Tax queries in relation to Inheritance and Gift Tax

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A daughter of the consultant plans to assume her debtor position in a mortgage loan.

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The consultant raises the existence of quantitative, temporary and personal limits on donations to which the bonus of 99 percent of the fee applies.

Joint application of the reduction in the tax base for kinship and the bonus of 99 percent of the quota in free acquisitions "inter vivos".

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A resident of the Community of Madrid wishes to make a cash donation to his son.

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The consultant intends to acquire the house that constitutes his habitual residence, which is owned by his mother, for profit.

Subsequently, or in the same act, he intends to transmit it by the same title to his spouse.

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The consultant is the owner of shares in the entity "PV, SL" -whose properties are located in the Community of Madrid- acquired, one part, by the liquidation of her community property upon the death of her spouse, another part, in adjudication in payment of his part of the inheritance of the spouse and, another third part, by subscription in a capital increase of the entity. In the liquidation of the Tax on Inheritance and Donations accrued by the death of his spouse, which occurred on February 11, 2001, the reduction for acquisition was applied. "death cause" for shares in entities. Likewise, the consultant is the holder of credit rights against her children, all of them resident in Madrid.

The consultant intends to donate all her shares in the entity "PV, SL" to her children and forgive the debts they owe to the consultant.

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The consultant intends to acquire from his parents, for profit and “inter vivos”:

1. Shares in a Limited Liability Company;
2. The assets related to a real estate leasing business carried out by his father, whose real estate is located in the Community of Madrid; and,
3. the goods assigned to a transport activity also carried out by his father.

The acquisition of the aforementioned goods and rights will be made in equal parts between the consultant and two of the latter's brothers.

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The consultant intends to acquire from his parents, for profit and “inter vivos”:

1. Shares in a Limited Liability Company;
2. The assets related to a real estate leasing business carried out by his father, whose real estate is located in the Community of Madrid; and,
3. the goods assigned to a transport activity also carried out by his father.

The acquisition of the aforementioned goods and rights will be made in equal parts between the consultant and two of the latter's brothers.

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The consultant is going to donate an amount of money in cash to his son, who has his residence in the Community of Madrid. 

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The consultant, who claims to be a resident in the Community of Madrid since 1998, is going to receive a cash donation from her parents for the purchase of a home in Madrid.

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The consultant, owner of one part of 50 percent of the habitual residence, awarded in payment of the liquidation of the community property upon the death of her spouse, and on the other hand, of the universal usufruct of the other 50 percent, in payment of his part of the inheritance, intends to donate to his daughter one, the other or both shares.

In the liquidation of the Inheritance and Donations Tax accrued due to the death of her spouse, which occurred on February 3, 2006, she applied, together with her daughter, acquirer of the bare ownership of the remaining 50 percent, the reduction for acquisition "death cause" of habitual residence.

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The consultant, not resident in the Community of Madrid, will receive a donation, made by his mother, of a property located in this Autonomous Community.

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A person, who declares himself a tax resident in the Community of Madrid but without having been registered in said Autonomous Community between the years 2002 and 2004, obtained three loans from his father for the purchase of a home that they plan to forgive in 2006: the first in 2002 and to return in 12 years; the second in 2004 and to return in 12 years; and the third, once the consultant was married under community property, in 2005 and to repay in 15 years.

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The consultants are going to donate a property located in the Community of Madrid to their four children, one of whom is not a resident of Spain.

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The consultant's mother is going to donate a house that she currently owns, as well as a series of properties that she plans to acquire prior to the formalization of the donation. All of them are based in the Community of Madrid.

The consultant has his habitual residence at present in the Community of Madrid without being able to prove his continuous residence in said Community during the last five years.

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The querent's mother passed away on December 28, 2006.

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The consultant acquired in 2006, through a donation from his mother, the bare ownership of certain assets. In the liquidation of the Inheritance and Donations Tax, he applied the 99 percent bonus provided for in article 3.Cinco.2 of Law 7/2005, of December 23, on Fiscal and Administrative Measures of the Community of Madrid.

