Lucas, aged 29, received 100,000 € from his mother by bank transfer in February. He had read that in his region gifts from parents to children "pay 1 %" and filed his self-assessment applying the relief. Eighteen months later he receives a proposed assessment: the relief is refused because the gift was not formalised in a public deed, and he is asked for the full tax plus interest. Lucas had looked at the percentage. He had not looked at the conditions.
What exactly a relief on the tax due is
The Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones, ISD) is calculated in layers. First the taxable base (what is received). Then the net taxable base, subtracting reductions. The scale and the kinship coefficient are applied to that, giving the tax payable. Only at the end, on that figure, are deductions and reliefs applied.
Article 23.2 of Law 29/1987 authorises the autonomous communities (Spain's regions) to approve whatever deductions and reliefs they see fit, which are applied after the State ones. A 99 % relief means that only 1 % of the calculated tax is paid. But each region decides whether it has one, for which kinship groups, with what limits on amount and with what requirements, and changes it whenever it changes its law.
That is why we do not give a list of regions and their percentages here: such a list goes out of date with every regional budget law, and a percentage read on an old website is exactly Lucas's mistake. What is stable is the method for finding out whether it applies to you.
Which region decides whether you have a relief
The relief that applies is that of the region whose rules govern your gift, and that depends on the asset:
| What is given | Region whose rules apply | Legal basis |
|---|---|---|
| Money, shares, movable assets, resident recipient | The recipient's region of residence (most days in five years) | Arts. 32.2.c and 28.1 Law 22/2009 |
| Property in Spain, resident recipient | The region where the property is | Art. 32.2.b Law 22/2009 |
| Property in Spain, non-resident recipient | The region where the property is | AP 2.1.c LISD |
| Movable assets in Spain, non-resident recipient | The region where they spent the most days in five years | AP 2.1.e LISD |
| Property outside Spain, resident recipient | The recipient's region of residence | AP 2.1.d LISD |
AP stands for the second additional provision of the inheritance and gift tax law (LISD). The donor's residence appears in none of the rows. Parents who live in a region with a relief do not "transfer" it to a child who lives in another.
The requirements usually imposed
Each region sets its own, but certain conditions recur in the regional rules. You have to check which ones yours requires on the date of the gift:
| Common requirement | What it is for | How it is proved |
|---|---|---|
| Public deed of gift | Giving a certain date and fixing what is given | A deed before a Spanish notary or, with caution, a foreign one |
| Proof of the origin of the funds or the means of payment | Preventing gifts of untraceable cash | A bank transfer identified in the deed |
| Kinship in group I or II | Limiting the benefit to children, grandchildren, spouse, parents | Family book, Civil Registry certificates |
| Recipient resident in the region | Keeping the benefit for its residents | The five-year rule |
| Filing on time | Linking the benefit to voluntary compliance | Self-assessment within thirty working days |
| Use of the money (sometimes) | Habitual home, business | Purchase deed or registration of the activity within a set period |
Some regions apply the relief with no limit on the amount; others cap it or scale it by bands. Some require the origin of the funds to be stated in the deed itself; having the bank receipt is not enough.
What happens if a requirement is missing: Lucas's case
With the State scale in article 21 of Law 29/1987, which we use only as a reference because the regional scale may differ, and with no kinship reduction on gifts (article 20.5), Lucas's figures would be:
- Net taxable base: 100,000 €.
- Gross tax: 9,166.06 € + 16.15 % of 20,119.48 € = 12,415.36 €. Coefficient 1.
- With a 99 % relief, Lucas would have paid 1 %: 124.15 €.
- Without the relief, for lack of a deed: 12,415.36 €.
- Difference to regularise: 12,291.21 €, plus late-payment interest from the end of the deadline.
- In addition, if the authorities consider that the self-assessment failed to pay the tax due, they may open penalty proceedings.
The relief works on an all-or-nothing basis. There is no "partial relief for having nearly got it right".
Many regional rules make the deed or filing on time a condition of the benefit. Signing the deed after the inspection or filing late does not usually recover the relief. The requirements are met before the money is moved, not after the letter arrives. Nor do we guarantee that a favourable approach one year will hold the next: the rules in force on the date of each gift are reviewed.
The relief does not cover everything
Even if the gift tax comes to almost zero, there are costs the relief does not touch:
- The donor's income tax (IRPF) if what is given is a property, shares or funds with a latent gain. The gain is taxed even though the gift is relieved. We develop this in whether a lifetime gift is cheaper than an inheritance.
- The municipal plusvalía (a local tax on the increase in value of urban land) on gifts of urban property, payable by the recipient.
- Notary and land registry fees, which are the price of meeting the deed requirement.
- Aggregation. Article 30 of Law 29/1987 adds together gifts from the same donor to the same recipient within three years, and those made in the four years before an inheritance, for rate purposes. Some regions also limit the relief by cumulative amounts.
When someone lives abroad
A child who lives outside Spain and receives a property or money located in Spain can apply the regional rules that correspond under the second additional provision, including their relief, if they meet its requirements. If the money is not in Spain, there is no Spanish tax to relieve. This is explained in parents who live abroad and want to give money, and the overall picture in the comparison of reductions and reliefs by region.
If you are going to make or receive a gift and want to know what your region's rules require today, tell us the relationship, the residences, the asset and the planned date in the inheritance form. We review the requirements before signing and warn you of the points where the benefit is usually lost.
Lucas paid the difference. His sister, who received the same amount three months later, signed a deed with the transfer identified and kept the relief.
We deal with gifts where donors or recipients are outside Spain, where you also have to coordinate with the adviser in the other country, at Salama Tax for inheritance and gifts and in the guide to international gifts and reliefs.