Exemptions in Spanish gift tax: an overview by region

Besides a uniform, national system, Spain's gift tax also has regional provisions. The 17 autonomous regions possess far-reaching powers to set their own exemptions, deductions and rebates. This results in a tax landscape that is highly fragmented, where a wealth transfer that is virtually tax-free in one region can result in a significant tax burden in another. In this article, we provide an overview of the different Spanish gift tax exemptions by region.

Do you have any questions about property gifting in Spain? If so, please feel free to contact with us. We can for your specific situation drawing up an initial indication of donation costs.

Also listen to our podcast episode on gifting in Spain.

Basics of Spanish gift tax (Impuesto sobre Donaciones)

The complexity of Spanish gift tax stems from a dual structure where national legislation forms the basis, but autonomous regions determine the final tax burden. Let's start with some basic concepts:

• The taxable event: the unencumbered acquisition of property by a natural person (incremento patrimonial obtenido a título lucrativo por personas físicas).  
• The taxpayer: the recipient of the donation, the donatario.  
• Basic calculation and national rates: the law sets a progressive rate rising from 7.65% to 34%.  
• Reductions (reducciones): Specific amounts deducted from the tax base. For example, if you gift a property in Costa Blanca of 250,000 euros to a child, the 250,000 euros can be reduced by 100,000 euros. The basis to calculate the tax is then 150,000 euros.
• Discounts (bonificaciones): Percentage reductions applied to the tax amount already calculated, which is the most impactful adjustment. For example, if the final tax is 10,000 euros, you can reduce by 99 per cent in Costa Blanca, ending up paying 100 euros.

The Spanish tax system classifies recipients into four groups based on their relationship to the donor. This classification is fundamental, as the most significant tax benefits are directly linked to these groups.  

• Group I: Direct descendants (children, grandchildren) and adoptees under 21.
• Group II: Direct descendants and adoptees aged 21 and over, spouses, direct ancestors (parents, grandparents) and adopters.
• Group III: Second-degree relatives (brothers/sisters) and third-degree relatives (uncles/aunts, cousins/nephews), as well as relatives in the ascending and descending lines (parents-in-law, children-in-law).
• Group IV: Collateral relatives of the fourth degree (second-degree cousins) and beyond, as well as non-relatives.

Gifts outside the immediate family circle (Group I & II) are still heavily taxed in most regions, reflecting a clear policy goal of facilitating wealth transfer within the nuclear family. However, we see a regional trend to extend benefits to Group III as well.

To understand the impact of regional benefits, a step-by-step analysis of the calculation method is essential.  

1. Base Imponible (Taxable Base): This is the fair market value of the donated property. For real estate, since 2022, the cadastral reference value (valor de referencia) as a minimum. 
2. Reducciones (Reductions): Regional or national reductions shall be made from the Base Imponible subtracted. The result is the Base Liquidable.
3. Cuota Íntegra: On the Base Liquidable the progressive rate is applied (7.65 per cent - 34 per cent), resulting in an initial tax amount.
4. Coeficiente Multiplicador (Multiplier): The Cuota Integra is multiplied by a coefficient depending on the kinship group and the recipient's pre-existing wealth (from 1 to 2.4). This yields the Cuota Tributaria on.
5. Bonificaciones (Discounts): On the Cuota Tributaria a percentage discount is applied, set by the autonomous region. This is often the most significant step that reduces the tax burden. The end result is the amount payable, Total a Ingresar.

An example. You make a property donation with a tax reference value of 250,000 euros in Costa Blanca to your two adult children. The base imponible amounts to €125,000 per child. A regional reduction of €100,000 per child applies. The base liquidable is more than €25,000 per child. The application of the rates results in a tax of €2,142.49. This amount is increased by the coefficient 1 for Group II for beneficiaries with assets in Spain less than 402,678.11), in total dee Cuota Tributaria. is then 2,142.49 euros. The 99 per cent discount is applied to this amount, making the final gift tax €21.43 per child.

