Over the last two years, Mateo's parents have paid for a €12,000 master's degree when he was already working, bought him an €18,000 car registered in his name, forgiven €15,000 they lent him for the deposit on commercial premises and, this month, are going to transfer €40,000 to him for the deposit on a flat. Mateo is 31, lives in Zaragoza and wants to know which of those things are gifts he should have declared with Modelo 651, the gift tax return. Probably all of them: the master's, the car, the forgiven debt and the transfer are acquisitions for no consideration, and those made in the last three years are added together to calculate the rate on the new one.
The rule: every acquisition for no consideration between living persons
Ley 29/1987, the inheritance and gift tax act, taxes as a chargeable event the acquisition of assets and rights by gift or by any other gratuitous legal transaction between living persons. The person liable is the donee, and the vehicle is Modelo 651, within the thirty working days following the gift. The law has no exempt minimum amount below which you need not declare: what has to be paid will depend afterwards on the scale, the reductions and the community's relief (each Spanish region sets its own), but the obligation to declare arises with the gift. The page on inheritances and gifts describes the whole tax.
"Any other gratuitous transaction" is what widens the perimeter. You do not need a deed that says "I give": it is enough for someone to become poorer so that another becomes richer without anything in return.
How each thing Mateo receives is classified
| Transaction | Is it a gift for tax purposes? | Why |
|---|---|---|
| Master's degree paid by the parents for an independent son | Yes, in principle | It is payment of the son's debt with the parents' money. It would be different if it formed part of the duty of maintenance towards a child who depends on them |
| Car bought by the parents and registered in the son's name | Yes | An indirect gift of the price: the asset enters the son's wealth without his paying |
| Forgiven loan | Yes | Forgiving a debt is an acquisition for no consideration in the amount forgiven |
| Transfer for the deposit on the flat | Yes | A gift of money, the most common kind |
| Documented loan, genuinely repaid | No, as long as it is repaid | There is consideration; if it is never repaid, it may be recharacterised |
| Birthday present of a customary amount | Grey area | State law sets no threshold; proportion to the donor's wealth and custom are weighed |
The three-year accumulation, with numbers
Article 30 of Ley 29/1987 provides that gifts from the same donor to the same donee within a period of three years are treated as a single transfer for assessing the tax: the base of the current gift is taxed at the average rate that would correspond to the notional base of the accumulated total. Splitting does not lower the rate.
Let us see it with Mateo's data, assuming everything comes from both parents in equal shares. Each parent is a different donor, so the accumulation is done separately for each:
- Previous gifts from each parent in the three years: (12,000 + 18,000 + 15,000) / 2 = €22,500.
- New gift from each parent: 40,000 / 2 = €20,000.
- Accumulated notional base per parent: 22,500 + 20,000 = €42,500.
- Rate applicable to the new €20,000: the average rate for a base of €42,500, not that for a base of €20,000.
- Illustrative effect: if under his community's scale the average rate for €20,000 were 8 % and that for €42,500 were 9.5 %, the tax on each new gift would go from €1,600 to €1,900, before reductions and relief. The percentages are fictitious: they are there to show the mechanism, not to calculate your case.
And there is a second, less friendly consequence: if the first three transactions were not declared, the new return puts them on the table, because to accumulate them they have to be entered.
If the donor or the donee lives abroad
The obligation to file does not disappear with distance, but it changes shape:
- A donee resident in Spain who receives money or assets from anywhere in the world: declares here on everything received.
- A non-resident donee who receives a property located in Spain, or assets or rights that are exercised or must be performed in Spain: declares here on that.
- A non-resident donee who receives money in a foreign account from a foreign donor: in principle, outside the Spanish tax.
Which community's rules apply in each combination, and when management falls to the Agencia Tributaria, the state tax agency, is set out in the table of competences for the ISD (the Spanish initials of the tax). Cases with family in several countries have their own guide in international inheritances and gifts.
What looks like a gift and goes down another road
- Gifts to a company. Legal entities do not pay this tax: the increase is taxed under corporation tax. There is no Modelo 651.
- Life insurance collected by a beneficiary other than the policyholder. It falls within the tax, but as a chargeable event of its own and not as an ordinary gift.
- Renouncing an inheritance in favour of a specific person. It is not a pure renunciation: the law treats it as an acceptance followed by a transfer to the person favoured, with tax consequences on both sides.
- Payments between spouses within the household finances. It depends on the matrimonial property regime and on what the money is used for; if one spouse transfers a significant amount to the other for their separate property, it may be a gift.
A quick check before you receive
- Are you going to receive money, an asset or the payment of a debt of yours without giving anything in return? Then it is a gift.
- Have you received anything from the same donor in the previous three years? It goes into the accumulation.
- Does your community require a public deed or other conditions for its relief? You need to know before, not after.
- Is it a property? Add the plusvalía municipal, the local tax on the increase in land value, and the donor's gain in their income tax (IRPF).
- Do you have thirty working days free from the date? If not, prepare the data before the transfer.
Article 4 of Ley 29/1987 allows a gratuitous transfer to be presumed when the tax authorities' data show that one person's wealth decreases and, at the same time or afterwards, that of their spouse or descendants increases. A transfer from parents to a son followed by the purchase of a flat fits that picture exactly. Whoever does not declare does not go unnoticed: they only lose the chance to put things right with a recargo, the surcharge for filing late unprompted, instead of a penalty.
What is worth preparing with Mateo before the transfer
The €40,000 transfer has not yet been made. It is the best moment to put everything in order: rebuild the transactions of the previous three years with statements and invoices, decide whether those that were not declared are regularised at the same time, check the requirements for the relief under the Aragonese law in force, formalise the gift in a deed if that law requires it, and have the money travel from account to account with a clear description. None of this is difficult done beforehand; almost all of it is expensive done afterwards.
If you would like us to look at your case, the inheritance and gift form gives us what we need to tell you what has to be declared and what it will cost. And if the gift has already been made and the deadline has passed, read on in deadlines and extension in the ISD.