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

The Dirección General de Tributos (DGT) has issued a relevant criterion regarding the tax treatment of cash donations, clarifying the nature of the change in net worth that these operations represent for the person delivering the funds.

What the DGT has ruled

The query presented focused on the taxation of the operation from the donor's perspective. The DGT has determined that, although the donation of any asset or right entails a change in net worth, in the specific case of a donation of money, no capital gain or loss shall be calculated in the donor's IRPF.

This criterion is based on the nature of the asset being transferred. Furthermore, the administration emphasizes that, regarding Inheritance and Gift Tax (ISD), the tax liability falls exclusively on the donee, which means the operation has no tax impact for the donor under said tax.

What this means for you

If you are an individual deciding to make a cash donation, this criterion provides legal certainty regarding your income tax return. Unlike the donation of other assets, such as real estate or shares, where the difference between the acquisition value and the transfer value may generate a taxable capital gain or loss, money does not present this tax risk for the person delivering it.

In summary, the act of donating money will not increase your IRPF taxable base through capital gains, as there is no acquisition value to compare with the transfer value to determine an economic benefit or loss.

What you should do

It is fundamental to distinguish between the donation of money and the donation of other assets or rights to avoid errors in tax settlements. Although the operation does not affect the donor's IRPF, the donee must fulfill their obligations under Inheritance and Gift Tax (ISD).

Given the complexity of changes in net worth, it is necessary to assess each particular situation to ensure that the documentation of the fund transfer is correct and complies with current regulations.