Note: The Spanish national government is trying to introduce a national minimum tax on inheritances and gifts.

Where will the declaration be made?

For the donation of real estate, the location of the property is decisive. The laws of the autonomous region where the property is located always apply, regardless of the tax residence of the donor or the recipient. The return, via Model 651, must be filed with the tax authority of that particular region within 30 working days from the date of the gift deed.  

Belgium does not yet tax foreign property donations. You do not have to declare a foreign property donation. There is also no 5-year suspect period.

This is an important difference from inheritance tax. Unlike gift tax, foreign property is added to the estate to calculate inheritance tax.

Read more about inheritance planning and Flemish inheritance tax in Spain.

Spanish gift tax exemptions in popular regions

Autonomous regions are engaged in active tax competition, using gift tax as a tool to attract wealthy individuals and investors. This has resulted in a landscape where popular regions have developed very favourable regimes for international property owners.

Andalusia

Andalusia has positioned itself as one of the most fiscally attractive regions for intra-family gifts.  

• Discount (Bonificación): The core benefit is a rebate of 99% on the tax payable (cuota tributaria) for recipients in Group I (children < 21) and Group II (children ≥ 21, spouses, parents). This reduces the effective tax burden to a token amount of 1%.  
• Reductions (Reducciones): In addition to the rebate, there are specific reductions. For example, when donating money to a descendant (under 35) for the purchase of a first primary residence, there is a 99% reduction on the amount donated, with a maximum basis of €150,000 (or €250,000 in case of disability).  
• Conditions: To benefit from the 99% discount, the donation must be formalised in a notarial deed (escritura pública). When funds are donated, the source of the funds must be adequately evidenced in the deed.  

Read more about gift tax in Andalusia.

Comunidad de Madrid

Madrid competes directly with Andalusia with a similar, very favourable regime and has recently further simplified the rules.  

• Discount (Bonificación):
  • Group I & II: A discount of 99% on the tax payable, resulting in a payment of only 1% of the calculated tax.  
  • Group III: From 1 July 2025, the discount for brothers/sisters, uncles/aunts and nieces/nephews has been significantly increased from 25% to 50%. This is an important development that increases planning opportunities for families without direct descendants.  
• New Simplifications (from 1 July 2025):
  • 100% Discount up to €1,000: Gifts of up to €1,000 are fully exempt and require no declaration, regardless of the degree of kinship.  
  • No Notarial Deed up to €10,000: For donations up to €10,000 to Group I & II recipients, the requirement of a notarial deed has been abolished to apply the 99% discount, reducing administrative burdens and costs.  

Comunidad Valenciana

Since 2023, Valencia has joined quasi-exempt regions, a drastic change in policy from the past.  

• Reductions (Reducciones): There is a general reduction on the taxable base of €100,000 for Group I and II recipients.  
• Discount (Bonificación):
  • Group I & II: A discount of 99% on the tax payable is applicable to donations made since 28 May 2023.  
  • Group III (Phased Introduction): In line with the trend to extend benefits, Valencia is introducing a new discount for brothers/sisters, uncles/aunts and nieces/nephews (Ley 5/2025):
    • From 1 June 2026: 25% discount.  
    • From 1 June 2027: 50% discount.  

Read more about gift tax on the Costa Blanca.

Catalonia

Catalonia serves as an important fiscal counterpoint and applies a significantly less favourable regime than the previous regions. It illustrates that one should not assume that all of Spain is tax-advantaged for donations.  

• Reductions (Redcciones): There are specific reductions, such as a 95% reduction for the gift of a first principal residence to a descendant, with a maximum of €60,000 (or €120,000 in case of disability).  
• Rates: Catalonia applies its own, different rates. For donations to Group I & II, they range from 5% to 9%, depending on the value. For other groups, rates can go up to 32%.  
• Discount (Bonifcación): Discounts are more limited. While children under 21 can get a discount of up to 99%, it is considerably lower (up to 60%) for other close relatives such as children over 21.  

