If the question is how much money you can donate to a child without declaring it to the Treasury, the law makes it clear: none

An increasingly widespread trend among millionaires is the Do not leave inheritance To your children. Bill Gates either Warren Buffett There are good examples of this new trend that seeks to convey the heritage of parents to children in alternative ways.

However, it is not necessary to go to fortunes so bulky to meet cases of parents who want to convey part of their heritage to their children when they are still young.

Patrimonial donations and movable property. According to him Article 618 of the Civil Code“Donation is an act of liberality by which a person has one thing for free in favor of another, that accepts it.”

Thus, as defined by the regulations on the Inheritance and Donations Tax, Donating money, goods or any other form of patrimony to children will be considered as a donation by the Tax Agency. That implies that the donation must meet a series of characteristics and pay similar taxes to those that would be paid in case of inheritance without any limit value. Namely: Plusvalía tax, IRPF and Inheritance Tax and Donations.

When donating money seems simpler, but Hacienda Vigila. If, as in most cases, the donation consists of an amount of money not very high, temptation is simply giving it to it. But how much money can you give a child without declaring it as a donation?

The law does not establish any type of limit that forces donations to declare, so, technically, it would be donation to even give it a euro. However, such and as indicated From lawyers and inheritances, it is not common for the Treasury to pursue the small deliveries of money or gifts of little value.

Nevertheless… Finance can request bank information by detecting certain movements due to the regulations of Prevention of capital laundering and terrorism financingso keep it in mind:

• Income of more than 3,000 euros in cash to review that its origin is justified profits.
• Income in 500 euros tickets. They are the most monitored tickets by the Treasury because they are used for criminal activities. Entering a large amount of cash in these tickets will sow many suspicions.
• Recurring income. The entry of a fixed, periodic amount and from the same origin, indicate some type of commercial transaction and the Treasury will show interest in their nature. The small amounts sent to the same account in a short period of time have the same effect
• Transfers Entities notify the credits of more than 6,000 euros, and transactions of 10,000 euros or more. Whether they are bank transfers and cash movements.

How do they pay children’s money to children? Donations, like inheritances, are taxed by the Donation and Succession Tax. Each autonomous community manages this tax under its criteria, so taxation will depend on the Autonomous Community in which the donor has resided in the last five years.

Madrid, Basque Country, Murcia, Castilla-La Mancha, Asturias, Balearic Islands, Canary Islands, Galicia, Extremadura, La Rioja and Navarra are exempt from this tax or bonus it to 99.9% for spouses, parents and children. Andalusia bonuses 99% and other communities apply exemptions of up to 400,000 euros. If the donation exceeds that limit, it must be taxed by it.

It is not a donation, but I “preside”. If what is intended with donation is to help financially in a complicated stage, there is an alternative to donation: formalize a loan without interest.

This assumption is not subject to taxes or expenses and it is only necessary to formalize a private loan contract and the donor will have to submit the settlement of the property transmissions tax at zero cost.

However, in that document the deadlines and the way in which the money will be returned, which can be extended both in time as desired, will be specified, which makes it especially interesting for the donation of large sums of money.

What if the donation is not declared? If you choose not to declare the donation and hacienda, it detects that money has been received without justifying its origin, it will be interpreted as an unjustified assets. In that case, such and as indicated the OCU, a Taxation of the IRPF to the marginal type that can reach up to 56% of the donated amount, plus the corresponding sanction.

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Image | Unspash (Alexander Gray)

*An earlier version of this article was published in July 2024