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V2033-20 19 June 2020 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ISD · trust

Trust transfers deemed direct between settlor and beneficiary for Inheritance and Gift Tax

A taxpayer inquired about the tax implications for his wife and son following his death if they receive funds from a US-based trust. The Directorate General for Taxes (DGT) ruled that, as trusts are not recognised in Spain, transfers are considered to be made directly between the settlor and the beneficiary.

The question raised

Taxation of the wife and the son depending on whether they are residents in Spain at the time of the consultant's death.

The DGT's ruling

Due to the tax transparency of the trust, transfers of assets or income from the settlor to the beneficiary are considered direct transfers. If the beneficiaries are residents in Spain, they are taxed under personal obligation on all assets received, regardless of their location. If they are not residents, they are taxed under real obligation solely on assets located in Spanish territory.

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