Gifting during your lifetime: Spanish gift tax and form 651

When you hand over money or an asset during your lifetime, free of charge, to another person, that transfer is taxed under the Impuesto sobre Sucesiones y Donaciones (ISD, Spain's inheritance and gift tax) in its gift branch, governed by Ley 29/1987 (the Spanish Inheritance and Gift Tax Act). It is the same tax that applies to inheritances, but applied to transfers made between living people.

The tax is always paid by the donatario, that is, the person who receives the gift, using form 651. The person making the gift does not file that form, although it can have consequences in their own IRPF (Spanish personal income tax), which we look at below.

It is a tax ceded to the comunidades autónomas (Spain's regional governments): state law sets the framework, but each region can approve its own rates, its own reductions and its own reliefs. That is why what you pay changes a great deal from one region to another. The competent region is, as a general rule, the region where the recipient habitually resides, except when property is gifted, in which case the region where the property is located applies.

Managora works out which region is competent, calculates the tax due applying the reductions and reliefs you are entitled to, and files form 651 at the right sede electrónica (the administration's online filing office), for you.

You can gift money, property, vehicles, company holdings, shares, jewellery or any asset or right with an economic value. The taxable base is the real value of the asset gifted, less the charges and debts that reduce it.

For property, a public deed before a notario (Spanish notary) is required by law: without a deed, the gift of a property is not valid (article 633 of the Código Civil, the Spanish Civil Code). Managora prepares the gift and coordinates the signing, we do not send you off to find a notary on your own, the notarial step is part of the service.

For money, the law does not require a deed for the gift to be valid, but most comunidades autónomas require the gift to be formalised in a public document (a deed or similar) in order to apply the family relief. If money is gifted, it is also advisable to leave a record of where the funds came from and of the means of payment (a traceable bank transfer). In some regions, such as Madrid, the public document is a requirement when what is gifted exceeds a certain cumulative threshold from the same giver.

In short: for property the deed is essential; for money it is not needed for validity, but in practice it is needed so as not to lose the relief and to evidence the transaction before Hacienda (the Spanish tax authority).

The tax due depends on three factors: the value gifted, the degree of kinship between giver and recipient, and the applicable comunidad autónoma. Kinship is classified into four groups (see the table). The closer the kinship, the less you pay.

A progressive rate is applied to the base and then a multiplier coefficient depending on the kinship group and the recipient's pre-existing wealth. The state scale runs from 7.65% to 34%, but many regions approve their own rates and, above all, very high reliefs on the tax due.

The big difference lies in the regional reliefs. In many regions, gifts between parents and children, between spouses or from grandparents to grandchildren (groups I and II) carry a 99% relief, so that the final bill is symbolic. In other regions the treatment is less favourable, or is arranged through their own reduced rates. That is why, before making a gift, it is worth working out the real cost in your specific region.

You can see the exact price of our service to prepare and file form 651, always up to date, on the Managora gift tax service page.

Although the recipient pays the gift tax, the giver may have to pay tax in their IRPF (Spanish personal income tax). The reason: when you gift an asset that has risen in value since you bought it, Hacienda takes the view that a capital gain arises, even though you receive no money in return.

This gain is calculated as the difference between the acquisition value of the asset and its value for gift tax purposes, and it is taxed in the savings base of the giver's IRPF. It typically happens when gifting property, shares or funds that have risen in value. Important: if the gift produced a loss rather than a gain, the law does not allow it to be counted (losses on gifts cannot be offset).

Gifting cash, by contrast, does not generate a capital gain for the giver, because the euro does not rise in value. The risk appears when, in order to make the gift, an asset that has risen in value is sold first: that sale is indeed taxed.

There is one relevant exception: if you are 65 or over and you gift your habitual residence (or the bare ownership, keeping the usufruct for yourself), the capital gain is exempt from IRPF, provided the legal requirements are met. Managora always reviews this point before a gift is made, because sometimes the saving on gift tax is reduced by the giver's IRPF.

There is no single answer: it depends on your assets, your age, the region and your objective. A gift lets you pass on wealth early and help your children when they need it (for example, to buy a home), and in regions with a 99% relief the ISD cost is minimal.

An inheritance, for its part, has advantages of its own: it has state reductions for kinship that do not exist for gifts, the deadline is longer (6 months, extendable) and, above all, the so-called plusvalía del muerto (the deceased's capital gain) is exempt from IRPF, that is, the deceased pays no tax on the increase in value of their assets. In a gift of a property that has risen in value, that same increase in value is indeed taxed as a capital gain of the giver.

Another factor to bear in mind is accumulation: gifts from the same giver within a period are added together, and they can also be added to the future inheritance, which can push up the applicable rate. The decision is best taken with concrete figures.

Managora runs the comparison for you (gift today against future inheritance) using your real situation before you decide, and carries out the option you choose.

The reference state rule remains Ley 29/1987 del Impuesto sobre Sucesiones y Donaciones (the Spanish Inheritance and Gift Tax Act) and its regulation (Real Decreto 1629/1991). On top of that, each year the regions adjust their reliefs and requirements, and that is the part that moves most.

In the Comunidad de Madrid, Ley 2/2025 extended the relief to group III relatives and simplified the requirements for accessing the tax benefits on gifts. In the Comunidad Valenciana, Ley 5/2025 introduced an increasing relief for group III (25% from 1 June 2026 and 50% from 1 June 2027), keeping the 99% for groups I and II.

The general trend in 2026 is towards a reduction or an almost total relief of the tax for gifts between direct family members in many regions. As these percentages and thresholds change by region and by year, Managora checks the rules in force in your region at the moment your gift is prepared.