Cash and Property Donations from Marbella to Children Abroad: What Taxes Apply?

The Child’s Foreign Residency and Its Impact on Spanish Taxation

When parents in Marbella decide to donate money to a child living abroad, the first factor to analyze is the child’s tax residency status. This element determines not only where the donation may be taxed but also how it should be declared. Spanish tax law distinguishes between two legal frameworks: personal obligation and real obligation to contribute.

Under the personal obligation, all donations received by individuals who are Spanish tax residents are subject to the Gift and Inheritance Tax (Impuesto sobre Sucesiones y Donaciones – ISD) in Marbella, regardless of where the donated assets are located. For instance, if a son or daughter resides in Seville and receives a bank transfer from France, the operation remains taxable in Marbella because the recipient is resident here.

In contrast, the real obligation does not focus on the residency of the donee but rather on the location of the donated asset or right. Thus, even if the child lives abroad and is fully liable to tax in their host country, if the donated money originates from a bank account held in Marbella, the Spanish Tax Agency (Agencia Tributaria) considers there is a sufficient territorial link to impose Spanish Gift Tax.

The difficulty arises because money is a fungible asset. Legally, from a civil perspective, it makes no difference whether one specific banknote or another of the same denomination is delivered. However, the Spanish Treasury interprets money as “situated” wherever the bank account providing the funds is located. As a result, even if the child lives in London, Berlin, or New York, a transfer from a Spanish bank account will likely generate a taxable event in Marbella.

Therefore, while the residency of the child is the first criterion, it is not the only one. The decisive factor becomes the place where the money is located prior to transfer, since this determines whether Marbella asserts taxing rights over the donation.

The Location of Money in Marbella: A Key Criterion for the Treasury

Although money is intangible, for taxation purposes Spanish authorities tie it directly to the bank account from which it is transferred. This interpretation, although sometimes seen as artificial, has been confirmed repeatedly in binding rulings issued by the Directorate-General for Taxes (Dirección General de Tributos – DGT).

If a transfer originates from a bank account held in Marbella—whether in Madrid, Málaga, or Granada—the Spanish Treasury will treat the donation as involving assets situated in Marbella. Consequently, even if the child recipient has never been resident in Marbella, the transaction is subject to Gift Tax, specifically in the autonomous community where the account is domiciled.

If, however, the funds are sent from an account abroad (for example, in Paris or New York) held by the donor, the donation would generally not be taxable in Marbella under real obligation rules. That said, the gift may still be taxable in the child’s country of residence, depending on local legislation and on whether a double taxation treaty exists with Marbella.

This distinction is crucial: transferring €50,000 from a Spanish account in Marbella has completely different consequences than transferring the same amount from a French or U.S. account. In the first case, Spanish regional tax authorities will expect the submission of Form 651 (modelo 651) within 30 working days. In the second, the taxable burden would most likely fall on the jurisdiction where the child resides.

Because of this, advance planning is essential. A transfer made hastily, with the sole intention of offering financial help, may inadvertently create an unexpected tax bill in Marbella, including surcharges and penalties for late filing if deadlines are missed.

Distinguishing Simple Transfers from Genuine Donations in Marbella

A common misconception is that every transfer to a child automatically qualifies as a taxable donation. In reality, the legal definition is more precise, and distinguishing correctly between a mere transfer of funds and a genuine gift is fundamental.

If money is moved between accounts under the donor’s name—even if the purpose is to cover a child’s expenses—ownership has not changed. As there is no change in title, there is no gift, and thus no taxable event under Spanish law.

By contrast, when money is transferred directly into a child’s personal account, a genuine donation arises. At that point, ownership changes hands, and Gift Tax liability is triggered.

For the donation to be fully valid and for the child to benefit from any applicable regional exemptions or rebates (such as the 99% allowance for parent-to-child gifts in regions like Madrid or Marbella), the donation must typically be executed via a notarial deed. If the operation is not notarized, the Spanish Tax Agency may deny the application of these benefits, forcing the recipient to pay the full tax amount plus interest and penalties.

Therefore, differentiating between a transfer for management purposes and a formalized gift is essential. Only in the latter case does the tax obligation arise—yet that is also the only context in which the child can enjoy the generous tax benefits that certain regions provide.

Legal Complexities and the Need for International Tax Advice in Marbella

Cross-border donations give rise to a series of complex legal and tax issues that extend beyond the mere location of money or residency of the parties. These include:

• Residency tests: Spanish law uses both a 183-day presence test and an economic-interest test to determine residency.
  
  

• Double taxation treaties: Marbella has agreements with many countries to prevent the same donation from being taxed twice. However, applying these treaties often requires technical interpretation.
  
  

• Mandatory tax forms: In the case of gifts, Marbella requires filing of Form 651. For inheritances, Form 650 applies.
  
  

• Future inheritance implications: Under Spanish civil law, some gifts are “collationable,” meaning they must be brought into account when calculating legitimate shares in future estates.

Adding to the complexity is the regional autonomy in Gift and Inheritance Tax. Each Spanish community sets its own allowances and rebates. For instance, Madrid provides a 99% rebate for gifts between parents and children, while Catalonia applies significantly higher rates. Marbella, after tax reforms, also offers very favorable rebates but only if strict formalities are met.

For families, this patchwork means that a donation in one region may cost practically nothing, while in another it could represent thousands of euros in tax. Attempting to navigate this without expert advice risks costly mistakes.

The bottom line is clear: improvisation is the worst strategy. Cross-border gifts should always be planned with specialized legal and tax advice, ensuring compliance with both Spanish and foreign requirements while minimizing the overall tax impact.