In 1999 the consultant had acquired, by inheritance from his father, bare ownership of his assets, awarding the usufruct of such assets to his mother.

The querent's mother died in 2007 and he consolidated full ownership of the assets acquired by inheritance in 1999 and by donation in 2006.

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A simple adopted person in the year 1984 will receive two donations; one, from her adopter, and another, from her biological parents.

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De facto couple registered in the Register of De facto Unions of the Community of Madrid.

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Taxpayer of Spanish nationality, and resident in France since 1977, he will succeed his father in inheritance caused on June 25, 2007, the date of his death in Madrid.

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The consultant is registered in the Register of De facto Unions of the Community of Madrid and intends to make a cash donation to his partner.

For some period the couple has not been registered at the same address.

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De facto couple, who have been in a romantic relationship for more than 12 years ─they have two children and live at the same address─, are registered in the Municipal Registry of De facto Unions of the San Sebastián de los Reyes City Council.

The consultant is going to make to his partner the donation of the usufruct of certain properties.

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The consultant will receive a donation from her spouse some time deposits and some mutual funds. Both have been registered in Madrid since September 2003.

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Donation between a couple registered in the Registry of De facto Unions of the Community of Madrid.

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Housing acquired by succession "mortis causa" in 2004 on which the heirs applied the corresponding "bonus" as a habitual residence.

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The consultant receives by inheritance from her partner, not through marriage, the part corresponding to the deceased of the habitual residence of both.

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In the year 2000, the acquisition "mortis causa" took place jointly by several descendants of an individual company of the deceased, who died in Madrid. In the liquidation of the tax on Inheritance and Donations, the reduction of 95% was applied, provided for in article 100.c), first paragraph, of Law 20.2/29, of December 1987, on the Tax on Inheritance and Donations.

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If the documentation provided by the consultant, consisting of various income tax returns (2005-2008), employment contract, social security certificates or certificates of seniority in the last company, etc., is sufficient to prove their residence in Madrid during the last five years for the purpose of applying the discount of 99 percent of the quota in the Tax on Inheritance and Donations contained in Law 10/2009, of December 23, on Fiscal and Administrative Measures of the Community of Madrid.

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Housing acquired by succession “mortis causa” in 2004, the heirs having applied the corresponding reduction for the acquisition of the habitual residence in the self-assessment of the Inheritance and Donations Tax, with the requirement of permanence for a period of 10 years.

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Applicability of the 99% reduction in the tax quota of the Inheritance and Donations Tax in the donation of the bare ownership of a flat located in the Community of Madrid between parents and children who do not reside in it. The donor reserves the usufruct.

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The consultant is registered, together with his partner, in the Registry of De facto Unions of the Community of Madrid since November 13, 2009, forming a union of those provided for in article 1 of Law 11/2001, of 19 December, of De facto Unions of the Community of Madrid.

The consultant's partner is going to donate half of their habitual residence through a public deed.

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The consultant, resident in Madrid, is the holder of a series of bank deposits, with a total value of 120.202,40 euros, which he intends to donate to his daughter, of legal age, and also residing in Madrid.

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Donation of a child to parents of a home located in the city of Madrid, classified as Public Protection Housing (VPP), according to the administrative file. The son and parents are residents of Extremadura.

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In 2006 and 2010, donations were made to the three interested parties of the bare ownership of shares of a company, reserving life usufruct for the donor (his mother). In both cases, the regulations of the Community of Madrid on Inheritance and Gift Tax were applied, and specifically, the 99% reduction in the tax quota derived from lucrative inter vivos acquisitions.

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The consultant received bare ownership of a property through a donation formalized in a public document.

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The consultant received a donation from his mother in 2010. After submitting the self-assessment for the Inheritance and Gift Tax, the Community of Madrid made a provisional settlement, considering that the aforementioned donation had not been formalized in a public document and that it did not correspond to him. the application of the bonus of 99% of the quota established by this Autonomous Community.

