It is becoming more and more normal to have a relative who lives and works abroad. And sometimes, the need may arise to send you money with the commitment or not to return it. To avoid problems with the Treasury, we have prepared a short guide with the main questions to take into account, such as making it very clear if it is a loan or a donation or knowing how the loan is taxed to a non-resident.
José María Salcedo, partner of the Legal Attic office, clarifies which are the keys to send money abroad to a relative.
Loan or donation
Regarding the Treasury, it is convenient to make it very clear if it is a loan or a donation, so the operation must be properly documented. In the case of a loan, a repayment schedule must be agreed upon and proof of loan repayment must be kept. “The best thing, in these cases, is that the refund is made by bank transfer, and the bank receipts of each of the payments are kept,” says Salcedo.
In addition, the collection of interest is not mandatory, but in the event that interest is to be charged, it is convenient to expressly put it in the loan contract.
In the event that there is no proof of the existence of the loan, in the eyes of the Treasury it can be considered a donation and, therefore, it can demand the corresponding tax, which is usually more unfavorable for the person who has received the money.
How the loan is taxed to a non-resident
The loan between individuals is exempt from payment of the Property Transfer Tax (ITP). Therefore, although you do not have to pay this tax, you are obliged to present the self-assessment (model 600) before the competent tax administration. And who must present this self-assessment is the borrower, that is, the person who receives the money.
The lender must pay personal income tax in the event that the repayment of the loan with interest has been agreed (it must include such accrued interest as return on movable capital).
Know the competent administration to require the ITP
It is a tax assigned to the Autonomous Communities, but in cases where the family member who receives the money resides abroad, he is considered a non-resident, since he does not reside in any autonomous community, but outside of Spain.
In these cases, as recently stated by the General Directorate of Taxes (query V0509-20), “Both the performance and the management of the tax correspond to the State, being applicable the provisions of the consolidated text and regulations of the Tax on Patrimonial Transmissions and Documented Legal Acts and, in this particular point, the Order of July 4, 2001, approving, among others, model 600, declaration-settlement of the Tax on Patrimonial Transmissions and Documented Legal Acts “.
For this reason, the model declaration 600 must be presented at the Delegation of the corresponding State Tax Administration Agency.
How donating money is taxed
In the event that you choose to help the non-resident relative without the intention of recovering the money, we are dealing with a donation, which is taxed in the Inheritance and Donations Tax and the taxpayer will be the beneficiary. “But this will only be the case when the donated money is in a bank account in Spain. In those cases, the beneficiary of the money, even if he is a non-resident, will be taxed in our country by real obligation. In other words, for having received goods that are in Spain ”, says José María Salcedo. If the donated money is not in an account in Spain, the beneficiary will not have to pay taxes in our country for the donation received.
In addition, the beneficiary may apply the tax benefits approved by the Autonomous Community where the money has been located for a greater number of days, from the period of the five immediately preceding years, counted from date to date.
In which administration do you have to pay for the donation of money to a non-resident
As the beneficiary resides outside of Spain, the competent body for the payment of the tax is the National Tax Management Office, Department of Successions of Non-Residents (C / Infanta Mercedes, nº 49. Madrid; registry in Paseo de la Castellana, 147) .
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