Donating money, a property or shares to a family member is a common practice. The process becomes more complicated when the donor and the recipient live in different countries, or when the donated asset is located outside Spain. Several tax rules come into play simultaneously in international donations, and a planning error can turn a tax-exempt donation into a bill running into thousands of euros.
At Taxmind, as tax advisers specialising in international taxation in Barcelona, we handle the administrative management of these processes drawing on our knowledge of the regulations, our experience with the tax authorities and our personal empathy with those involved. That is why we have set out to detail and summarise in this guide everything you need to understand how international donations work in Spain.
If you have any questions or queries on this topic, please leave them in the comments and we’ll be happy to answer them.
What do we mean by international donations?
We refer to a donation as ‘international’ when the transaction involves a foreign element. There is no such thing as an ‘international donation tax’ as such: what exists is a standard donation to which a cross-border dimension is added, making it necessary to analyse where it is taxed and under which regulations. This foreign element can take three forms:
- The donor resides outside Spain (for example, parents living in France who make a donation to a child living in Barcelona).
- The donee — the recipient — resides outside Spain (for example, a foreign national living in Spain who makes a donation to a relative in their country of origin).
- The donated asset is located abroad (a bank account, a property or shares outside Spain).
Any of these three situations turns a ‘run-of-the-mill’ donation into a transaction that must be carefully planned.
The tax that changes everything: ISD
In Spain, donations are subject to Inheritance and Donation Tax (ISD), governed by Law 29/1987. It is a direct tax levied on what a natural person receives free of charge, and its key feature is that the person liable to pay is the donee (the recipient), not the donor. Responsibility for collecting the ISD has been devolved to the autonomous communities, and this is where the major differences in taxation arise.
Personal liability versus real liability
The key to determining whether a donation is taxable in Spain is to distinguish between two forms of liability:
- Personal liability. If the donee resides in Spain, they are liable for tax on everything they receive, regardless of where the donated asset is located (worldwide assets). It makes no difference whether the money comes from Argentina or the property is in Lisbon.
- Real liability. If the donee does not reside in Spain, they are only liable for tax here on assets and rights situated within Spanish territory (a property in Spain, money deposited in a Spanish bank account, etc.).
Form 651 and the 30-working-day deadline
Donations (including international donations) are self-assessed using Form 651, and the deadline is short: 30 working days from the date of the donation (the date of the deed for property, or the date of the transfer for money). There is no grace period and the clock starts ticking automatically. Submitting the return after the deadline incurs increasing surcharges of 5 per cent, 10 per cent, 15 per cent or 20 per cent depending on the delay, plus interest on arrears.
The autonomous community has the final say: connecting factors and European harmonisation
As inheritance tax (ISD) is devolved to the autonomous communities, the tax bill for the same donation can vary enormously depending on the applicable community. The rules for determining which regional legislation applies (the so-called ‘points of connection’ under Article 32 of Law 22/2009) are, in summary:
- Property in Spain: always taxed in accordance with the regulations of the region where it is situated, regardless of where the parties reside.
- Movable property (cash, securities, shares) for a resident donee: the legislation of their region of habitual residence applies.
- Movable assets in Spain for a non-resident donee: the legislation of the autonomous community where the asset has been situated for the most days over the last five years applies (for cash, where the funds were deposited).
A crucial point for international families: following the 2014 ruling of the Court of Justice of the European Union (Case C-127/12) and the subsequent Law 11/2021, non-residents — whether from the EU/EEA or third countries — are entitled to claim regional tax reliefs and allowances on the same terms as a resident. The discrimination that previously forced non-residents to follow national tax rules – which were almost always more expensive – no longer exists.
And in Catalonia? The case of Barcelona
Catalonia does not apply 99 per cent tax relief as Madrid or Andalusia do, but it does offer a reduced rate for donations between close relatives (parents, children, spouses and civil partners) ranging from 5 per cent (up to €200,000) to 9 per cent for higher brackets. The essential requirement is that the donation be formalised in a notarised public deed. Furthermore, there is a 95 per cent reduction when the money donationed is used for the first main residence of a recipient under the age of 36. Therefore, for a donation originating in or destined for Barcelona, the notarised public deed is not merely a formality: it is what opens the door to being taxed at the reduced rate.
The donor does not always give ‘for free’: personal income tax (IRPF)
This is the most surprising point, and one that many articles overlook. The recipient pays inheritance tax, but the donor may have to pay income tax. When an asset that has appreciated in value (a property, shares, a fund) is donated, the tax authorities consider that the donor has realised a capital gain, as if they had sold it at market price, and tax is levied on the difference between the acquisition value and the transfer value (Articles 33 to 36 of the Personal Income Tax Act).
The exemption that applies to inheritances (known as the ‘deceased’s capital gain’) does not apply to inter vivos donations. This gives rise to two situations to bear in mind:
- Donor resident in Spain: is taxed on the capital gain under their personal income tax at savings tax rates (currently between 19% and 28%).
- Non-resident donor gifting an asset situated in Spain: is taxed under the Non-Resident Income Tax (IRNR) on that gain, at 19 per cent (EU/EEA) or 24 per cent (other countries).
