Be careful when opening a bank account for your children: the money you deposit for them may be considered a donation.

In Spain, money donations from parents to children are subject to the Inheritance and Donations Tax (ISD), whose management and much of the practical regulation correspond to the autonomous communities. This means that the specific form, the submission channel, and the exact deadlines may vary, but the procedure scheme is usually very similar throughout the territory.

1. Formalization of the donation

• Donation agreement: legally, an agreement between donor and donee is sufficient, but in practice it is highly recommended to document it in writing.
• Notarial public deed (highly advisable):
  • The notary records who donates, who receives, the amount, the payment method, and the date.
  • The deed serves as the main document for the tax self-assessment and may be necessary if the Tax Agency reviews the operation in the future.
• Proof of money movement: usually a bank transfer receipt, nominative check, or equivalent document is provided.

2. Identification of the competent administration

• In donations from parents to children, the competence usually corresponds to the autonomous community of habitual residence of the child (donee) at the time of the donation.
• The regional Tax Agency's website indicates:
  • Which self-assessment form is used for donations.
  • The specific instructions and possible reductions for parents–children.
  • The submission methods (online, in person, or both).

3. Documentation usually required

With variations between communities, it is common to require:

• ID/NIE of donor and donee.
• Family book or other document proving kinship (to apply reductions or bonuses for being a child).
• Donation deed or, failing that, a private document signed by both parties.
• Proof of payment or transfer of the donated money.
• Form/self-assessment of the Inheritance and Donations Tax correctly completed.
• In some cases, prior appointment or electronic registration if submitted in person/online.

4. Submission and self-assessment

In most communities, management is by self-assessment by the taxpayer:

• The regional Tax Agency provides a specific form for donations (online form or PDF).
• It must indicate:
  • Data of donor and donee.
  • Amount donated and date of donation.
  • Payment method (transfer, check, etc.).
  • Reductions, bonuses, or applicable rates according to regional regulations.
• After completing the form:
  • If the result is payable, the payment is made (usually by electronic banking, card, or direct debit).
  • Scanned documentation is attached if the submission is electronic, or in paper if in person.

5. Usual deadlines

Although the specific regulation is regional, the ISD for donations is usually subject to a relatively short submission deadline from when the donation is perfected (that is, from when the money is delivered). This deadline is generally counted from the day after the donation and is measured in weeks or a few months, not years.

Therefore, it is prudent to:

• Consider the deadline as short and not delay the procedure.
• Explicitly check on the regional Tax Agency's website:
  • The exact number of days and whether they are business or calendar days.
  • The consequences of late submission (surcharges, interest, possible penalties).

6. Consequences of not declaring or declaring late

• If the self-assessment is not submitted, the regional Tax Agency may carry out an official assessment, demanding the tax plus surcharges and penalties.
• If submitted late, surcharges and interest usually apply, although the penalty may be lower if the taxpayer voluntarily regularizes.
• Not declaring can cause problems if in the future:
  • The Tax Agency verifies the child's assets (for example, home purchase) and requests justification of the source of funds.
  • Inheritances among siblings are disputed and previous donations are reviewed.

7. Practical recommendation

Since each community sets its own form, reductions, and deadline details, the safest is to:

• Consult the official website of the regional Tax Agency of the child's residence.
• For large amounts or complex situations, consider consulting a tax advisor or processing the donation through a notary, who usually offers guidance on the tax and its deadlines.

The Inheritance and Donations Tax (ISD) is a state tax whose ownership corresponds to the State (art. 133 CE), but it is almost entirely delegated to the autonomous communities in collection and largely in regulatory capacity. This delegation is structured through the LOFCA and the law on the delegation of State taxes to the autonomous communities.

1. General framework of the delegation

The State retains the basic regulation of the tax (definition of the taxable event, taxpayer, tax base, general structure of the rate, basic concepts of reductions, etc.), but delegates the revenue and broad regulatory and management powers to the common regime autonomous communities. That is:

• The ISD remains a state tax.
• The revenue generated, in practice, is entered into the autonomous community coffers.
• The communities can largely configure the effective tax burden in their territory.

2. Regulatory powers of the autonomous communities

The regional tax administrations have leeway to regulate essential aspects of the final amount of the tax, always within the limits set by state regulations:

• Reductions in the tax base: they can improve or expand the reductions provided in the state law, especially in acquisitions by children, spouses, and ascendants, family businesses, main residence, agricultural holdings, etc.
• Rates and tax rates: they can approve their own scale of rates, usually progressive, which allows them to toughen or soften the tax compared to the state minimum.
• Multiplying coefficients and quota bonuses: they can modulate the tax through coefficients based on pre-existing assets or degrees of kinship, and introduce very high bonuses (in some cases close to 99% for certain relatives).
• Improvement of minimums and benefits for certain groups: for example, greater reductions for disabled persons or for certain productive economy figures.
• Basic formal and procedural aspects: they can influence complementary formal obligations, without altering the essential structure of the tax set by state law.

This capacity explains the very significant differences in taxation between communities: the same inheritance or donation can have a very different tax burden depending on the competent territory.

3. Powers of management, assessment, collection, and inspection

In addition to partial regulatory capacity, the regional tax administrations generally assume the comprehensive management of the tax when, according to the connection rules, the community is competent. This includes:

• Management and assessment: receipt and processing of declarations or self-assessments, value verification, issuance of provisional and definitive assessments, and response to taxpayer inquiries.
• Collection: acceptance of payments, granting of deferrals or installments, management of surcharges and enforcement proceedings.
• Inspection: verification of correct compliance with obligations, investigation of undeclared assets or rights, and proposal of sanctions in case of infringement.
• Administrative review: resolution of appeals and economic-administrative claims within their competence, according to the state review system.