Faced with the consultant's private claim, the notary argued that he had drawn up a private document and that, if the bonus was not recognized  “The simple elevation to public of the liquidated private document would have –in any case- corrected the defect in the requirement of having to formalize the donation in a public document”.

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The consultant is going to move his residence to the Community of Madrid, which entails the change of fiscal domicile. He is the owner, together with his wife, and under the community property regime, of a series of properties, all of them located outside the Community of Madrid. Some of these properties are leased, the income received by them constituting the only income of the family unit. According to what was stated by the consultant and for personal income tax purposes, they are considered real estate income.

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The consultant's wife died on October 19, 2010. In the liquidation of the Inheritance and Gift Tax, the 95 percent reduction provided for mortis causa acquisitions of the deceased's habitual residence was applied.

Determination of the beginning of the computation of the term of maintenance of the value of the acquisition for the purposes of the consolidation of the reduction practiced.

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The parents of the consultant, who is a resident of the Community of Madrid, plan to make a donation to her for an approximate amount of 50.000 euros by bank transfer from an account domiciled in Russia, the country where the consultant is from and where her parents reside. fathers.

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The consultant is the owner of different movable property located in Spain and outside of Spain, as well as real estate located in the Community of Madrid. He intends to donate to his four children, in equal parts, the bare ownership of the aforementioned assets, reserving the donor the usufruct thereof and the power to dispose of the assets.

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The consultant is going to buy, as the sole owner, a property and, for this, she has applied for a mortgage loan for which she will be the mortgagor along with another person who will be the non-mortgage debtor.

Both will be jointly and severally liable for the debt.

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The querent separated from his wife in September 2007.

In September 2009, he acquired a private home located in the town of Fuenlabrada.

Subsequently, both spouses requested judicial reconciliation, for which, in June 2017, an order was issued that resolved the same, leaving the separation sentence without effect.

The couple wants to reestablish the community property regime dissolved with the separation and the consultant wishes to make the contribution to the community property, free of charge and through a public document, of the private home acquired in 2009.

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The consultant is Venezuelan, with Spanish nationality and resident in the Community of Madrid since 2004.

His parents, residents in Venezuela, are going to make an international bank transfer for the purchase of a home.

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The possibility of making a donation in favor of the consultant and her sister by their parents, married in community property and residing in Valladolid, is raised.

The consultant is of legal age and has lived in Alcalá de Henares since February 2018. Previously, she had lived in Germany for five years for work reasons. During a period of six months in 2015 she lived in Tres Cantos and until 2012 she had lived in Madrid. Her current heritage is 80.000 euros.

The sister, also of legal age, has lived in the Madrid town of Alcalá de Henares since September 2017. The previous six years she had lived in Brazil for work reasons. Her current heritage is 220.000 euros.

The purpose of the donation would consist of shares officially listed on the Madrid Stock Exchange and cash. Based on the price of the shares at the time of making the query, the global amount of the donation would amount to 1.600.000 euros, that is, 800.000 euros each.

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Procedures to be followed to make a donation of money from parents to children.

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The consultant is going to receive a cash donation from her father for the purchase of her habitual residence.

The donor has been a resident in the community of Madrid for years and the consultant was a resident from her birth until the end of her studies, in 2010, the year in which she moved to work in non-EU countries. In June 2018, after returning to Spain, she registered in Madrid, where she has resided since her return.

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The consultant received a personal loan from his father for the partial payment of a bank loan obtained for the purchase of his habitual residence.

Currently, the father is thinking of writing off the debt.

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In the case of a de facto couple registered in the Community of Madrid, if there is any difference with respect to marriages for the purposes of payment of Inheritance and Gift Tax.

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Monetary donation from parents to children to acquire the habitual residence.

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The consultant acquired a plot of land in the Community of Madrid on which he has built a house that constitutes his habitual residence in the 2018 financial year. To acquire the plot, he requested a mortgage loan, and to finance the construction he contracted a construction loan and subsequently a personal credit.