The main exception is the gift of shares in a family business that meet the requirements of Article 20.6 of the Inheritance and Gift Tax Act: in this case, the donor’s capital gain is also exempt from personal income tax. This is the most common route to a tax-efficient business succession. There is no double taxation between corporation tax and personal income tax because each tax is levied on a different item: corporation tax is levied on the recipient’s gain; personal income tax is levied on the donor’s unrealised capital gain.
The most common scenarios
These are the situations we encounter most frequently in our advisory work. The table below summarises them, and we explain the most relevant ones below.
| Scenario | Who files the Inheritance Tax return? | Applicable regulations |
|---|---|---|
| A foreign national resident in Spain who makes a donation to their country of origin | The donee abroad (real obligation, only if there are assets in Spain) | Connecting factor under Article 32 (location of the asset/funds) |
| Spanish citizen/resident making a donation to a relative abroad | The non-resident donee (if the asset is in Spain) | The autonomous community where the property is situated or where the funds were held |
| Non-resident father donates money to a son resident in Spain | The resident son (personal liability) | The jurisdiction of the donee’s habitual residence |
| A resident receives property situated abroad | The resident donee (global assets) | Tax jurisdiction of the donee’s residence + deduction for foreign tax |
| Non-resident donates property situated in Spain to a non-resident | Non-resident donee (real obligation) | Tax jurisdiction where the property is situated |
| Donation of a family business / Spanish shareholdings | The donee (depending on their residence) | The donee’s autonomous community + reduction under Article 20.6 of the Spanish Inheritance and Donation Tax Act |
☑️ A foreign resident in Spain who makes a donation to their country of origin
This is the case for many expatriates: they live and are tax residents in Spain, and wish to make a lifetime donation to a relative who remains in their home country. In this case, the donee does not reside in Spain, so they will only be liable for inheritance tax in Spain if the donated asset is situated in Spanish territory (for example, money in a Spanish bank account or a property in Spain). If the donor transfers funds that are already outside Spain to a relative who is also outside Spain, that transaction will normally be exempt from Spanish inheritance tax.
However, please note: if the donor is a resident and donates an asset in Spain that has appreciated in value, they will have to declare the capital gain on their personal income tax return.
☑️ A Spanish citizen making an international donation
A resident of Spain who makes a donation to someone abroad falls, depending on the type of asset, under the same framework as above: the non-resident donee is only liable for inheritance tax if the asset is in Spain, with the regulations of the autonomous community where the property is situated or where the funds are held applying.
In the case of cash donations, placing the funds beforehand in a tax-favourable region can significantly alter the tax bill. And again, if the donated asset has appreciated in value, the Spanish donor will declare the capital gain on their personal income tax return.
☑️ A non-resident parent donates money to a child resident in Spain
This is the reverse situation and one of the most common. The child resides in Spain and is therefore personally liable to tax on everything received, even if the money comes from abroad, and the regulations of their region of residence apply. A child residing in Madrid can receive donations from their parents with virtually no inheritance tax; the same child in a region without a tax allowance would pay the full rate.
The Directorate-General for Taxation has confirmed this in numerous recent binding rulings (for example, V1903-23, concerning money received from abroad by a resident of Madrid, or V0085-26, concerning a resident of Andalusia).
☑️ Donation of a property situated abroad
If a donee resident in Spain receives a property situated abroad (a flat in Lisbon, a house in Buenos Aires), they are liable for inheritance tax in Spain on the total value of the asset, in accordance with the regulations of their region of residence and with the right to deduct the equivalent tax paid abroad. Furthermore, that property may trigger the obligation to declare it on Form 720.
☑️ Donation of a property in Spain between non-residents
When both the donor and the donee are non-residents but the property is in Spain, the donation is subject to inheritance tax under the regulations of the autonomous community where the property is situated, and, thanks to European harmonisation, the donee is entitled to regional tax reliefs. The non-resident donor, for their part, will be liable for non-resident income tax (IRNR) on the capital gain from the property.
☑️ Donation of a family business or shareholdings
The transfer during the donor’s lifetime of a family business or company shares is a classic example of wealth planning. If the requirements of Article 20.6 of the Inheritance and Donation Tax Act are met, the donee is entitled to a reduction of between 95% and 99% on the tax base, and the donor is exempt from capital gains tax on personal income tax. This is one of the transactions where thorough advance planning makes the biggest difference.
International double taxation: treaties and the deduction under Article 23
One of the greatest risks when it comes to international donations is paying tax twice: in the country where the asset is located or where the donor resides, and also in Spain. The problem is that Spain has very few double taxation agreements covering inheritance and donations: only with France, Greece and Sweden, and these relate essentially to inheritances. For everything else, there is no agreement.
Where there is no agreement, the recourse is the unilateral double taxation relief provided for in Article 23 of the Inheritance and Donation Tax Act. The resident donee may deduct from their Spanish tax liability the lower of the following two amounts:
- The foreign tax actually paid, or
- The result of applying the average effective Spanish inheritance tax rate to the portion of the asset situated abroad.
An important point to note: only the tax borne by the donee themselves is deductible; if the donor paid the tax abroad, it cannot usually be deducted in Spain.
