If you’re living in Spain, understanding the local gift tax (Impuesto sobre Donaciones) is crucial when transferring assets to family, friends, or charitable organisations.
For British expats, retirees, or business owners, Spanish gift tax can significantly impact the amount of wealth passed on, especially as the value of your assets increases.
If you’re thinking of gifting money, property, or other valuable assets in Spain, understanding Spanish Gift Tax, known locally as Impuesto sobre Donaciones is essential.
Whether you’re a British expat supporting your children, a retiree managing your estate, or a business owner passing on assets, knowing how this tax works could save you and your loved ones thousands of euros.
Gift tax in Spain can be complex. It varies significantly by region and depends on the relationship between giver and receiver.
Our guide explores how Spanish gift tax works, who pays it, when it applies, and how you can reduce or even avoid unnecessary tax burdens with proper planning.
The Spanish Gift Tax applies when an individual receives a gift of value, money, real estate, shares, or any other asset.
Unlike some countries, Spain taxes the recipient, not the giver.
This tax is separate from inheritance tax in Spain, although the rules are quite similar. Both taxes fall under the broader umbrella of Spain’s succession and donation tax laws and often can confuse expats unfamiliar with local rules.
In Spain, the rules are that it is always the recipient of the gift, donation and inheritance, who is responsible for paying tax.
This applies whether the gift comes from a family member, friend, or even a business partner.
This means that if you’re wanting to gift your child a property or transfer a large sum of money to a friend, the receiver must file and pay the appropriate tax, even if they were unaware of such an obligation.
Gift tax in Spain is progressive which means that the higher the value, the higher the tax.
However, the real complexity comes from who you’re giving to and where the recipient lives.
The general rule in Spain is that if:
The relationship parameters are the same as for inheritance tax rules which you can read about here.
| Group | Relationship | Base Allowance (National Level) |
|---|---|---|
| Group I | Children under 21 | €47,859.00 |
| Group II | Children over 21, spouses, parents | €15,957.00 |
| Group III | Siblings, nieces/nephews, in-laws | €7,993.00 |
| Group IV | Unrelated individuals | €0 |
Important: These are national rules. Each autonomous region can offer higher or lower allowances or even apply reductions.
Spain’s regional variation is a unique aspect of the gift tax.
Spain’s 17 autonomous communities have the power to modify gift tax rates, deductions, and reductions. While Madrid and Andalusia offer generous tax reductions, other regions such as Catalunya or Castilla y León may impose higher taxes on gifts.
Some examples in numbers:
Understanding these regional differences is essential for planning your gifts efficiently.
This is a question we are often asked at Private Client Consultancy.
If either the giver or the recipient is a non-resident, Spanish Gift Tax can still apply in specific situations.
Cross-border gifts can trigger double taxation unless treaties or credits apply.
Get in touch with a Private Client Consultancy advisor today to see how we can help you.
The rule in Spain is that the value of a gift is assessed at the time of the transfer, using fair market value principles. This will apply to:
Once the gift’s value is calculated, deductions based on the relationship and regional rules apply. Then, the progressive tax bands are applied:
| Taxable Base (€) | Tax Rate (%) |
|---|---|
| 0 – 7,993 | 7.65% |
| 7,994 – 31,956 | 10.20% |
| 31,957 – 79,881 | 15.30% |
| 79,882 – 239,389 | 21.25% |
| 239,390 – 398,778 | 25.50% |
| 398,779 – 797,555 | 29.75% |
| 797,556+ | 34.00% |
The rates above are multiplied by a factor that depends on the relationship and the assets of the recipient:
| Pre-existing net wealth (Euro) | Group I and II | Group III | Group IV |
|---|---|---|---|
| 0 - 402,700 | 1.00 | 1.5882 | 2.0 |
| 402,700 - 2,007,400 | 1.05 | 1.6676 | 2.1 |
| 2,007,400 - 4,020,800 | 1.1 | 1.7471 | 2.2 |
| 4,020,800 + | 1.2 | 1.9059 | 2.4 |
Once again, the rules of Spanish Gift Tax are the same as Inheritance Tax.
A British expat living in Valencia wishes to gift a property valued at €500,000 to their child.
Since direct descendants receive considerable allowances in this region, the child may be eligible for a reduction that reduces the taxable amount, meaning less tax would be payable on the gift.
However, had the recipient been a more distant relative, such as a cousin, the tax rate would be much higher, and the allowances would be significantly lower.
Additionally, property gifts could involve capital gains tax in certain circumstances, depending on the asset’s appreciation in value.
Planning your gift early can help you minimise tax liabilities.
If you are a retiree or an expat, gifting property or assets as part of a broader estate planning strategy can reduce the tax burden on your beneficiaries.
Additionally, you might want to consider the timing of your gift, as the tax implications can change based on regional rules or the size of the gift.
For example, making a gift early may allow the recipient to benefit from the current tax rates and allowances, while waiting until later could see them facing higher tax rates.
If you’re considering gifting assets in Spain, it’s crucial to be aware of the gift tax implications.
By understanding the tax rates, regional variations, and allowances, you can make more informed decisions about how to transfer wealth efficiently.
Planning ahead and seeking professional advice will ensure that your gifts are structured in a way that maximises benefits and minimises tax liabilities.
If you’re unsure about the specifics of your situation, you should consult with one of our expert advisors who understands the Spanish system.
At Private Client Consultancy, we can guide you through the process, help you navigate regional tax laws, and ensure that you’re compliant with all legal requirements regarding Spanish Gift Tax
Yes, if the amount is small and within regional allowances, particularly between close family members in regions like Madrid.
Yes, if the recipient lives in Spain or if the gifted asset is located in Spain.
You can’t avoid it entirely, but careful planning using allowances, regional benefits, and staggered gifts can reduce the burden significantly.
No. Gift tax applies to lifetime transfers, while inheritance tax applies after death. However, they share similar rules and exemptions.
Disclaimer: Tax laws, rates, and reliefs are subject to change and may vary depending on individual circumstances and residency status. Any information provided on this website is based on our understanding of current regulations (or the date of when the content was published) and should not be considered personalised financial or tax advice. As tax obligations can differ across regions, countries and evolve over time, we strongly recommend seeking professional advice tailored to your specific situation before making any financial decisions.
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