Gifts between parents and children, or between spouses, are a frequent topic of consultation in our office. “How much Gift Tax do I have to pay?. Who pays the Tax: Donor or Donee?. Does the gift of money involve the same taxes as the donation of a property?” In previous articles we have dealt with several of these questions. This week we analyse whether a gift received abroad has to be declared in Spain, and the key points to bear in mind.
Gift Tax in Spain. Personal obligation.
In Spain, Gift Tax is always paid by the donee. In other words, the person who receives the gift or donation. If you receive a gift, and your habitual residence is in Spain, you must declare the gift to the Spanish Tax Office. It does not matter where the goods or rights gifted to you are located. A bank transfer to a bank account outside Spain. The donation of an apartment in a foreign country such as the UK. Etc. It’s irrelevant. If you are a tax resident in Spain, you are obliged to declare the gift received. This is known as a “personal obligation”.
Avoiding problems with the Tax Agency. Be careful with 720 Tax Form.
We often hear phrases such as: “The Spanish Tax Agency may not be aware of gift of a flat or an amount of money that occurs abroad”. This reasoning, besides not being correct, is highly unadvisable. To avoid having problems with the tax authorities, it is very important to declare in Spain any gift received abroad. It is also essential not to forget the informative declaration of assets and rights located abroad, known as 720 tax form, and the penalties for concealing or omitting information on your assets outside Spain.
Gift Taxation in Spain. Valencian region.
The amount of tax to be paid when declaring a gift received abroad will depend on the value of the gift, place of residence of the donee. Nowadays, gifts are significantly relieved in the Valencia region. In addition, a change in the Gift Tax law is expected to come into force before the end of the year, which will allow a 99% rebate for donations between parents and children, between spouses, etc. This rebate will be applied retroactively from May 28th, 2023.And will result in the amount to be paid for the Gift Tax in the Valencia Region to be practically non-existent.
The importance of not forgetting the formal requirements.
Before receiving a gift abroad, it is crucial to double check the Spanish regulations. The reason is simple: in Spain, gifts are required to comply with a series of formal requirements.
For instance, in the Valencian region, in order to apply for certain deductions of kinship, etc., the gift must be formalised in a public document. Furthermore, the deadline for paying the tax is 30 days after the gift is made. If you are receiving a gift in the UK, it may be advisable to do so before a UK Notary. An experienced Gift Tax solicitor will be able to inform you of all the requirements you need to consider, to avoid surprises and last minute problems.
At White Baos Lawyers we are experts in Inheritance and Gift Tax planning. If you are going to receive a gift and you need information on how to declare in Spain a gift received abroad, do not hesitate to contact us. We will study your case and offer you expert legal advice on the matter.
The information provided in this article is not intended to be legal advice, but merely conveys information relating to legal issues.
Carlos Baos (Lawyer)
White & Baos.
Tel: +34 966 426 185
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