Other obligations you must not forget
It is worth bearing in mind that these are actions which will be requested of you if the need arises:
Form 720 and Form 721
If the international donation includes assets held abroad (bank accounts, securities or property) worth more than €50,000, you are required to submit Form 720.
From 2024, crypto-assets held in custody outside Spain must be declared on Form 721. This is a separate obligation from the Inheritance and Donation Tax (ISD), with its own deadline (by 31 March of the following year), and is frequently overlooked, even if Form 651 has been submitted correctly.
Banking controls and anti-money laundering
Banks are required under Law 10/2010 to identify the source of funds. Upon receiving a significant international transfer, they may ask you for documentation relating to the donor, proof of the source of the money (savings, sale of a property, etc.) and the donation contract or deed. It is advisable to notify the bank before receiving the transfer to avoid preventative blocks.
Notarial deed: not always compulsory, but almost always advisable
A monetary donation does not require a public deed to be valid, but, as we have seen, in regions such as Catalonia, Andalusia or Madrid, the deed is a requirement for applying the reduced rate or tax relief.
The cost of the deed (a few hundred euros) is negligible compared to the tax you can save. In the case of property donations, a deed is compulsory.
Common mistakes and planning tips
To summarise, we highlight the following:
- Firstly, improvising. Planning must be done before transferring the money, not afterwards. Once the international donation has been made, almost all options are closed off.
- Forgetting the public deed when the local authority requires it to apply the tax relief: without it, the donation is taxed at the full rate, even if the relationship qualifies.
- Ignoring the donor’s income tax (IRPF), i.e. focusing solely on the recipient’s inheritance tax (ISD) and being caught out by capital gains tax.
- Missing the 30-working-day deadline for Form 651 or that for Form 720 (31 March).
- Failing to document the source of the funds and subsequently facing bank freezes or demands from the tax authorities.
Frequently Asked Questions on International Donations
What better way to summarise the key points on the subject of international donations from a procedural perspective than through some of the most frequently asked questions we receive at our consultancy on this matter:
☑️ Do I have to pay tax in Spain if I receive a monetary donation from abroad?
Yes, if you are resident in Spain. As a resident donee, you are liable for Inheritance and Donation Tax on everything you receive, even if the donor lives abroad and the money comes from overseas. The regulations of your autonomous community of residence apply.
☑️ Who pays the tax on international donations – the donor or the recipient?
In the case of Inheritance and Donation Tax (ISD), it is always the recipient who pays. The donor does not pay ISD, but may have to declare a capital gain on their personal income tax return if the value of the donated asset has increased.
☑️ How long do I have to declare the donation?
30 working days from the date of the donation (the deed for property or the transfer for money), by submitting Form 651 to the relevant autonomous community.
☑️ Can I avoid paying tax twice on the same international donation?
If you have paid a similar tax abroad, you can claim the double taxation relief under Article 23 of the Inheritance Tax Act. Spain only has specific double taxation agreements with France, Greece and Sweden, and these mainly cover inheritance.
☑️ I am a foreign national living in Spain. If I make a donation to a relative in my home country, is it taxable in Spain?
As your relative does not reside in Spain, they will only be liable for Spanish inheritance tax if the asset being donationed is situated in Spain. If you transfer funds that are already held abroad to a person outside Spain, there is normally no Spanish inheritance tax. However, if you gift an asset situated in Spain that has appreciated in value, you will need to declare the capital gain on your personal income tax return.
☑️ Is a notarised deed compulsory?
For international cash donations, a notarised deed is not required for the donation to be valid, but it is usually necessary to claim the reduced rate or the regional tax relief (for example, in Catalonia). For property, a notarised deed is compulsory.
☑️ I’ve received a property or a bank account abroad. Do I need to declare anything else?
Yes. In addition to inheritance tax, if the value of the assets abroad exceeds €50,000, you must submit Form 720 (or Form 721 for crypto-assets), by a different deadline and with its own specific requirements.
☑️ I live in Barcelona. Are donations more expensive there than in Madrid?
In Catalonia, there is no 99 per cent allowance, but there is a reduced rate (from 5 per cent to 9 per cent) for donations between close relatives formalised in a public deed, as well as specific reductions such as the 95 per cent allowance for the first home of people under 36. Good planning allows you to make the most of these benefits.
Conclusions
We have learnt that, when it comes to internacional donations, we are not talking about an exotic tax by any means, but rather a standard donation with additional layers: the recipient’s inheritance tax, the donor’s income tax, the applicable autonomous community, any potential foreign taxes, and reporting obligations such as Form 720. Each layer presents an opportunity for savings or a risk of penalties, and the difference between the two is almost always decided before the documents are signed.
At Taxmind, we recommend planning weeks in advance (weeks, not days). Based on our extensive experience, this is what truly makes a donation a safe and efficient transaction.
If you are planning an international donation, at Taxmind we are tax advisers specialising in international taxation for expatriates and residents in Barcelona and elsewhere across Spain. We analyse each case before the donation to make the most of all available tax reliefs and thus avoid double taxation. Should you have any queries or questions, we are here to help.
