Donation of money: absence of capital gains or losses in Personal Income Tax

The Directorate General of Taxes (DGT) has issued a relevant criterion regarding the fiscal nature of money donations and their impact on the donor's income tax return. This clarification is fundamental to avoid errors in the settlement of Personal Income Tax (IRPF) when making gratuitous transfers of cash.

What the DGT has resolved

The inquiry addresses the question of whether the donation of money generates a capital gain or loss for the person delivering the capital. The advisory body determines that, although the donation of any asset produces a change in wealth, in the specific case of money, no capital gain or loss will be computed for the donor.

This criterion is based on the following points:

• Exclusion of losses: According to article 33.5 of the Law 35/2006 (LIRPF), capital losses derived from lucrative transfers inter vivos or liberalities are not computable.
• Taxpayer: In Inheritance and Gift Tax, the taxpayer is the donee, who receives the asset, meaning the operation has no direct economic impact for the donor in said tax.

What it means for you

If you are an individual making a donation of money to a third party, this operation should not be declared as a capital gain or loss in your IRPF return. Although your wealth decreases upon delivering the cash, the regulations prevent that outflow of capital from translating into a computable capital result for the donor.

What you should do

In the event of such an operation, it is necessary to correctly distinguish between the decrease of assets in wealth and the generation of a fiscal result. It is essential to verify that the operation is managed within the framework of Inheritance and Gift Tax, where the responsibility lies with the recipient. It is recommended to assess each particular situation to ensure that the documentation of the transfer is consistent with the economic reality of the operation.