How the new tax will affect people buying cars in Spain

In this era of financial uncertainty, it is very common for families to help each other by giving each other money. House.

But is there a specific amount that the recipient can give without being obligated to pay taxes?

Gift tax is levied when property is increased through gifts received during life.

According to Article 618 of the Spanish Civil Code, “a donation is the act of generosity in which money or goods are freely offered by one person for the benefit of another and are received by another”.

So how much can you give someone without being taxed?

This means that if you give someone a gift, regardless of how big it is, you must declare and pay taxes on what you receive. Whether it’s family or friends, you should declare it.

Yes, even if you give someone 20 euros so they can go out for dinner and drinks, technically they are obligated to pay taxes on it.

Many people think that taxes should only be declared and paid for gifts over €3,000, but this is not the case.internal revenue or Hacienda It states that taxes must be paid whenever property or money is given for free, including gifts.

The idea stems from the fact that Spanish banks only have to report money movements if they have more than 3,000 euros or if someone uses 500 euro banknotes.

But in practice, most people do not declare whether someone has given them a gift of 20 euros. Hacienda These small amounts can turn a blind eye.

However, technically, you have to pay taxes on these transfers, and you should be aware of the following: Hacienda You are entitled to claim taxes on small donations received in the last four years.

Gift tax must be declared and paid within 30 days from the date of receipt.

How much is the gift tax?

The gift tax in Spain is progressive, but the tax rate depends on a number of factors, including:

  • Amount to be transferred to the recipient.
  • Whether the taxpayer is a resident of Spain.
  • If the taxpayer is non-resident, whether he is an EU or non-EU citizen.
  • Region of Spain where the recipient lives.

All regions of Spain have different rates, so if you give a gift to someone who lives in Madrid, for example, you’ll pay a completely different amount to someone who lives in Barcelona.

Read also: How much is the inheritance tax in each region of Spain?

If the gift is Spanish property, such as real estate located in Spain, the giver is obligated to pay taxes on it regardless of where the beneficiary lives.

The amount of tax you pay also depends on your relationship with the giver. There are four different relationship groups. these are:

Group I: Birth and adopted children and other descendants (grandchildren, great-grandchildren, etc.) under the age of 21.
group 2: Birth and adopted children and other descendants over the age of 21, parents and other descendants (grandparents, great-grandparents, etc.), and spouses.
Group 3: Parents-in-law and their descendants, children-in-law, brothers and sisters, cousins, nieces and nephews, aunts and uncles.
group 4: Even if registered as all other partners, including unmarried partners, Pareja de Jecho.

Read also: Civil Union or Marriage in Spain: Which Is Better?

Depending on the circumstances, the fee can vary from 7.65% for amounts under €8,000 and up to 34% for amounts over €200,000.

It is important to consult an attorney to determine if you are responsible for paying or if the recipient is responsible for paying if you are a donor.

What if I want to give a gift to help a married child buy a home?

As young people these days struggle to climb the real estate ladder, more and more parents are helping their children buy a home with a down payment.

Read also – Inheritance tax in Spain: Should I give my property to my children or sell it?

In this case, everything must be recorded before a notary so that the gifted amount is included as personal property. Otherwise, it is considered marital property.

When you donate money to children to buy a home, you can get a 95% discount on the purchase price, provided you meet the following requirements:

  • The money will be used to purchase the habitual residence after the donation.
  • It cannot exceed €60,000, or double for children with a 65% disability.
  • Gifts must be made through banking transactions between parent and child. Donations must be duly made in front of a notary by a notary public.
  • You must submit your declaration within 30 business days of your donation date and purchase within 3 months.

If I want to give someone money, is there another way?

Yes, if you want to help someone financially but don’t want them to pay taxes on your gift, we can always offer you an interest free loan.

To do this and ensure that the recipient is not taxed, you will need to sign a document in the presence of a notary stating the details of the loan (amount, repayment period, interest free).

However, you must prove to the hacienda that the money has been returned so that you are not obligated to pay taxes in the future.

Always remember to seek advice from a lawyer or professional financial advisor. The team at The Local Spain are not tax experts and have learned the hard way by answering the phone, talking to lawyers and tax authorities, and reading the applicable laws. How the new tax will affect people buying cars in Spain

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