Donations in Spain: How to Make Them and When They Can Be Revoked

🇪🇸 Read the original in Spanish

Donation is one of the most common legal formulas in Spain for transferring assets between family members or close relatives, but it is also one of the ones that generates the most doubts and conflicts. Although it is often perceived as a simple gift, the reality is that it is a formal contract subject to strict civil rules and taxation that must be understood in detail to avoid surprises with the tax authority. In this article, we analyze in depth how to make a donation legally, safely, and cost-effectively, and in which exceptional cases the donor can back out and revoke their decision.

What is a donation according to the Spanish Civil Code?

A donation is an act of liberality by which a person (the donor) gratuitously disposes of a thing in favor of another (the donee), who accepts it. This legal transaction is meticulously regulated in *Book III, Title II of the Spanish Código Civil (Civil Code) (Articles 618 to 656)*.

For a donation to be fully valid in the Spanish legal system, the mere will to hand over the asset is not enough; the acceptance of the donee is an indispensable requirement. *Article 629 of the Código Civil*** establishes that the donation does not bind the donor, nor produce any effect, except from the moment of acceptance. If the donee does not accept the asset during the donor's lifetime, the donation does not legally exist.

Legal limits on the freedom to donate

Contrary to popular belief, no one can donate everything they want or to whomever they want without limits. The Código Civil imposes two fundamental restrictions to protect both the donor themselves and their forced heirs:

1. Guarantee of subsistence (Article 634): The donor must reserve, in ownership or in usufructo (usufruct/right of use), what is necessary to live in a state corresponding to their circumstances. It is not legal to leave oneself in destitution by making a donation.
2. *Protection of the legítima (Article 636): No one may give or receive, by way of donation, more than what they can give or receive by will. A donation that exceeds this measure is considered "inofficious" and may be reduced or annulled upon the death of the donor so as not to prejudice the legítima* (forced share/statutory inheritance) of the heirs (children, spouse, or parents).

How to make a donation: formal requirements and step-by-step procedures

Spanish law is very strict regarding the form of donations to prevent fraud, coercion, or impulsive decisions. The requirements vary substantially depending on the type of asset being transferred.

A) Donation of movable assets (money, jewelry, vehicles, works of art)

According to *Article 632 of the Código Civil***, the donation of a movable asset can be made:

• Verbally: Requires the simultaneous delivery of the donated item (for example, handing over a watch as a gift).
• In writing: If there is no immediate delivery, the donation and the acceptance must necessarily be recorded in writing (public or private).

B) Donation of real estate (homes, land, commercial premises)

*Article 633 of the Código Civil** is categorical: for the donation of real estate to be valid, it must be made in an escritura pública (public deed) before a Notario* (Notary). This document must individually describe the donated assets and the value of any charges that the donee must satisfy. The acceptance can be made in the same deed of donation or in a separate one, but always during the lifetime of the donor. A donation of a home in a private document has no legal validity whatsoever.

Practical step-by-step guide to making a donation safely

If you have decided to make a donation, these are the steps you must follow to comply with current legislation:

1. Valuation of the assets: Determine the real value of what you are going to donate. If it is real estate, you must know its valor de referencia catastral (cadastral reference value), which is the minimum taxable base for the tax authority.
2. Drafting the agreement or visiting the Notary:

• If it is money or movable assets, draft a private donation contract stating the details of the donor, donee, the exact amount, and the express acceptance. Although it is a private contract, it is highly recommended to present it to the liquidating office of the Comunidad Autónoma (Autonomous Community).
• If it is real estate, arrange an appointment with a Notario to draft the Escritura Pública de Donación (Public Deed of Donation).

1. Settlement of taxes (Deadline of 30 business days): The donee (the person receiving the asset) must self-assess the Impuesto sobre Sucesiones y Donaciones (ISD - Inheritance and Gift Tax) before the Tax Agency of the corresponding Comunidad Autónoma within 30 business days starting from the day after the formalization of the donation.
2. *Registration in the Registro de la Propiedad (Property Registry): In the case of real estate, once the taxes are paid, the deed must be presented at the Registro de la Propiedad* to register the property in the name of the new owner.
3. *Declaration in the IRPF (by the donor): The donor must check if the donation generates a capital gain in their IRPF* (personal income tax) return for the following year.