Read more about inheritance tax in Catalonia.

The Balearic Islands

The Balearic Islands recently introduced a very generous policy, effectively abolishing the tax for gifts within the immediate family circle.  

• Discount (Bonificación): There is a 100% rebate on the tax payable for recipients in Group I and II.  
• Group III: A discount of 25% applies to siblings, uncles/aunts and nieces/nephews. This percentage can go up to 50% if the donor has no descendants.  

Find more information on inheritance and gift tax in the Balearic Islands here.

The Canary Islands

This region offers a very generous discount that makes donations within a wide family circle fiscally attractive.

• Discount (Bonificación): There is a discount of 99.9% on the tax payable for recipients in Groups I, II ánd III. This is a significant difference from other regions, where Group III often enjoys much less benefit. The condition is that the tax return is filed voluntarily and within the stipulated period.  

Read more about inheritance tax in the Canary Islands here.

Overview of Spanish gift tax exemptions of the other autonomous regions

To complete the national picture, here is a brief overview of regimes in other relevant regions, based on the latest information.  

• Murcia: Similar to Andalusia, with a discount of 99% for Group I & II.  
• Castilla y León: Discount from 99% for Group I & II.  
• La Rioja: Since 2024, an exceptionally wide discount of 99% for all recipients regardless of kinship group.  
• Galicia: Adopts a system of high exemptions rather than discounts, with a €1,000,000 exemption for inheritances in the direct line. The regime for gifts is less favourable.  
• Asturias: An exemption of up to €300,000 for Group I & II.  

Comparative overview of main discounts by autonomous region (2025)

Additional taxes and charges

The myth of the "free" donation needs to be debunked. A donation that is virtually tax-free for the recipient thanks to a 99% rebate can be very costly for the family as a whole. The total tax cost of the transaction is the sum of the gift tax (ISD), the donor's capital gains tax (IRPF/IRNR) and the municipal capital gains tax (Plusvalía).

Donor's obligation: capital gains tax (IRPF/IRNR)

This is the main "hidden cost" of a donation. The Spanish tax authorities consider a donation to be a "fictitious sale" for the donor. This means that the donor has to pay capital gains tax on the difference between the value of the property at the time of the donation and the original purchase value.

For non-residents (tax residence outside Spain), the rate is a flat rate of 19% on the realised capital gain.  

This tax can be significant, especially if the property has been owned for a long time and has increased in value. Eand donation shortly after purchase minimises or eliminates this burden, because little or no added value was then realised.

Read more about the national capital gains tax here. 

Receiver's obligation: Municipal Plusvalía

In addition to the gift tax, the recipient also owes a municipal tax, the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (IIVTNU), better known as the plusvalía municipal.

• Principle: This tax levies on the increase in value of the urban land during the period the donor was the owner, with a maximum of 20 years.  
• Taxpayer: When a gift is made, the recipient is obliged to pay and declare this tax.  
• Calculation: Since a change in the law at the end of 2021, taxpayers have a choice between two calculation methods: an objective method based on cadastral values and a method based on actual capital gains. No tax is due if no increase in value has taken place.  
• Declaration deadline: The declaration must be filed with the relevant municipality within 30 working days of the donation.  

Find more information on how to calculate the municipal capital gains tax here.

Other transaction costs

Besides taxes, there are various transaction costs that need to be taken into account:

• Notary fees: A notarial deed is a formal requirement in most cases to enjoy tax benefits and is legally necessary for the transfer of property.  
• Registration fee: The new owner must be registered in the Property Register
• Consultancy fees: Given the complexity of Spanish and international regulations, legal and tax consultancy costs are unavoidable for a correct and tax-optimised settlement.  
• Practical Steps: A Spanish tax identification number (NIE) is required for all parties involved who are non-residents. If parties cannot be present in Spain in person, a notarised power of attorney (poder) are drawn up.  

Do you have any questions about property gifting in Spain? If so, please feel free to contact with us. We can for your specific situation drawing up an initial indication of donation costs.