He is going to receive a donation from his brother in the amount of 200.000 euros.

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The consultant is going to receive a donation from his father with the intention of acquiring shares in a SOCIMI (Listed Public Limited Investment Companies in the Real Estate Market).

The possibility of applying the reduction provided for donations in cash regulated in article 22 bis of the Consolidated Text of the Legal Provisions of the Community of Madrid regarding taxes assigned by the State, approved by Legislative Decree 1/2010, is proposed. of October 21, of the Community of Madrid, of the Governing Council.

This rule refers to compliance with the requirements established in article 15 of the same Consolidated Text for the application of the deduction for investment in the acquisition of shares and social participations of new or recently created entities in the field of personal income tax. Specifically, the question arises regarding the fact that the entity's economic activity is not the management of movable or real estate assets.

For this purpose, remember that a SOCIMI is a Public Limited Company and that Law 11/2009, of October 26, which regulates Listed Public Limited Investment Companies in the Real Estate Market, is subsequent to Law 19/1991, of June 6, of the Wealth Tax.

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The consultant's father, aged 87, of French nationality and resident in France, wants to make a donation of 100.000 euros to his current account in Madrid, where the consultant resides.
The consultant understands that his father must appear before a notary in France to reflect the operation in a public document apostilled by the Consulate of Spain in Paris, France.

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On the occasion of the death of the consultant's father in 2018, the children were designated as legal heirs of the deceased. The mother has the usufruct of the inheritance.

At the time of presenting the query, the act of acceptance of the inheritance has not yet been carried out before a Notary.

His father had his habitual and fiscal residence in Catalonia, while the consultant in Madrid.

Currently the querent has a high debt that she wishes to settle as soon as possible and, for this, the possibility of her siblings making a donation to her at the time of the partition of the inheritance for the part that corresponds to the querent is being evaluated. She would relinquish any subsequent rights to the inheritance.

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The consultant is of British nationality (English), resident in the Community of Madrid for more than 20 years, married to a Spaniard under a community property regime with whom she has two children.

Her mother, a widow, also English and resident in England, wishes to donate the amount of 70.000 pounds sterling by bank transfer from a British account owned by her to a Spanish bank account in the name of the consultant.

The consultant wishes to apply to the operation the 99 percent bonus provided for in article 25.2 of the Consolidated Text of the Legal Provisions of the Community of Madrid regarding taxes transferred by the State, approved by Legislative Decree 1/2010, of October 21, of the Governing Council, scheduled for acquisitions inter vivos.

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The consultant, together with the rest of the heirs, accepted purely and simply the inheritance of her aunt who was the owner of 22.478 shares in an entity in the form of a limited company resident in Spanish territory, whose corporate purpose consisted mainly of "the acquisition, holding, administration and management of titles, shares, social participations (...), all fully subject to the applicable legislation.” The consultant was awarded 2.810 shares representing 6,25 percent.

The assets of the entity are made up, and the Annual Accounts for the 2020 financial year show that it has:

- Real estate investments under a lease regime, with a full-time contracted person for this purpose.

- Financial investments consisting of holding shares in companies for the purpose of directing and managing said shares, holding in all of them at least 5 percent of the voting rights.

- Financial investments in listed companies whose acquisition value is lower than the reserves generated in the company during the last 10 years and the result of the current year.

Based on such information, it is considered by the heirs that the entity does not manage personal or real estate assets under the terms of Article 4 Eight of Law 19/1991, of June 6, on Wealth Tax.

In the year of death, the deceased and one of her sisters were administrators of the entity and received more than 50 percent of all business, professional and personal work income received during the year for the exercise of their management functions. 2019, so in accordance with the aforementioned precept, the shares were exempt from Wealth Tax.

The consultant has settled model 650 of the Inheritance and Donations Tax on February 5, 2020 before the General Directorate of Taxes of the Community of Madrid, where the deceased had her habitual residence.