Taxation of donations: deadlines, figures, and tax impact

Making a donation in Spain is not free. It involves a tax burden that affects both parties and varies enormously depending on the Comunidad Autónoma of residence of the donee (or where the real estate is located).

1. Impuesto sobre Sucesiones y Donaciones (ISD)

This tax is always paid by the donee (the receiver).

• Deadline: 30 business days from the formalization of the donation.
• Place of presentation: If it is real estate, in the Comunidad Autónoma where it is situated. If it is money or movable assets, in the Comunidad Autónoma where the donee has had their habitual residence for the majority of the last 5 years.
• Tax reliefs: Many Comunidades Autónomas (such as Madrid, Andalusia, Murcia, the Valencian Community, or Galicia) apply tax reliefs of between 95% and 99% of the tax liability for donations between parents and children (Group II), provided they are formalized in a public deed and the origin of the funds is justified.

2. The IRPF of the Donor (The tax "trap")

Many donors are unaware that donating an asset can force them to pay the tax authority in their income tax return. For IRPF purposes, the tax authority considers that the donor has "sold" the asset for its current value. If the current value is higher than the value for which it was acquired back in the day, there is a capital gain that must be taxed at rates ranging between 19% and 28%.

• Exception: No IRPF is taxed if what is donated is cash, or if the donor is a person over 65 years of age who donates their primary residence.

3. The Plusvalía Municipal (IIVTNU)

If urban real estate is donated, the donee must pay the Impuesto sobre el Incremento de Valor de los Terrenos de Naturaleza Urbana (commonly known as Plusvalía Municipal - municipal capital gains tax) to the corresponding Town Hall within 30 business days.

Practical examples with real figures

To understand the impact of donations, we will analyze two common scenarios.

Example 1: Donation of money from father to daughter in Madrid

• Situation: Carlos, a resident of Madrid, wants to donate the amount of 50,000 € to his daughter Sofía for a house deposit.
• Procedure: They go to the Notario to formalize the donation in a public deed (an indispensable requirement in Madrid to apply tax benefits). The Notary's cost is around 250 €.
• Gift Tax (ISD): Sofía must settle the tax. In Madrid, the theoretical rate for 50,000 € would generate a tax liability of about 4,000 €. However, by applying the 99% relief for Group II, Sofía will only pay 1% of that liability, which is 40 €.
• IRPF: Since it is cash, Carlos (the donor) does not have to declare any capital gain in his IRPF.

Example 2: Donation of an apartment from an aunt to her nephew in Catalonia

• Situation: Carmen donates a beach apartment valued at 150,000 € to her nephew Lucas. Carmen bought it fifteen years ago for 90,000 €.
• Gift Tax (ISD): As this is a Group III relationship (collaterals of the second and third degree), tax reliefs are minimal or non-existent. Lucas will have to pay a tax rate that, according to the Catalan tables for that amount and relationship, can exceed 18,000 €.
• IRPF for the donor: Carmen has generated a capital gain of 60,000 € (the difference between the current value of 150,000 € and the acquisition value of 90,000 €). In her income tax return, Carmen must pay approximately 21% of that gain, which equates to about 12,600 €.
• Plusvalía Municipal: Lucas must also pay the municipal capital gains tax to the Town Hall, which will depend on the number of years Carmen has owned the land.

When can a donation be revoked? Legal grounds

As a general rule, a donation is irrevocable: once made and accepted, the donor cannot change their mind and recover the asset. However, the Código Civil contemplates three exceptional and specific situations in which the donor (or in some cases their heirs) can legally seek the revocation of the donation.

1. Supervenience or survival of children (Article 644)

Any donation made by a person who has no children or descendants will be revocable by the mere fact of any of the following cases occurring:

• That the donor has children after the donation, even if they are posthumous (supervenience).
• That the child of the donor, whom the donor believed to be dead when making the donation, turns out to be alive (survival).
• Limitation period: The period to exercise this action is 5 years, counted from the time notice was received of the birth of the last child or the existence of the one believed to be dead. This action cannot be waived and is transmitted, upon the death of the donor, to their children and descendants.

