Types of donations: benefits and procedures
In Spain, there is not a single type of donations. In fact, each donation is related to a series of different rights and obligations.
In our notary office in Barcelona, we can explain to you what each type of donations consists of. These are recorded as a gift in article 618 of the Civil Code. Theoretically, they consist of a free act by which a person disposes of something in favour of another, without any payment involved.
Donee and Donor
Before explaining the different types of donations, allow me to clearly explain who the donee and donor are.
Who is the donor?
The donor is the person who decides to transfer, or give free of charge, a good, right or money to another person. They are the original holder and the one who voluntarily makes the desired type of donation, without expecting anything in return.
Who is the donee?
The donee is the person or entity that receives the asset, right or money donated by the donor. It can be a family member, friend or non-profit organisation. It can also be a company or any person who is capable of accepting the donation. The donee must have the natural capacity to understand the act and its consequences. When they accept a donation, they become its owner or holder and assume the burdens or conditions imposed with the donation.
What Types of Donations are there?
- Inter vivos
- Mortis causa
- Pure and simple
- Remuneratory
- With reversion clause
- Conditional
- With power to dispose
We will now develop these different grants according to the chosen classification criteria:
Inter vivos
Inter vivos are the donations of the donor's own assets and property to a natural person (who may or may not be part of the family) or a legal entity (for example, foundations or non-governmental organisations). Movable and/or immovable property can be donated and it involves taxes.
Mortis causa
Mortis causa donations occur at the time of the donor's death. Therefore, the donor disposes of the donated asset while alive. They can be donations from parents to their descendants when the former pass away.
Purity and manners
In the case of pure donations, the donor transfers a part of their wealth to benefit a third party. In modal donations, the donee receives a burden or encumbrance, which is why they are also known as donations with encumbrance or onerous donations. In these, the donee has the duty to fulfil what is imposed by the donor.
Remunerative
In remunerative donations, the donor rewards a third party for the services provided or their merits, provided that they are not enforceable debts. This could occur in parents who want to thank their children for the care given during old age.
With reversion clause
Donations with a reversion clause are always in favour of the donor for any circumstance and cases; they cannot be applied to third parties. The same case as testamentary substitutions of the Civil Code applies.
Conditionals
In conditional donations, the donor includes requirements that the donee must meet in order to receive the donation.
Subject to the power of disposal
In donations with reservation of the power to dispose, the donor can dispose of some of the money or donated goods while alive. Once deceased, the properties that had not been disposed of would pass to the donee.
Benefits of donations and charges
Donations are subject to certain tax benefits and obligations. Among the former, the donor's ability to set conditions and the donation to the recipient of the donation stand out.
The obligations with the Tax Agency involve both the donor and the donee and vary according to the characteristics outlined above. Most taxes are regional, so they will depend on the Autonomous Community where you live. If you want to learn more about this matter, we have an article on our blog about taxes on donations in Catalan taxation. It is important to know that almost always the donor has to pay income tax and the donee the inheritance tax.
One of the general exemptions in donations is the capital gain. For those over 65 years old, the transfer of the main residence would not be taxable by the Tax Agency. However, those under 65 would have to include it in their income tax return. In most cases, this would mean paying more taxes.
How to make donations
The procedures to officially transfer legacies are slightly different depending on whether it is movable or immovable property. In any case, our Notaries of Barcelona can formalise them.
The Notaries will formalise the donation of an immovable property through a deed of donation, where the value, charges and individual indication of the property are stated. In the document, all donated assets must be valued and specified.
The Civil Code includes each type of donation that exists and there are laws that regulate their tax burdens and benefits for those involved. Each type of donation must be examined thoroughly.
On our blog, the article about frequently asked questions on donations may perhaps resolve some of the uncertainties you may still have.
If you still have questions about this, do not hesitate to contact us! Therefore, we provide you with the different contact methods we have, both our email bcn@jlanotarios.com, as well as the contact formor on our website. You can also visit our offices to resolve your doubts. We will be happy to assist you.
