Introduction
Gifting property to a relative overseas may seem generous, but for capital gains tax purposes, it’s treated just like a sale.
If the gift’s tax reference value—i.e. the minimum value recognised by the Tax Agency—exceeds what you originally paid, you’ll be liable for capital gains tax on the difference.
How Donations Are Taxed as Capital Gains
- In Spain, a donation is legally equated to a sale for capital gains tax purposes, using the tax reference value as the minimum “sale price”.
- Even without receiving money, the donor is taxed on the gain: the difference between the acquisition value and the reference value (or the assigned value, if this is higher).
Understanding the Tax Reference Value
What Is the Tax Reference Value?
- A mandatory minimum property value set by the Tax Agency, updated periodically based on notarial records.
- It is always used when calculating gift and inheritance taxes, even if the actual market value is lower.ower.
Why It Matters for Donations
- If reference value or asswigned value > acquisition value, the donation triggers a taxable gain.
- Reference value may exceed market sale price.
Calculating Your Gain and Tax Liability
- Determine your acquisition value: purchase price + costs (notary, registry, improvements).
- Check the gift’s tax reference value via the Catastro portal. You will need a digital certificate to do so.
- Calculate gain: Reference value or assigned value − Acquisition value.
- Apply the capital gains tax rate: 19% for non-residents.
Practical Steps to Minimize Taxation
- Obtain a professional valuation to dispute an inflated reference value.
- Time the gift when market values and reference values are aligned.
- Consider partial transfers or reserving a life interest (usufruct) to reduce the taxable base.
- Investigate regional gift tax allowances or reductions before signing the deed.
Example Scenario
Imagine you bought your Costa Blanca villa in 2010 for €150,000 plus €18,000 in taxes and costs and fees.
The 2025 reference value is set at €200,000 and the assigned value to the property is this one as well.
Taxable gain = €200,000 − €168,000 = €32,000.
At a 19% non-resident rate, tax due = €6,080.
This tax is for the donor.
In some areas the donee will have to pay Donation Tax as well.