Horizon-ERC Advanced Grant subsidies are not subject to Inheritance and Gift Tax

The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the tax nature of European research subsidies, specifically the Horizon-ERC Advanced Grant. The query sought to determine whether the receipt of these funds should be taxed under Inheritance and Gift Tax (ISD).

What the DGT has ruled

The body has ruled that the receipt of the Horizon-ERC-ADG grant cannot be classified as a donation. For a donation to exist according to the Civil Code, the Administration must act with the intent of liberality or with the will to enrich the beneficiary, elements which are not present in this case.

As it is a public subsidy granted to fulfill purposes of public or social interest, the operation is not subject to Inheritance and Gift Tax, in accordance with the provisions of article 3.c) of the Inheritance and Gift Tax Regulation (RISD).

What this means for you

For researchers receiving this type of European funding, the direct consequence is the certainty that these funds should not be taxed under ISD. The classification of the aid as a public subsidy rather than a donation eliminates the tax obligation for this specific tax.

Nevertheless, it is important to note that the analysis also considers the possible exemption in Personal Income Tax (IRPF). Under the requirements for research grants provided for in article 7.j) of the IRPF Law, the nature of the aid could have implications for the beneficiary's personal income.

What you should do

Since the tax classification of an aid can depend on the interpretation of its purpose and the requirements met by the beneficiary, it is necessary to assess each particular case. It is recommended to analyze the documentation of the grant award to ensure that the provisions of current regulations are met in both the inheritance and income tax spheres.