Periodic donations from the same donor require individual self-assessment

The tax treatment of money transfers received on a recurring basis has been defined following a recent resolution from the Dirección General de Tributos (DGT). The inquiry addresses the correct way to settle Inheritance and Gift Tax (ISD) when a donee receives funds from the same donor periodically.

What the DGT has resolved

The administration establishes that the donee resident in Spain is the taxpayer by personal obligation for this tax. This implies that the responsibility for completing the procedure falls directly on the person receiving the money.

The resolution determines two fundamental aspects for compliance with the obligation:

• Individual self-assessment: A self-assessment must be submitted for each donation received, within thirty business days from the formalization of the contract or the delivery of the funds.
• Calculation of the tax liability: To determine the applicable tax rate, the marginal rate of the current donation should not be used. Instead, the average rate resulting from applying the tariff to the theoretical taxable base of all donations accumulated from the same donor over a three-year period shall be applied to the base of the present donation.

What this means for you

If you receive regular money transfers from a family member or the same donor, you cannot treat each income as an isolated taxable event for tariff purposes. The regulations seek to prevent the fragmentation of donations from artificially reducing the applicable tax rate.

This criterion requires maintaining strict control over movements received in the last three years to correctly calculate the theoretical taxable base and, therefore, the average rate that will affect the new donation. Failure to meet the thirty-day deadlines or an incorrect calculation of the average rate could lead to sanctions by the Administration.

What you should do

Upon receiving recurring funds, it is necessary to document each transfer and verify the applicable regulations according to the residence of both the donor and the donee. Since the calculation of the average rate requires an aggregate view of the last three years, it is essential to have a historical record of the donations received to ensure that the individual self-assessment is accurate and complies with the requirements of Law 29/1987 and the ISD Regulations.