Although in some communities it may be much more expensive than in others, it is common for parents to give or lend money or goods to their children while they are still alive. An act that, however, can lead to problems with the treasury, especially when it is attempted to be hidden. The main doubt that arises is about the amount and type of donations that the taxpayer is obliged to declare. “Any donation, no matter how small, is a taxable event,” explains Javier Muñoz Zapatero, member of the Personal Income Tax Expert Group of the Spanish Association of Tax Advisors (AEDAF).
This means that even the allowance given to a child each week is technically considered a donation. And this, as the expert acknowledges, “is obviously absurd”, which is why he considers that the law is imprecise and that in the end “social customs” end up being imposed, as happens for example with wedding gifts. Therefore, in these cases it is time to apply common sense: giving a child 100 euros on time is not the same as giving them a transfer to purchase a car or to buy a flat.
The responsibility for the inheritance and gift tax is currently transferred to the autonomous communities. The amount to be disbursed to the corresponding treasury will depend on the type of asset and the amount donated. The Registry of Economists and Tax Advisors illustrates in a study the existing inequality between autonomous communities in the inheritance and donation tax through the example of a 30-year-old son who receives 800,000 euros in cash from his father or mother without a purpose. specific.
As can be seen from this example, the communities that pay the most are Extremadura, Asturias and Aragón, where the taxpayer should pay between approximately 170,000 and 200,000 euros. On the opposite side is Cantabria, where not a single euro would be paid, while in Andalusia, Madrid, Castilla y León, Murcia, the Canary Islands and the Valencian Community the tax debt would be “symbolic”, as indicated by Raquel Jurado, technician of the studies service of the General Council of Economists.
In recent months there have been some changes to the inheritance tax. One of the most recent is that of the Valencian Community, where the 99% bonus of this tax has been approved with retroactive effects from May 28 – applicable for the benefit of children, spouses and fathers and mothers. The Canary Islands have also jumped on the same bandwagon, while Aragón and Extremadura plan to follow similar paths. “The autonomous communities where the PP has won in the last elections have had a greater tendency to introduce more advantageous measures in this tax,” says Jurado.
In any case, for the application of these bonuses it is necessary that the donation be recorded in a public document. In this sense, the most common way to carry out this procedure is before a notary, a mandatory requirement when the asset being donated is a property. If this step is omitted, the Treasury could impose a penalty for non-payment of the tax, the amount of which is established in the General Tax Law, which specifies that the fines range from 50% of the missed payment to the 150%, depending on whether the violation is minor, serious or very serious.
So, before donating to children – whether money, real estate or other assets – it will be necessary to assess the convenience or not of making the transfer based on the taxation of the tax in the community in which the donee resides (the one who donated it). receives the money) or in the community where the donated real estate is located. And, in addition, other aspects will have to be taken into account.
According to the expert lawyer in inheritance law Alejandro Ebrat, from a tax point of view, donations of real estate to children “are never convenient” because they pay a lot of taxes”, with some exceptions, which is why he maintains that it is more advantageous “to leave them in the inheritance “. As for monetary donations, they are more beneficial in those communities in which the Inheritance Tax is high, as is the case of Asturias, Catalonia and Castilla-La Mancha. “These types of donations tend to be more beneficial if We make them spaced out over time, specifically every three years, because this way they do not accumulate and the taxation is lower,” he explains.
However, he warns that from a family point of view, donating money to children has its risks. For example, if they are minors, it will be necessary to provide in the donation that they will not be able to manage the money alone until they reach a certain age. Likewise, it will be very important to specify in some civil legislation “that the donation will be collatable if desired.” This means that when the donor dies, the assets received during life will be taken into account in the distribution of the inheritance when it is in equal parts. Expenses for food, education, curing illnesses, learning, ordinary equipment, or customary gifts cannot be taken into account.
On the other hand, donations can have advantages for those taxpayers who want to pay less taxes, since their assets are reduced. Or for those who prefer to distribute the inheritance during their lifetime and avoid conflicts between children over this issue in the future.
To avoid problems with the treasury when lending money to a child, the transaction must be recorded in a loan contract and legalized in the corresponding autonomous community. It is also important that the loan is repaid according to the payment schedule. Otherwise, “The Treasury could consider it a hidden donation,” warns Ebrat. Depending on the amount, it should be assessed whether it is more worthwhile to donate, “since there are communities where this type of donation from parents to children pays very little”, especially if the child does not have sufficient financial capacity to return the money or real intention. to do it. In the case of opting for this last option, one must take into account whether the money is for the purchase of a primary residence, in which case, if the requirements are met, the taxpayer can benefit from tax credits.