In the self-assessment, it was decided to apply the 95 percent reduction regulated in article 21.3 of the Consolidated Text of the Legal Provisions of the Community of Madrid on taxes transferred by the State, approved by Legislative Decree 1/2010, of October 21, of the Community of Madrid, of the Government Council, forcing itself to maintain it for a period of five years.

On the other hand, the consultant is the owner of 100 percent of the shares of a HOLDING company (with SLU form) resident in Spain registered in the Mercantile Registry of Madrid. Its corporate purpose is the "acquisition, possession, enjoyment, administration and disposal of securities, company shares and real estate on its own behalf or on behalf of third parties". As in the previous case, the company has material resources for the development of its activity, and, therefore, does not manage a movable or real estate asset in the terms of article 4. Eight of Law 19/1991.

The consultant intends to approve a capital increase in the HOLDING company by making a non-monetary contribution of the shares that she has inherited from her aunt, in such a way that after the increase she will continue to hold ownership indirectly through your society. All the siblings of the consultant are going to carry out an operation similar to the one described and all of them intend to maintain these shares in their HOLDING companies during the mandatory holding period.

Excerpt from the query:

The consultant, together with the rest of the heirs, accepted purely and simply the inheritance of her aunt who was the owner of 22.478 shares in an entity in the form of a limited company resident in Spanish territory, whose corporate purpose consisted mainly of "the acquisition, holding, administration and management of titles, shares, social participations (...), all fully subject to the applicable legislation.” The consultant was awarded 2.810 shares representing 6,25 percent.

The assets of the entity are made up, and the Annual Accounts for the 2020 financial year show that it has:

- Real estate investments under a lease regime, with a full-time contracted person for this purpose.

- Financial investments consisting of holding shares in companies for the purpose of directing and managing said shares, holding in all of them at least 5 percent of the voting rights.

- Financial investments in listed companies whose acquisition value is lower than the reserves generated in the company during the last 10 years and the result of the current year.

Based on such information, it is considered by the heirs that the entity does not manage personal or real estate assets under the terms of Article 4 Eight of Law 19/1991, of June 6, on Wealth Tax.

In the year of death, the deceased and one of her sisters were administrators of the entity and received more than 50 percent of all business, professional and personal work income received during the year for the exercise of their management functions. 2019, so in accordance with the aforementioned precept, the shares were exempt from Wealth Tax.

The consultant has settled model 650 of the Inheritance and Donations Tax on February 5, 2020 before the General Directorate of Taxes of the Community of Madrid, where the deceased had her habitual residence.

In the self-assessment, it was decided to apply the 95 percent reduction regulated in article 21.3 of the Consolidated Text of the Legal Provisions of the Community of Madrid on taxes transferred by the State, approved by Legislative Decree 1/2010, of October 21, of the Community of Madrid, of the Government Council, forcing itself to maintain it for a period of five years.

On the other hand, the consultant is the owner of 100 percent of the shares of a HOLDING company (with SLU form) resident in Spain registered in the Mercantile Registry of Madrid. Its corporate purpose is the "acquisition, possession, enjoyment, administration and disposal of securities, company shares and real estate on its own behalf or on behalf of third parties". As in the previous case, the company has material resources for the development of its activity, and, therefore, does not manage a movable or real estate asset in the terms of article 4. Eight of Law 19/1991.

The consultant intends to approve a capital increase in the HOLDING company by making a non-monetary contribution of the shares that she has inherited from her aunt, in such a way that after the increase she will continue to hold ownership indirectly through your society. All the siblings of the consultant are going to carry out an operation similar to the one described and all of them intend to maintain these shares in their HOLDING companies during the mandatory holding period.

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The consultant lives and works in the Community of Madrid since March 2019, at which time he moved his residence from Las Palmas de Gran Canaria to Getafe. He currently resides in the municipality of Guadalix de la Sierra. The registration documents issued by the Getafe and Guadalix de la Sierra municipalities are attached to the consultation.

His parents want to make a financial donation (it follows that in cash). 

