Publicado: 03-03-2025
Lifetime donations are a financial and estate planning strategy that allows the transfer of assets or money to family members, friends, or institutions without waiting for inheritance. However, many people are unaware that these donations have tax implications that should be considered to avoid surprises with the Tax Agency.
What Is a Lifetime Donation?
A lifetime donation is the act by which a person freely transfers an asset, right, or sum of money to another without waiting for their passing. The beneficiaries of donations can be both individuals and legal entities.
Tax Implications of Lifetime Donations in Spain
Donations are regulated under Spanish tax law and are subject to the Inheritance and Donations Tax (ISD), which is managed by the autonomous communities. Here are some key aspects to consider:
- Donation Tax: In Spain, the beneficiary of the donation must pay ISD. The amount to be paid depends on the tax rate set by the autonomous community, the degree of kinship with the donor, and the value of the donation.
- Bonuses and Reductions: Some autonomous communities offer tax reductions, especially for donations between first-degree relatives (parents and children, spouses).
- Tax Declaration: Donations must be declared to the corresponding autonomous community’s Tax Agency within a maximum of 30 business days from the formalization of the donation.
- Tax Deductions for the Donor: If the donation is made to a registered non-profit organization, the donor may benefit from tax deductions in their Personal Income Tax (IRPF) or Corporate Tax (IS).
- Municipal Capital Gains Tax: If the donation includes real estate, the donor may be subject to Municipal Capital Gains Tax, which levies the increase in urban land value from acquisition to transfer.
Inheritance and Donations Tax by Autonomous Communities in 2025
The ISD is a tax transferred to autonomous communities, and each region applies its own regulations. Below are some key differences across regions:
- Andalusia: 99% bonus on donations to direct relatives, provided they are formalized in a public document.
- Aragon: Bonus increased from 65% to 99% on donations to direct relatives, with a limit of €500,000.
- Asturias: Reduction in taxable base for donations of individual businesses, professional practices, and company shares.
- Balearic Islands: Full exemption for inheritances among ascendants, descendants, and spouses.
- Canary Islands: 99.9% bonus on inheritances and donations between direct relatives.
- Castilla-La Mancha: 85% to 95% bonus for descendants, spouses, and parents on donations below €240,000.
- Catalonia: 95% reduction for specific donations, such as those for purchasing a first home or business donation.
- Madrid: 99% bonus for spouses and descendants, provided the donation is formalized in a public deed.
- Basque Country and Navarra: Up to 95% bonus for direct relatives in donations for acquiring a primary residence or an agricultural holding.
Tips for Optimizing the Tax Impact of a Donation in Spain
Proper estate planning and structuring can significantly optimize tax burdens and reduce unnecessary costs. Some strategies to consider include:
- Staggered Donations: Making donations in an appropriate amount, time, and manner to take full advantage of available tax reductions and bonuses.
- Notarial Formalization: Ensuring donations are properly documented before a notary to avoid issues with the Tax Agency.
- Specialized Advice: Consulting a tax expert to analyze the estate structure and applicable tax benefits.
Legal Advice for Lifetime Donations
At Gentile Law, our team of expert lawyers is ready to assist you with your estate planning, ensuring compliance with current regulations and optimizing the tax impact of your transactions.
Ana García Ginés
anagarcia@gentile.law
