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V0328-21 24 February 2021 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · animus donandi

Debt forgiveness via advance payments does not constitute a gift if there is no intent to make a liberal gift

A query was raised regarding whether reducing a debt in exchange for receiving advance payments qualifies as a gift for Inheritance and Gift Tax purposes and how it affects the acquisition value for Personal Income Tax (IRPF). The Directorate General for Taxes (DGT) ruled that no gift exists because there is consideration involved, and that the acquisition value for IRPF purposes must be reduced by said amount.

The question raised

Treatment of the projected operation in Inheritance and Gift Tax and in Personal Income Tax.

The DGT's ruling

For a donation to exist in the remission of debt, the 'animus donandi' must be present, that is, the intention to enrich the debtor at the expense of the impoverishment of the creditor. If the remission is part of a transaction where the creditor receives part of the money in advance, there is no intent of liberality. In Personal Income Tax, the acquisition value of assets acquired for consideration must be reduced by the amount of the agreed price reduction.

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