4. Limits and coordination with the State

The regional powers are subject to constitutional and legal limits:

• They must respect the basic state regulation. They cannot alter the taxable event or the essential structural elements of the tax.
• They cannot violate principles such as equality and market unity. Constitutional jurisprudence has controlled measures that generated unjustified discrimination between residents and non-residents or between residents in different communities.
• The delegation does not imply loss of the State's original taxing power: the state legislator can modify both the tax law and the delegation framework and, thereby, limit or expand the regional margin.
• Coordination is structured, among other channels, through the Fiscal and Financial Policy Council, where possible harmonization measures are addressed and the impact of regional regulatory diversity is supervised.

In summary, the regional tax administrations have a very relevant position in the Inheritance and Donations Tax: they manage the tax, keep its revenue, and can intensely modulate the effective taxation, but always within a state framework that sets the essential elements and can intervene to correct imbalances or excessive distortions between territories.

For a money donation between parents and children to be exempt or very lightly taxed by the Inheritance and Donations Tax (ISD) in Spain, general state requirements must be met and, above all, the specific requirements of the autonomous community where the operation is taxed. Below is a summary of the common elements usually required in most territories, with a practical approach.

1. Basic state legal framework

The ISD is regulated at the state level by the Law 29/1987, of December 18, on the Inheritance and Donations Tax, and by its Regulation, approved by Royal Decree 1629/1991, of November 8. These rules:

• Define the “inter vivos” donation as the taxable event (art. 3 of the Law): gratuitous transfer of goods or rights between individuals.
• Establish who is the taxpayer: the donee (the child receiving the money).
• Determine the tax base (net value of the donated money) and the obligation to file a self-assessment (state forms 651, etc., or other regional forms).
• Configure the system of reductions according to kinship (groups I and II: descendants, adopted, ascendants, spouse), on which the autonomous communities can improve the benefits.

Law 29/1987 itself (art. 20) refers to the reductions approved by each autonomous community, so the true exemption or near exemption derives from the regional tax regulations of delegated taxes (for example, Law 5/2021 of Andalusia, Legislative Decree 1/2010 of Madrid, Law 19/2010 and subsequent regulations in Catalonia, Law 13/1997 and its reforms in the Valencian Community, etc.).

2. Minimum formal requirements

Although details may vary, there are a series of basic formal requirements that, if not met, usually cause the loss of benefits:

• Public document or, at least, written document: many communities require that the money donation be formalized in a notarial public deed; others accept certain private documents, but the reinforced benefits (specific reductions for money) are usually linked to a notarial deed stating the amount, identity of donor and donee, and, if applicable, the destination of the money.
• Bank payment method: it is very common to require proof of the money movement (transfer, nominative check, identified deposit, etc.) to prove the reality of the donation and its amount.
• Submission deadline: the self-assessment of the donation must generally be submitted within a 30 business day deadline from the granting of the deed or the act of donation. Late submission may result in loss of reductions or penalties.

3. Most common material requirements

Communities with softer taxation on donations between parents and children (Andalusia, Madrid, Valencian Community, much of Catalonia, etc.) usually require combinations of these requirements:

• Direct kinship: the donation must be made between ascendants and descendants (parents–children, grandparents–grandchildren) or assimilated (adoptive parents–adopted). Benefits normally apply to subjects of groups I and II of the state law (descendants, ascendants, and spouse).
• Amount limits: some regulations establish very high reductions (or practically 99–100% quota bonuses) up to a certain money threshold per child or donor; above that threshold, the excess part is taxed.
• Justified destination of the money: for the greatest tax advantages, it is usually required that the money be destined to specific and verifiable purposes, such as:
  • Acquisition or rehabilitation of the child's main residence.
  • Contribution to establish or acquire an individual business, professional activity, or shares in entities (family business).
  • In some cases, certain training or study expenses.
  Justification is made with purchase deeds, invoices, canceled loan contracts, etc., within the deadlines set by each community (for example, that the home purchase is made within 3, 6, or 12 months following the donation).
• Maintenance of the asset or activity: if the reduction is linked to a family business or main residence, it is usually required to maintain ownership and, in the case of the business, the activity for a minimum period (typically 5 years). Selling earlier may imply regularization and repayment of the benefit.
• Age and situation of the donee: some reductions are designed for young people (for example, under 35 years old) or for taxpayers with certain circumstances (disability, etc.), which conditions their application.
• Tax residence: following Constitutional Court rulings, benefits cannot be required only for “habitual” residents in the community, but the regional regulations apply considering the ISD connection points (residence of the donee, location of assets, etc.).

4. Practical recommendation

In practice, achieving that the donation is exempt or almost exempt implies:

• Identifying in which autonomous community the tax will be filed.
• Checking if there are specific reductions for money donations between ascendants and descendants and what their conditions are (maximum amount, destination, deadlines).
• Planning the operation with a notary and tax advisor before moving the money, to coordinate date, deed, and justification of the destination.

The regional casuistry is very broad and changing; therefore, before making the donation, it is advisable to review the specific regulations of the community where it will be taxed, to ensure that all requirements are met and possible exemptions or bonuses are not lost.