What to Do When Donating a Vehicle: Tips from Arpem

Donating to a relative or acquaintance, whether it is a car or another type of asset, means making a transaction in which there is no economic exchange, but this does not mean that it is free. The donation supposes the payment of a tax that is necessary to calculate previously to make the appropriate decision.

To find out what amount is allocated to taxes in a donation, you can consult the tax tables in the Tax Agency of your autonomous community. Usually, the tax on a donation is usually higher than the one that affects a sale. But, in some communities, there are significant bonuses that make it virtually disappear.

This is the case, for example, of Madrid. A donation is, in principle, irrevocable, but it could be reviewed if the person to whom we were going to make the donation has an attitude of ingratitude. All people who have the ability to dispose of their assets can donate. The donation is also unilateral and its execution is instantaneous.

When it comes to donating a vehicle, a series of bureaucratic procedures must be carried out, similar to those that must be carried out in a purchase-sale: First, a contract or public deed must be signed between the donor and the donee. Afterwards, you have to change the owner at the corresponding Traffic Headquarters. Then you have to pay a fee.

The rate for cars is different from that for mopeds. Then you have to make sure that the change of ownership is correct. For this, you must request a Registration Report from the General Directorate of Traffic (DGT). Finally, both in the donation and in the sale, you have to face a tax. In the case of a sale, the Property Transfer Tax, in the case of a donation, the Inheritance and Donations Tax.

The donation contract must be agreed upon and contain the following:

1. The consent. The person to whom the donation is made states that they accept it (or that they do not accept it).
2. The object. It is what is donated, and must be specified.
3. The validity. For the donation to be valid, it must be in writing and the term of the donation must be established.

If a change of owner is made, in a donation, the Inheritance and Donations Tax must be paid at the Tax Agency of the Autonomous Community of the person who receives the vehicle. It is the Autonomous Communities that set the tax to be applied. Some communities set bonuses for their residents. The differences are big, depending on which community you reside in. In certain communities, donations between parents and children are subsidized and there are also communities in which the donation of cars between descendants and direct ascendants is exempt.

The difference between a change of ownership by donation or purchase is in the taxes that must be paid. As we saw above, donating a car involves procedures similar to buying and selling. The payment of the rate varies, which can be very high if there is no relationship between the donor and the recipient of the donation.

To put a donated car in your name, you must provide the following documentation:

The vehicle’s technical sheet and circulation permit, the valid ITV certificate,

the proof of having paid the Transfer and Donations Tax and the proof of the Treasury

1. The first thing to do is pay, at a Treasury office, the Property Transfer Tax per donation.
2. Then verify that the donated vehicle is free of charges (such as fines, embargoes) and all taxes have been paid.
3. Next, you have to go to an office of the Directorate General of Traffic with your DNI, passport or residence card and fill out the request for change of ownership, and pay the corresponding fees, which vary depending on the vehicle.

Donating is not the same as bequeathing a car. In the case of a donation, it is considered a free sale procedure, after which a change of ownership of the car is made to the person or family member who receives the donation. The change of ownership can be done both online and in person and has a cost of €55.70, except in the case of mopeds, in which the cost is €27.85.

To carry out a donation process you must do the following:

1. Sign the donation document, which must include the names and surnames of the buyer and the seller and their ID, the vehicle data (make, model and license plate), and the date and time the contract is signed.
2. Pay the Inheritance and Donations Tax, in the Autonomous Community in which the donation is made
3. Finally, we must keep the receipt of the payment of the tax, which includes the license plate and the vehicle’s chassis number. Finally you have to change the ownership of the vehicle in the General Directorate of Traffic.

In the case of an inheritance, the procedure is somewhat different from that of the donation. You must fill out a declaration of change of ownership due to death, after prior agreement of all those who are heirs to the car. Then you have to pay the Inheritance and Donations Tax and the vehicle transfer fee. However, both in one case and in the other, the ITV must be in force and insurance must be taken out. If the ITV is expired, it will have to be passed and the vehicle towed.

Depends. When we give away or donate a vehicle, the recipient must pay a tax that depends on how much the car costs, that is, the real value without the corresponding charges and debts. These charges are the Inheritance and Donations Tax that must be paid, whatever the value of the vehicle. Usually, the donor usually formalizes a sale instead of a donation.

In this way, you pay the Property Transfer Tax, instead of the Inheritance and Donations Tax. It is usually cheaper, especially if the person to whom we donate the car is not a relative or if the vehicle does not have much value. On the other hand, making the self-assessment of the Property Transfer Tax is easier.

The sale can usually be more advantageous, because with this option you have to pay the Property Transfer Tax to the Treasury, which is usually much lower than the Gift and Inheritance Tax. In most Communities -such as Madrid- the Property Transfer Tax is usually 4% of the value of the vehicle, but in other communities the tax is higher, for example in Galicia, which is 8%. There are Communities in which the operation is exempt from tax, such as in Catalonia, where the second-hand cars that are going to be sold are more than 10 years old and have a value that does not exceed 40,000 euros, the operation is exempt from taxation.