, under article 67.1.b. Since Saturdays, Sundays and public holidays are excluded, in practice the real window runs to about forty-five calendar days, and a regional or local holiday can stretch it further still.

The reference form is the modelo 651, though each region has its own version and its own electronic office, because administration of the tax is devolved. Self-assessment is compulsory in fourteen of the fifteen mainland regions under article 34.4 of Act 29/1987; the only one missing from that list is Extremadura, where you may still file a declaration and wait for the administration to assess it.

Filing late does not merely cost a surcharge. Madrid and Andalusia expressly condition their rebate on it being applied to what was declared without a prior demand from the administration, and Madrid adds that raising a private document to a public deed after the voluntary period has closed puts the rebate out of reach. In this tax, being late can cost the whole relief.

What this explanation leaves out

The Basque Country and Navarre have their own foral regimes and none of the above governs them. Ceuta and Melilla apply article 23 bis, which rebates 50 % of the tax on lifetime gifts without raising that percentage to 99 % for children and spouses as it does for inheritances.

Nor does this cover the specific reductions for gifting a family business, shareholdings, farms, heritage assets or money to buy a first home, which exist in almost every region with conditions of their own and long holding periods. If your case is one of those, the general figure on this page is a starting point, not the answer.