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V1454-22 20 June 2022 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · trust

Contributions of assets to a trust have no tax effects in Spain as it is not a recognised legal entity

The taxpayer asks whether the contribution of assets from his father to a trust has implications for Inheritance and Gift Tax. The DGT rules that, as the trust is not recognised in Spain, the relationships are considered to be direct between the settlor and the beneficiary.

The question raised

Whether the contributions of assets to the trust, made by the settlor through the trust deed, have tax effects for the taxpayer regarding Inheritance and Gift Tax.

The DGT's ruling

Due to the tax transparency of the trust, the transfers of assets or income from the trustee to the beneficiaries are considered direct transfers from the settlor to the beneficiary. These lucrative inter vivos transfers are subject to Inheritance and Gift Tax by personal obligation if the beneficiary resides in Spain. The initial contribution of assets to the trust is not considered a transfer with tax effects.

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