2. Non-fulfillment of charges (Article 647)

The donation will be revoked at the request of the donor when the donee has failed to comply with any of the conditions or charges that the donor imposed on them. A classic example is donating a home with the charge that the donee must care for and feed the donor during their old age. If the donee neglects this obligation, the donor can go to court to recover the asset.

• Limitation period: Although the Código Civil does not establish a specific period in this article, the majority of jurisprudence applies by analogy the 4-year period for rescissory actions.

3. Ingratitude of the donee (Article 648)

The donor can revoke the donation on the grounds of ingratitude in the following three specific cases:

1. If the donee commits any crime against the person, honor, or property of the donor.
2. If the donee imputes to the donor any of the crimes that give rise to ex officio proceedings or public prosecution, unless the crime was committed against the donee themselves, their spouse, or their children.
3. If the donee improperly denies maintenance/support to the donor when the donor needs it for subsistence.

• Limitation period: This action prescribes within 1 year, counted from the time the donor had knowledge of the fact and the possibility of exercising the action (Article 652). It is not transmitted to the heirs of the donor if the donor, being able to do so, did not exercise it.

Mistakes you must avoid

• Donating real estate through a private contract: This document lacks legal validity to transfer ownership. The donation of real estate strictly requires a public deed before a notary to legally exist.
• Forgetting the impact of IRPF for the donor: Believing that only the person receiving the asset pays taxes is a costly mistake. If you donate real estate, shares, or funds that have increased in value since you bought them, you will have to pay the tax authority for the capital gain generated.
• *Not respecting the legítima of forced heirs:* If you donate virtually all of your assets to a single child or to a third party, upon your death the remaining forced heirs can legally challenge the donation for being "inofficious" and demand its reduction.
• Failing to meet the tax filing deadline: You have a strict deadline of 30 business days from the signing. Filing late entails the loss of applicable regional tax reliefs and the imposition of surcharges and penalties by the Tax Agency.

Frequently Asked Questions (FAQ)

Is it better to donate during one's lifetime or leave an inheritance?

It depends mainly on the Comunidad Autónoma and the degree of kinship. In communities with high tax reliefs for donations (such as Madrid, Andalusia, or Cantabria), donating during one's lifetime allows for the progressive transfer of wealth and helps children when they need it most. However, tax-wise it is usually cheaper to inherit, as an inheritance does not generate the "IRPF of the donor" (technically known as the "plusvalía del muerto" or "dead man's capital gains").

Can money be donated from parents to children without going to a Notary?

Yes, it is legally valid through a private contract signed by both parties. However, to enjoy the significant tax reliefs (of up to 99%) offered by most Comunidades Autónomas, the indispensable requirement is usually that the donation is formalized in a public deed before a Notario and the bank origin of the funds is justified.

What happens if the donee sells the donated asset and the donation is later revoked?

In cases of revocation due to supervenience/survival of children or ingratitude, if the donee has already sold the assets, they cannot be claimed back from third-party purchasers in good faith. Instead, the donee will be obliged to return to the donor the value the assets had at the time the donation was made. In the case of non-fulfillment of charges, the transfers are annulled, except for the protection of third-party registrants in good faith.

Can the free revocability of a donation be agreed upon?

No. A donation is essentially irrevocable outside of the causes strictly specified by law (Articles 644, 647, and 648 of the Código Civil). It is not valid to introduce a clause in the contract that allows the donor to recover the asset "whenever they want" in an arbitrary manner, as the fulfillment of contracts cannot be left to the discretion of one of the parties. What is permissible is a donation with a reversion clause under objective future conditions.

In summary

• A donation is a gratuitous but solemn act that strictly requires the acceptance of the donee to be valid.
• Real estate must be donated through a public deed before a Notario; movable assets can be formalized by private contract.
• The donee must settle the Gift Tax within 30 business days from the formalization of the transfer.
• The donor must take into account the impact of IRPF, as the law equates a donation to a sale and may require paying tax on the capital gain.
• A donation is irrevocable as a general rule, except for three very specific legal causes: survival/supervenience of children, non-fulfillment of imposed charges, or ingratitude of the donee.

General legal information, not personalised legal advice. For your specific situation, ask your question for free at AbogadoAI — answers grounded in Spanish law (BOE), in English.

This is general information, not legal advice. Verify on the BOE or consult a lawyer for your specific case.