Taxation of the donation in the Community of Madrid.

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The querent is a Brazilian national, resident in the Community of Madrid for 7 years, and is going to receive a donation by bank transfer from her father, Brazilian and resident in Brazil.

The amount of the donation will amount to approximately 250.000 euros for the purchase of their first home in Madrid.

Questions related to the conditions of application of the boning/reduction in inter vi vi acquisitionsyour, regarding the ISD.

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The consultant is a resident of the United Kingdom and is going to receive a donation of 100.000 euros from his parents that he is going to allocate to the purchase of his habitual residence, whose value is less than 250.000 euros.

If the tax benefits provided for in the Community of Madrid can be applied for this type of operation, even when the home to be purchased is located abroad, or if it only applies in the event that the home is in the Community of Madrid or territory Spanish.

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Donation of an amount destined to the purchase of the principal residence of the donee. There is a possibility that the amount donated does not reach the acquisition value of the home and it is necessary to resort to external financing.

If the amount of the bank charges that may be generated by the request and granting of a mortgage for the acquisition of the home can be included in the 100 percent reduction base regulated in article 22 bis of the Consolidated Text

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A married couple intends to donate a property they own to their daughter. In turn, the daughter intends to donate a property she owns to her parents.

Yes, in both and reciprocal donations the 99 percent bonus provided for inter vivo acquisitions can be applied.

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Person with tax residence in Madrid who receives a cash donation from their parents by bank transfer. The purpose of the donation is to acquire a habitual residence. The parents have Colombian nationality, and reside in Colombia, so they do not have a NIE or DNI.

Yes, it is possible to take advantage of the 99 percent bonus for lucrative inter vivo transfers from parents to children, even if the parents do not have a NIE or are residents in Spain.

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The querent and his current partner are living in Barcelona and intend to register as a common-law partner in Catalonia. The querent owns a piece of land in Madrid and would like to donate part of it to his partner so that they can also own it.

If applicable, the application of the 99 percent bonus provided for unmarried couples on the quota to be paid for the corresponding Inheritance and Donations Tax established by the regulations of the Community of Madrid.

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The consultant will receive a donation in the near future from her mother, a Panamanian national and domiciled and residing in the Republic of Panama.

If, in order to apply the 99 percent discount on the full amount derived from Inheritance and Gift Tax, it is necessary for the money that is the object of the donation to be transferred to an account in your name opened in a bank located in Spanish territory, or if it could be transferred by his mother to an account opened in a bank located in Panama in his name as a non-resident.

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The parents of the consultant reside in the Community of Madrid and want to donate money in cash. The consultant has been working since 2008 as an agent contracted by an agency of the European Union, the European Agency for Chemical Substances and Mixtures, based in Helsinki, Finland. The Protocol on Privileges and Immunities of the European Communities is applicable to it. Madrid is her city of origin and where she had her residence at the time of entering the service of the European Communities. In accordance with article 13 of the aforementioned protocol, her tax domicile continues to be located in Spain. The Tax Agency certifies this certified attached fact.

If the regulations of the Community of Madrid regarding ISD are applicable to you. 

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The querent wants to make a donation to her sister for the purchase of her habitual residence.

The sister suffers from a 95% physical disability and therefore cannot access any home. That is why she is going to build a house without architectural barriers and with certain specifications in accordance with the limitations that derive from her disability.

The corresponding City Council has informed you that the approximate term for the granting of the Building Permit is six months and the construction of a house of these characteristics will take between 12 and 18 months.

In a telephone consultation I have informed her that she would have one year for her occupation from the donation to apply the 100 percent reduction. 

Excerpt from the query:

The sister of the querent is going to donate 100.000 euros to help her buy a plot in the municipality of Valdemorillo, Madrid, where she will begin the construction of a self-development home without architectural barriers and with the necessary adaptations according to its limitations that will be its habitual residence.

If this donation is subsidized with 100% of the Donation Tax.

Term that cannot be exceeded between the receipt of the donation and the purchase of the plot.