This entry, to a certain extent, is the development of a more generic one published in this same blog, dedicated to the fiscal cost of donations and which can be consulted by clicking here. That entry I am referring to is one of the most visited on this blog and the one that has generated the greatest number of views, comments and inquiries in different ways.
Now I want to refer to a very common type of donation in the Community of Madrid, such as the donation made between spouses, grandparents, parents and children, in money, with very different purposes, which remain in the internal sphere of each person.
The donation as a legal act or business (I do not want to get into technical discussions) supposes that a person gives something to another without consideration, in principle forever and without having to return it.
This configuration of the donation gives rise to its own scope being the family circle (grandparents, parents and children), due to the existence of ties of affection that are rewarded through it.
These effects justify that in donations of real estate it is common to establish certain precautions, limiting the power of the donee over the property, in different ways:
a.- In the form of a reserve for the donor of the usufruct or the power to dispose of the assets.
b.- By way of establishing a reversal of the donated property in favor of the donor or other persons, for certain cases (usually possible deaths).
c.- Or establishing charges or conditions to the donee whose breach implies the revocation of the donation.
My experience tells me that on many occasions the donor, despite the donation, is believed to continue to be the owner of the donated property, and donations have often been revoked, which is why I have always considered it advisable to establish some type of condition to justify the revocation and thus limit its fiscal effects.
However, in the case of money donations, these limitations make very little sense, because the money is given to be spent, it is what is called a fungible thing, since if it cannot be used and spent it is as if it were not had.
Notwithstanding the foregoing, the donation of money is subject to the general limits of respect for the legitimate, since no one can give or receive, by way of donation, more than what they can give or receive by will (article 636 CC) , being able, in addition, to make sense the dispensation of collation of article 1036 CC.
THE FORM OF DONATIONS
Donations, except in the case of real estate, which must be made in a public deed to be valid (it is one of the very few cases that the law requires), can be made verbally or in writing.
However, in the case of money donations in the Community of Madrid, If we want to take advantage of the important tax benefits, they must be made in a public deed, with which we introduce ourselves in a brief study of the fiscal aspect of these donations.
We start from the example of a donation of 100,000 euros.
Yo.- BASE DONATION TAXABLE.
It will be 100,000 euros. In the donations of money there is no doubt about its value.
II.- LIQUIDABLE BASE.
It will coincide with the tax base, since there is no provision in the case of money for any type of reduction. However, as you can see in this entrance, Since January 1, 2019, there are reductions in the tax base in the case of donations of money to collateral.
III.- TAX RATE
In the gift tax, the tax rate is progressive based on the amount of the tax base.
In the case of a donation of 100,000 euros, the effective rate would be 12.407%, giving rise to a tax rate of 12,407.03 euros.
IV.- THE MULTIPLIER COEFFICIENT.
It is a magnitude that multiplies the amount that results from applying the type to the tax base and that depends on the relationship between donor and donee and the pre-existing patrimony of the donee.
In the case of donations between spouses and accredited common-law partners, descendants and ascendants, of any age This coefficient ranges between 1 and 1.20, depending on the pre-existing patrimony of the donee, in the following terms:
Pre-existing assets of the donee of less than 403,000 euros:
Coefficient 1.00.
In the case that we are dealing with, the fee would go to 12,407.03 euros
Pre-existing assets of the donee between 403,000 euros and 2,008,000 euros:
Coefficient 1.05.
In the case that we are dealing with, the fee would go to 13,027.38 euros
Pre-existing assets of the donee between 2,008,000 euros and 4,021,000 euros
Coefficient 1.10.
In the case that we are dealing with, the fee would go to 13,647.73 euros
Pre-existing assets of the donee greater than 4,021,000 euros
Coefficient 1.20
In the case that we are dealing with, the fee would go to 14,888.43 euros.
V.- THE BONUS ON THE FEE OF 99%.
This is the most important aspect of the regulations of the Community of Madrid, which includes article 25 of Legislative Decree 1/2010, of October 21, of the Governing Council, which approves the revised text of the legal provisions of the Community of Madrid in matters of taxes ceded by the state.
In acquisitions inter vivos, taxpayers included in groups I and II of kinship of those provided for in article 20.2.a) of Law 29/1987, of December 18, on Inheritance and Gift Tax, (that is, between spouses and accredited common-law partners, descendants and ascendants, of any age, with no limit to the amount or class of goods that are the object of the donation) A 99 percent discount will be applied to the tax rate derived from them, provided that the following requirements are met:
a.- The donation must be made in a public document, that is, before a Notary.
b.- And when the object is money, the origin of the donated funds is duly justified, which must be manifested in the writing itself.
The normal thing is that the funds come from savings, and to avoid any type of problem it is mandatory in some cases and convenient in all that the donation be made through transfers and/or checks.
When the donation is made through a transfer, despite the fact that it is an aspect on which the law is silent, the Madrid tax administration requires that between the date of the transfer and the deed of donation not have elapsed more than 30 business days.
Fulfilling these requirements, the amount of the tax would be reduced in the following terms:
The fee of 12,407.03 euros would go to 124.07 euros.
The fee of 13,027.38 euros would go to 130.27 euros.
The fee of 13,647.73 euros would go to 136.47 euros.
The share would go to 14,888.43 euros would go to 148.88 euros.
In the event that the donation is made outside the scope of spouses and accredited common-law partners, descendants and ascendants, in addition to the fact that there would be no right to the fee bonus, the multiplier coefficient would be higher, ranging between 1.5882 and 2,4. For example, a donation of 100,000 euros to a friend would be taxed at least 29,776.87 euros.
VI.- THE DONATION OF MONEY BY MARRIED PARENTS IN PROPERTY SYSTEM.
In the very frequent case that both spouses are married under the community property regime, those who jointly donate an amount of money to a child or descendant, from a tax point of view, it is considered that there are two donations, each one for half of the global amount donated.
VII.- WHEN DO THE REGULATIONS OF THE COMMUNITY OF MADRID APPLY?
In monetary donations, the application of the regulations of the Community of Madrid depends on whether the recipient has his tax residence in the Community of Madrid, or has had it for longer in the last five years.
Finally, in the case of foreigners, residents or non-residents, I refer to these two sections of this blog, which can be consulted here and here
VIII.- THE REAL COST.
To know in an indicative way the fiscal cost of these donations of money, I refer you to this entrance of the blog and for the cost of writing to this other
