Gift tax from parents to their children. Requirements for not paying for the first €100,000 received. Valencian Community.

As we have explained previously, making gifts to your children is a formula that has increased considerably in recent times, in order to minimise the Inheritance Tax that your heirs will have to pay in the future.

When implementing this strategy, it is very common to make gifts of less than €100,000. The reason behind it is simple: in the Valencia region, the first €100,000 donated from parents to children (or from grandparents to grandchildren, depending on the circumstances) are exempt from paying Gift Tax.

However, many people overlook the formal and material requirements that must be met in order to successfully apply this tax allowance:

1. In order to apply to the €100,000 reduction for kinship it is mandatory to formalise the donation in front of a Notary.

3. You must present your birth certificate or “family book” (in Spanish known as “Libro de familia”). Since the €100,000 reduction for kinship is based on the family relationship between donor and donee, the tax authorities need proof that both parties involved in the gift are related to each other.
4. The pre-existing wealth/assets of the recipient of the gift must be under €600,000.
5. Finally, it is important to be very careful about previous gifts that both the donor and the donee have made or received within the last 10 years. In some cases, despite the family relationship between both, it may not be possible to apply this reduction. For instance, let’s imagine that John receives a donation of €100,000 from his father, and takes advantage of this tax allowance. If John decides to make a gift to someone else (for instance, to his mother) she will not be able to benefit from this reduction until 10 years have elapsed. Likewise, if the person receiving the gift now (Maria) made a gift to another family member who took advantage of this tax benefit, she will not be eligible for this reduction until 10 years have passed.

The requirements to qualify for the €100,000 reduction, especially when both donor and recipient have previously made/received donations, can be very complex. At White-Baos we are experts in Gift Tax, Inheritance Tax, etc. If you want to make a gift to a loved one, do not hesitate to contact us. We will study your case and offer you expert advice on the matter.

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Possibility of cancelling or revoking a donation or gift in Spain. Reasons to do it. Legal regulation. Acts of the beneficiary.

Carlos Baos (Lawyer)

White & Baos.

Tel: +34 966 426 185

E-mail: info@white-baos.com

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