Because of the low gift taxes in most Spanish autonomous regions, with 99% deductions in the direct line, gifting becomes fiscally interesting. In this article, we discuss the different steps to donate in Spain.
Step 1. Consulting the tax reference value
In principle, every property in Spain has a tax reference value, called the 'valor de referencia'. This value is the minimum acceptable value for the Spanish tax authorities for calculating gift tax, for example. To consult the reference value, we need an assessment notice from the IBI or the 'referencia catastral' of the property needed.
Based on the reference value, the gift tax is calculated. This is important to have an initial idea of the final Spanish gift tax and Spanish capital gains taxes to be paid. At this point, we can calculate whether a gift is effectively more advantageous than inheritance.
Read more about the tax reference value in Spain.
Step 2. Preparation of a notarised power of attorney
To carry out the following steps in Spain - without your presence on site - we need a notarised power of attorney. You can give a notarised power of attorney both in Belgium and in Spain. Both donors and donee must give such a power of attorney.
Read more about a notarised power of attorney.
Step 3. Application for the NIE numbers
With the power of attorney, we can arrange all the necessary NIE numbers. In a normal situation, the donors will already have a NIE number. For the donors, we will have to apply for a NIE number.
Learn more about the NIE number here.
Step 4. Signing of the notarial deed
Once all the NIE numbers are obtained, we can prepare the notarial deed. You have the option of donating full ownership, usufruct, or bare ownership. The ratio of usufruct to bare ownership depends on the age of the youngest usufructuary. The formula is 89 - the age of the youngest usufructuary = the percentage of usufruct, with a minimum of 10%.
The signing of the deed takes place in Spain. Thanks to the power of attorney, you do not need to be present for this.
Important to know is that you cannot include conditions in a Spanish gift deed. Given is given.
Step 5. Declaration of various taxes and registration of title
Finally, we must file tax returns within one month of the gift deed, after which the new title can be registered. In addition to the gift tax there are a national capital gains tax and a municipal capital gains tax. If no capital gains are realised, there are obviously no capital gains taxes.
In Spain, a donation is equated with a sale for capital gains tax purposes, with the 'sale price' corresponding to the tax reference value. To determine the national capital gain, reduce the tax reference value by the purchase price, purchase costs and gift costs. The municipal capital gains tax uses a different calculation method.
Because of the low straight-line gift taxes in most autonomous regions, with 99% reductions, gifting in Spain is currently an interesting form of inheritance planning. This is provided no or low capital gains tax is payable.
What does a donation in Spain cost?
In addition to the various taxes (gift tax and the two capital gains taxes), there are notary and registration fees (broadly estimated +/- €2,500), the cost of a notarised power of attorney (+/- €675), miscellaneous fees (+/- €150, including NIE numbers and search fees) and fees.
From when can I donate?
As soon as you own. The purchase and gift of a property in Spain can therefore take place quasi simultaneously.
Review our free webinar
Retrieved from Thursday 24 October we organised a webinar on the various tax aspects of gifting in Spain. You can re-watch this webinar here.
