Spain's Tax Agency may fine undeclared family transfers up to 150%

The Spanish Tax Agency (Hacienda) treats undeclared money transfers between family members as donations if the funds are given without the obligation of repayment. Under Law 29/1987, such gratuitous transfers are subject to the Inheritance and Gift Tax. Failure to declare these transfers can result in penalties of up to 150% of the unpaid tax amount.

To distinguish a donation from other financial movements, the nature of the transaction is key. Loans with a formal obligation to repay, shared expenses such as splitting a restaurant bill, or legal support for basic needs (alimentos) are not considered donations. However, if a transfer is made ‘a fondo perdido’ (without expectation of return), it triggers tax obligations.

Taxpayers are advised to maintain documentation to justify the purpose of transfers. For loans, a signed contract with a repayment schedule is recommended to avoid being classified as a donation. The recipient of the funds is responsible for declaring the amount using the appropriate self-assessment forms, such as Model 651. Notably, there is no universal minimum threshold in state law that exempts small transfers from declaration, although some regional bonuses may reduce the tax burden.