How much money can I gift my child tax-free in Spain?

In Spain there is no amount you can gift to a child tax-free that is valid for the whole country. The national tax law (Ley 29/1987, on Inheritance and Gift Tax (Impuesto sobre Sucesiones y Donaciones)) does not set any exempt amount for gifts: any sum, whether €1,000 or €100,000, is a gift subject to the tax. What your child pays depends on the region (autonomous community), because many apply reliefs that can bring the tax bill down to almost nothing. Even so, the return has to be filed within 30 working days.

Why there is no tax-free amount

Gift tax is a national tax, but it is devolved to the regions, which can approve their own rates, reductions and reliefs. The result is a very uneven map: in some regions a gift from parents to children is taxed very lightly if certain requirements are met, and in others the cost is considerably higher. And those rules change often.

To know which rules apply, there are two basic principles:

• Money, shares and other movable assets: in general, those of the region where the child receiving the gift has their habitual residence, not the parents’ region.
• Property: those of the region where the property is located.

If either of them lives outside Spain, the rules change.

How much is paid on a gift of €10,000 or €100,000

To get an idea of the order of magnitude, it helps to do the calculation under the national rules, which are the starting point for the regions. It works like this:

1. The taxable base is the value of what is gifted. The reductions for family relationship in the national law (€15,956.87 for a child aged 21 or over) apply only to inheritances, not to gifts, except in special cases such as the family business.
2. The progressive scale in Article 21 is applied to that base, starting at 7.65% and rising to 34%.
3. The tax is multiplied by a coefficient that depends on the family relationship and on the existing wealth of the recipient. For a child with existing wealth of up to €402,678.11, the coefficient is 1: the tax does not change.
4. The region can replace the national scale and coefficients with its own and add its own reductions and reliefs.

These are indicative figures: the actual tax may end up close to the national figure, somewhere in between or almost at zero, depending on the region and on whether you meet the requirements for its relief. Before transferring a significant sum, ask for the calculation under the rules currently in force in your region.

What happens if you give your child €10,000

If you transfer €10,000 to your child for the deposit on a flat or for a business, in legal terms it is a gift (donación): something handed over for free that they accept. These are the consequences:

• The person who pays the tax is your child, not you. They must file the self-assessment return within 30 working days of the gift, using their region’s form, or Form 651 (modelo 651) of the Spanish Tax Agency (Agencia Tributaria) in the cases managed by the State, such as when the recipient does not live in Spain.
• You are not taxed under personal income tax (IRPF) for gifting money, because money does not generate a capital gain. It would be different if you gifted a property or shares that are worth more than when you bought them.
• The formalities matter. A gift of money can legally be made without a notary, but many regions require, in order to apply their relief, that it be recorded in a public deed (escritura pública) and that the money moves in a traceable way, by bank transfer and not in cash. It is best to check this before transferring, not afterwards.
• Gifts are added together. Those made by the same parent to the same child within a period of three years are treated as a single gift for the purposes of the tax (Article 30 of Ley 29/1987), so splitting the amount does not lower the rate.
• It counts in the inheritance. Unless you expressly waive this, what you have gifted is deducted from what that child receives when your estate is divided: this is collation (colación), which we explain in how an inheritance is divided by law.

How much money can be transferred without it counting as a gift?

No amount stops being a gift because it is small. What turns a transfer into a gift is not the figure but the reason: that the money is given for free, with no obligation to pay it back and nothing in exchange. A transfer of €500 is just as much a gift as one of €50,000; the difference is practical, not legal.

Does the Tax Agency find out? It does not receive a notice of every transfer, but it has a great deal of information:

• Banks report accounts, their holders and their balances to it.
• They also report cash deposits and withdrawals of more than €3,000 (Form 171).
• Anti-money laundering rules oblige banks to monitor and, where appropriate, report unusual transactions.
• And when your child buys a home, the Tax Agency can ask them to show where the money for the deposit came from.

If a gift is not declared and the Tax Agency detects it, it can claim the tax with late-payment interest and a penalty for as long as it is not time-barred, which in general happens four years after the deadline for filing it ends. And in some regions, declaring late or without meeting their requirements can mean losing the relief.

What is not a gift: loans, maintenance and presents

A documented loan

If the money is going to be paid back, it is not a gift but a loan. So that the Tax Agency does not treat it as a disguised gift, it is advisable to sign a written contract with the amount, the repayment schedule and, if agreed, the interest; to file it within 30 working days with the regional tax office (in many regions, using Form 600), where it is exempt from transfer tax (ITP); and, above all, to make the repayments by bank transfer. In addition, the personal income tax law presumes that loans earn interest unless proven otherwise: if it is interest-free, make sure the contract says so and go over it with an adviser.

Maintenance costs

Paying for the food, housing, studies or medical care of a child who depends on you is not a gift: it is fulfilling the duty of maintenance that the Spanish Civil Code places on parents. And those costs are not deducted later in the inheritance (Article 1041 of the Civil Code).

Customary presents

The usual presents for birthdays, Christmas or a wedding, in line with the family’s means, do not usually cause problems, and the Civil Code excludes them from collation. But tax law does not set any exempt amount: a “present” of several thousand euros is a gift.

Who is exempt from paying gift tax?

Strictly speaking, almost nobody: the national law does not exempt gifts to children or to other relatives. What do exist are situations that are treated differently:

• Companies and other legal entities that receive a gift do not pay this tax, but corporate income tax.
• The gift of a family business or of shares in it to the children or the spouse can have a national reduction of 95% with strict requirements: among others, that the donor is aged 65 or over or has an absolute permanent incapacity or severe disability (gran invalidez), that they stop managing the business and being paid for doing so, and that the recipient keeps what was gifted for ten years.
• Regional reliefs, which in several regions reach 99% of the tax for children and the spouse, sometimes with limits on the amount or with requirements such as a public document, the purpose of the money (for example, buying the main home) or the child’s age or disability.

Not even a 99% relief removes the obligation to file the return on time.

How to gift money to a child without surprises

1. Check the rules in force this year in the region where your child lives.
2. If its relief requires a public document, sign the gift before a notary and record the amount, the means of payment and, where applicable, its purpose.
3. Transfer the money from your account to theirs; never in cash.
4. File the tax return within the following 30 working days, even if nothing is payable, and keep the supporting documents.

If you are going to help your child with a significant sum, or are thinking of gifting them a property, you can tell us about your case on gifts from parents to children: we put you in touch with a specialist lawyer or adviser who will work out the cost under your region’s rules before you sign. And if what you are looking for is to organise all your assets for the long term, wealth planning will suit you better.

Frequently asked questions

How much money can my parents give me without declaring it?

No amount is free from being declared by law: every gift is filed for the tax within 30 working days, even if the tax comes to zero thanks to a regional relief. In practice, only maintenance costs and customary presents of a moderate amount fall outside this.

Can I split the gift into several transfers to pay less?

It does not work to lower the rate: gifts from the same donor to the same recipient within a period of three years are added together as if they were a single gift to calculate the tax. And each one must be declared within its own deadline.

Does the parent who gifts money pay any tax?

They do not pay gift tax, which falls on the child, nor are they taxed under personal income tax for gifting money. If they gift a property or shares that have risen in value, they may have a capital gain in their income tax return.

Which rules apply if my child lives in another region?

For a gift of money, in general, those of the region where the child has had their habitual residence for the most days in the last five years apply, not the parents’ region. If a property is gifted, the region where it is located decides.