Private contracts between individuals in Spain: loan, gift, building work and services

Freedom of form applies: contracts are binding whatever the form in which they are entered into (article 1278 of the Código Civil, the Spanish Civil Code) and have the force of law between the parties (article 1091). A signed private document is fully valid and enforceable.

The only relevant exception is the gift of real estate, which requires a public deed to be valid (article 633 of the Código Civil). Loans, building work, services and gifts of money are valid as a private document.

The date against third parties is a different matter. Article 1227 of the Código Civil provides that the date of a private document only counts against third parties (for example Hacienda, the Spanish tax authority) from the moment it is entered in a public register, handed to a public official in their official capacity, or one of the signatories dies. That is why it is advisable to file the tax form, which gives the transaction a certain date.

Managora drafts each contract with the clauses that make it enforceable and takes care of whatever filing is required.

A loan or mutuo (articles 1740 and following of the Código Civil) is the handing over of money with an obligation to return it. It can be agreed with interest or without it.

For tax purposes it is subject to but exempt from Impuesto sobre Transmisiones Patrimoniales (Spanish transfer tax, ITP) under article 45.I.B.15 of Real Decreto Legislativo 1/1993. Nothing is paid, but the borrower (the person who receives the money) must file form 600 with the Hacienda autonómica (regional tax authority) of their home address within the following 30 working days.

If the loan carries no interest, IRPF (Spanish personal income tax) presumes that it is remunerated at the interés legal del dinero (the statutory interest rate), under articles 6.5 and 40 of Ley 35/2006. That presumption is switched off by expressly agreeing in writing that the loan is free of charge and by filing form 600.

The risk of not documenting it or not declaring it is that Hacienda reclassifies the transfer as a gift and demands Impuesto sobre Sucesiones y Donaciones (Spanish inheritance and gift tax, ISD) plus a penalty. Essential clauses: amount, delivery by bank transfer, term and repayment schedule, interest or express gratuity, and acceleration of the loan (early maturity).

A gift (articles 618 and following of the Código Civil) is a transfer made free of charge. A gift of money is valid in writing; a gift of real estate requires a public deed (article 633).

The main tax is Impuesto sobre Sucesiones y Donaciones, paid by the donee (the person who receives) through form 651 within 30 working days. It is devolved to the comunidades autónomas (Spain's regions), so the rate and, above all, the reliefs vary a great deal: in several regions children and the spouse enjoy reliefs of up to 99%. Competence lies with the region where the donee is resident when money or movable assets are given, and with the region where the property is located when real estate is given.

Two additional effects need watching. In IRPF, the donor is taxed on the capital gain if they give away an asset that has increased in value (article 33 of Ley 35/2006); giving money does not generate that gain. And if urban land is given away, the donee also pays plusvalía municipal (the local tax on the increase in land value, IIVTNU).

Key clauses: identification of the parties, the asset given, its gratuitous nature, acceptance by the donee, and any conditions or reservations agreed.

The contract for work (articles 1588 and following of the Código Civil) creates an obligation to deliver a result: the finished work. The party carrying it out may supply only their labour, or the materials as well (article 1588); who bears the risk if the work is destroyed before delivery depends on that (articles 1589 and 1590).

On price, where the work is contracted for a lump sum the contractor cannot demand an increase even if materials or wages go up, unless there are changes to the plans authorised in writing by the owner (article 1593).

Liability for defects is wide: the contractor is liable for collapse caused by construction defects for 10 years from the date the work was completed (article 1591). In building construction, the guarantee periods of the Ley de Ordenación de la Edificación (the Spanish Building Act) also apply (1, 3 and 10 years).

Recommended clauses: description and specification of the work, price and payment by milestones, completion deadline and penalty for delay, quality standards and materials, guarantee, and handover certificate and final settlement. If the party carrying out the work is a company or an autónomo (self-employed worker), they issue an invoice with IVA (Spanish VAT).

The contract for services (articles 1583 to 1587 and 1544 of the Código Civil) creates an obligation to carry out an activity, not to guarantee a result. That is its essential difference from the contract for work: with services you pay for the activity performed (an obligation of means), with work you pay for the result.

There is no register and no tax form of its own for this contract. If the provider is an autónomo or a company, they invoice with IVA and apply the IRPF withholding where appropriate.

Employment status needs care. If the relationship involves subordination, imposed working hours, exclusivity and work carried out for another's account, it may be treated as a disguised employment relationship (falso autónomo, a bogus self-employed worker). The contract must reflect the provider's real independence.

Usual clauses: subject matter and scope of the service, fees and invoicing, duration and grounds for termination, confidentiality, ownership of the results or intellectual property, and liability regime.

The contract is perfected when the parties sign it; a handwritten signature on a valid document is enough (article 1278 of the Código Civil). For the date to have effect against Hacienda or third parties, it should be backed by filing the tax form or by an entry in a register (article 1227).

Managora drafts the contract tailored to your case with all the clauses that make it enforceable, tells you the exact amount, which you can check on the service page, and files form 600 or form 651 for you where applicable, within the deadline.

You do not have to find or coordinate anyone else: Managora prepares and files the complete procedure, and you receive the contract and the filing receipt by email.