Gift Tax charges what you receive for free during another person's lifetime: money, a property, shares… It is a tax devolved to the Autonomous Communities, so how much is paid depends on where the person receiving the gift resides. In the Valencian Community, for close relatives, the bill can be much lower than in other regions.
How it is calculated
The starting point is the value of what is gifted. On top of it, where applicable, the regional reductions and reliefs are applied, and the result determines the amount payable. The key lies in the kinship: gifting to a child or spouse is not the same as gifting to a nephew, niece or a stranger.
Descendants, spouse and ascendants
The Valencian Community provides regional reductions and reliefs for gifts between parents, children, spouse and ascendants, which significantly lower the amount payable. The exact amounts and percentages are updated periodically, so it is advisable to confirm the figure in force at the time of the gift.
Public deed and evidence of origin
To apply the tax benefits, the gift usually has to be formalised in a public document (deed) and, in the case of money, the origin of the funds must be documented. Without these requirements, the reliefs are lost.
Without close kinship
When the recipient is not a direct relative, the reliefs are reduced or disappear and the bill rises considerably. In these cases it is worth carefully studying whether it pays to gift or to seek another route.
Although the gift is paid by the recipient, if you gift a property or an asset that has increased in value, you (the donor) may have to declare a capital gain on your personal income tax (IRPF), as if you had sold it. It is the mistake that causes the most trouble, and we explain it when comparing gifting during your lifetime or leaving an inheritance.
Gift during your lifetime or wait for the inheritance?
There is no single answer. A gift lets you bring the transfer forward and take advantage of reliefs, but it may trigger that gain on the donor's IRPF. An inheritance avoids that IRPF, but is taxed under the Inheritance Tax. The right decision depends on the type of asset, its increase in value and your family situation, and is almost always best taken within lifetime wealth planning.
At Equus Capital we calculate the real tax cost of each option and help you choose the most efficient route to transfer your wealth in the Valencian Community. First consultation free and with no obligation.
Frequently asked questions
How much is paid on a gift in the Valencian Community?
It depends on the value gifted and, above all, on the kinship. For descendants, spouse and ascendants there are regional reductions and reliefs that considerably lower the amount payable. The exact percentages are updated periodically, so it is advisable to confirm the figure currently in force.
What requirements are there to pay less on a gift?
Normally the gift must be formalised in a public document (deed) and, if it is money, the origin of the funds must be evidenced. Without these requirements the regional reliefs are lost and the bill rises.
Does the person making the gift also pay tax?
They may. Although Gift Tax is paid by the recipient, if you gift a property or an asset that has increased in value, you as the donor may have to declare a capital gain on your personal income tax (IRPF), as if you had sold it.
Is it better to gift during your lifetime or leave it as an inheritance?
It depends on the asset and its increase in value. A gift takes advantage of reliefs but may trigger the donor's IRPF; an inheritance avoids that IRPF but is taxed under Inheritance Tax. The ideal is to decide within wealth planning.