Emily Carter is American and has lived in Valencia since 2021 with her partner. Her grandmother Ruth, a Texas resident, set up a revocable living trust with her assets years ago, and Emily is one of its beneficiaries. In April 2026 the trustee transfers 80,000 dollars to her Spanish account "to help her with the house". Emily asks her bank what that is for tax purposes, and the bank hands the question back to her. In Spain there is no box for trusts; the arrangement has to be translated into institutions the law does recognise.
A gap in the law, with a settled approach
Law 29/1987 on the Spanish inheritance and gift tax (Impuesto sobre Sucesiones y Donaciones, ISD) does not mention trusts. Nor does the Civil Code regulate them. That does not mean that distributions from a trust fall outside the tax: it means you have to analyse what really happens from the Spanish point of view.
The approach applied by the Spanish tax authorities, which has become established in practice, is to look through the trust: the fiduciary entity is disregarded as if it were a third party, and the focus is on the relationship between whoever contributed the assets (the settlor) and whoever receives them (the beneficiary). The trustee is an intermediary; the gratuitous transfer takes place from the settlor to the beneficiary.
No single ruling serves as a universal recipe: each trust has its own deed, powers and history, and the analysis is carried out on the specific trust deed.
When the tax arises
The legal provision that does exist and fits is article 24.3 of Law 29/1987: any acquisition of assets whose effect is suspended by a condition, a term, a fideicomiso (a fiduciary arrangement) or any other limitation is deemed to take place on the day those limitations disappear.
Translated to a trust: while the assets are in the trust and the beneficiary only has an expectation, there is no taxable acquisition. The tax accrues when the beneficiary actually receives the assets or acquires a right over them without limitations.
The nature of that acquisition depends on whether the settlor is alive:
| Situation | How Spain treats it | Kinship that counts | Form when the State manages |
|---|---|---|---|
| Distribution while the settlor is alive | Gift from the settlor to the beneficiary | Settlor – beneficiary | 651 |
| Distribution after the settlor's death | Acquisition on death from the settlor | Settlor – beneficiary | 650 |
| Assets still in the trust with no present right | No accrual until they are distributed or the right vests | — | — |
With a revocable trust like Ruth's, in which the settlor keeps control, the reading that the transfer comes from her is especially clear.
Emily's case, step by step
- Taxable event. Ruth is alive: the distribution is a gift from Ruth to Emily.
- Emily's residence. She lives in Spain: personal liability (article 6). She is taxed even though the trust, the trustee and the money all originate in the United States.
- Region. It is a gift of money to a resident recipient: the rules of the autonomous community (Spain's regions) where Emily lives apply, under the five-year rule (article 32.2.c of Law 22/2009). Emily has not lived in any other region since arriving in Spain: Comunitat Valenciana.
- Conversion. The dollars are converted at the exchange rate on the day of accrual. If on that day the dollar were worth 0.90 €, 80,000 USD would be 72,000 €.
- Kinship. Granddaughter of the settlor, aged over 21: group II.
- Tax on the State scale, with no reduction on gifts (article 20.5) and no regional benefits, to show the order of magnitude: 7,943.98 € + 15.3 % of 106.93 € = 7,960.34 €. The Valencian rules and their requirements can change the figure a great deal.
- Deadline. Thirty working days from the day after receipt.
If Ruth dies and the trustee distributes afterwards, the acquisition will be on death: the deceased did not live in Spain, so the State's Agencia Tributaria (the Spanish tax agency) manages the tax with Modelo 650, and Emily can apply the regional rules indicated by the second additional provision of Law 29/1987. We explain this in I am inheriting assets located abroad.
You can describe the structure of your trust to us (who set it up, whether it is revocable, what you have received and when) in the inheritance form. We will ask for the trust document before giving an opinion.
Looking through the trust simplifies things, but it does not solve everything. If what is distributed is income generated by the trust (interest, dividends) rather than the capital contributed, there is room to argue that part of it should be taxed in the beneficiary's income tax (IRPF) instead of, or as well as, in gift tax. Whether the beneficiary has powers of control also matters. It is an area where administrative criteria are evolving: we warn of the risk, document the position and do not guarantee that the authorities will share it.
What happens on the other side
How the United States treats the distribution (for its federal gift or estate tax, or the trust's reporting obligations) is confirmed by the family's US adviser. If some similar tax was paid there by Emily, article 23 of Law 29/1987 would allow her to deduct it, up to the Spanish average rate. We give no opinion on US law; we coordinate with whoever the family appoints.
Reporting obligations in Spain
Being a beneficiary of a foreign trust can create reporting obligations in Spain independent of gift tax. Modelo 720, the return reporting assets held abroad, covers not only holders of accounts abroad but also representatives, authorised persons, beneficiaries, people with power of disposal and beneficial owners (article 42 bis of Royal Decree 1065/2007). If Emily holds any of those positions over the trust's assets, or leaves distributed money in an account in the United States above the 50,000 € threshold in one block, she will have to file it. The guide the three blocks of the 720 summarises the key points.
That same look-through logic can lead the authorities, with some trusts, to regard the beneficiary as the beneficial owner of the assets before any distribution. That is why the document is analysed once at the start, not each time a transfer arrives.
Documents worth gathering
- A full copy of the trust deed and its amendments.
- The identity of the settlor, the trustee and the beneficiaries.
- Whether it is revocable or irrevocable, and the date of any change.
- Proof of each distribution, with date and amount.
- The settlor's death certificate, if they have died.
- Any tax paid in the trust's country.
The guide trusts and Spanish taxation develops the reasoning in more detail.
Emily filed her gift self-assessment in Valencia with the distribution converted into euros, attaching the translation of the trust document. Her grandmother is still alive and the rest of the assets remain inside the trust, with no accrual in Spain for now.
Anglo-American trusts with beneficiaries living in Spain are one of the situations we deal with at Salama Tax for inheritance and gifts, always in coordination with the adviser in the trust's country.