Giulia has lived in Madrid since 2015, works for a consultancy and holds dual Italian and Spanish nationality. Her father, who lives in Florence, wants to give her the family house in Tuscany during his lifetime, valued at 350,000 €, and has already spoken to an Italian notary. In Italy they have explained to him what is paid there. Nobody has explained to Giulia that, because she lives in Madrid, the gift is also taxed in Spain, nor before whom.
Why a house in Italy is taxed in Spain
Article 6 of Law 29/1987, the law on the Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones, ISD), charges the tax under personal liability to taxpayers whose habitual residence is in Spain, regardless of where the assets are located. For gifts, the taxpayer is the recipient (article 5.b). Giulia lives in Spain: the gift of the Tuscan house is a Spanish taxable event.
The fact that the donor does not live in Spain, that the deed is signed in Italy and that the property has never been on Spanish territory changes nothing. The only thing that would change the result is if Giulia were not resident in Spain on the date of the gift.
Who manages it: the State, not the region
The sharing of the tax among the autonomous communities (Spain's regions) under Law 22/2009 assigns gifts of property to the region where the property is situated (article 32.2.b). A property in Italy is not situated in any region, so that yield is not ceded. It is managed by the State's Agencia Tributaria (the Spanish tax agency), using Modelo 651, the gift tax return.
Law 29/1987 confirms this indirectly: its articles 21.3 and 22.4 apply the State scale and coefficients to gifts of property located abroad. But the second additional provision, in its section One.1.d), recognises the right of residents in Spain to apply the rules of the autonomous community where they live. Giulia, who lives in Madrid, files with the State and can apply the Madrid rules, with their reductions and reliefs if she meets the requirements those rules impose.
| Item | Giulia's house |
|---|---|
| Liability | Personal (art. 6 LISD) |
| Administration | State tax agency |
| Form | 651 |
| Rules she can apply | Those of Giulia's region of residence (AP 2.1.d LISD) |
| Deadline | Thirty working days from the day after the gift |
| Deduction for tax paid in Italy | Yes, with a limit (art. 23 LISD) |
LISD is the inheritance and gift tax law and AP its second additional provision.
The value: there is no reference value
For property located in Spain, the base is the cadastral reference value. A house in Italy has no Spanish reference value. The general rule in article 9.2 applies: market value, understood as the most likely price between independent parties, unless the declared value is higher.
That opens the door to a value check. It is advisable to have an independent valuation as at the date of the gift, because the value stated in the Italian deed, calculated under Italian tax rules, need not match market value. If the Agencia Tributaria disputes the value, the procedure is the one we describe in I have received a value check.
How paying twice is avoided
Italy will tax the gift under its own rules. What Giulia pays there and whether that tax is similar to the Spanish one is confirmed by the Italian adviser she appoints; we give no opinion on Italian law.
In Spain, article 23.1 of Law 29/1987 allows the lower of two amounts to be deducted: what was actually paid abroad in a similar tax, or the result of applying the Spanish effective average rate to the part of the base corresponding to assets located abroad and taxed there.
The calculation, step by step
We use the State scale in article 21, with no kinship reduction on gifts (article 20.5) and no regional benefits, to show the mechanism; with the Madrid rules Giulia can choose, the result would be different. We assume the Italian adviser certifies a payment in Italy of 14,000 €.
- Taxable base and net taxable base: 350,000 € (market value according to the valuation).
- Gross tax: 40,011.04 € for the first 239,389.13 € plus 25.5 % of 110,610.87 € = 68,216.81 €. Coefficient 1 (group II, low pre-existing wealth).
- Effective average rate: 68,216.81 / 350,000 = 19.49 %.
- Limit by average rate: 19.49 % × 350,000 € = 68,216.81 € (the whole base is abroad).
- Tax paid in Italy: 14,000 €.
- Deduction: the lower, 14,000 €. Payable in Spain: 54,216.81 €.
If Giulia lived outside Spain, the gift would not be taxed here, because the house is not located on Spanish territory (article 7).
Article 25.2 of Law 29/1987 provides that, for deeds authorised by foreign officials, the limitation period runs from when the document is presented to any Spanish authority. If Giulia does not declare the gift and years later uses the Italian deed for something in Spain (a mortgage, a Modelo 720, a sale), the limitation period starts to run at that point. Not declaring does not make the tax disappear; it postpones it, with interest.
After the gift
The house keeps generating Spanish obligations for as long as Giulia is resident:
- Modelo 720. A property abroad worth more than 50,000 € is declared in the property block (code B) on this return of assets held abroad the following year. If in later years the total value of that block rises by more than 20,000 € compared with the last return, it has to be filed again.
- Income tax (IRPF). If the house is not let, it produces imputed property income; if it is let, rental income. Whatever Italy taxes on that income is coordinated through the treaty between the two countries, and the Italian side is confirmed by the adviser there.
- A future sale. The acquisition value will be the one resulting from the gift tax rules, not exceeding market value (article 36 of the Income Tax Act). A solid valuation today protects the sale tomorrow.
- Wealth tax. If Giulia's total wealth exceeds the thresholds for the tax, the house counts.
Giulia's father, as he does not live in Spain, has no consequences in Spanish income tax for making the gift. What happens in his Italian tax is reviewed by his adviser.
The guide to international inheritances and gifts brings these situations together, and the guide on how to fill in Modelo 720 explains the following year's return. If the asset inherited or given were money, the rules are different: parents who live abroad and want to give money.
If you are going to receive a property located outside Spain, tell us the country, value, planned date and your region of residence in the inheritance form before signing. We coordinate the Spanish side with the adviser you appoint in the other country.
Giulia signed in Florence in June, commissioned a valuation from an independent company and filed Modelo 651 with the Agencia Tributaria within the thirty working days, applying her region's rules.
Transactions of this kind, with two tax systems and a single asset, are a regular part of Salama Tax for inheritance and gifts.