Over the past decade, money movements between family members, particularly transfers between parents and children, have been on the radar of Tax authorities. The need to control capital flows to prevent money laundering and tax evasion means that these movements do not go unnoticed. Although transfers are often made for family reasons, such as helping children buy a home or contributing to college expenses, The Treasury has made it clear that donations cannot escape tax scrutiny. Now, with recent provisions, any transfer between family members that exceeds certain monetary limits can trigger increased scrutiny, and failure to comply with required formalities may result in significant penalties.
One of the key aspects of this regulation is the control of transfers which exceed 3,000 euros and those which reach 6,000 euros. While The first threshold requires banking entities to declare any movement which exceeds the said amount, The second directly involves the action of the Treasurywhich considers that these may be potentially “irregular” amounts. Thus, in a context where the tax administration seeks to reduce tax evasion and ensure that all capital movements comply with regulations, family members are required not only to declare their donations in a timely manner, but also also pay taxes on them through inheritance and gift taxes. Something we must take into account even if many taxpayers are unaware of the consequences of not reporting transfers between family membersbut the tax authorities are increasingly determined to monitor and sanction any failure. But what are the details of this control, and how does it affect those who make transfers between parents and children?
Goodbye transfers between parents and children
To achieve your goal of controlling money flow, The Treasury has implemented measures which require banks to report significant movements. Any transfer, deposit or withdrawal greater than 3,000 euros must be reportedand when 6,000 euros are exceeded, this may give rise to a direct investigation by the Treasury. In addition, movements that involve the use of 500 euro notes, as well as the cashing of checks, promissory notes or bills of exchange, are particularly observed.
But the Treasury’s interest is not limited to the figures we have given.. When it comes to transfers between family memberslike parents who wish to financially support their children, any large amount is seen as a donation. This means that, even if it is a family helper, there is a legal obligation to declare these movements for inheritance and gift taxwhich varies according to each autonomous community in Spain. This tax is applicable even on small amounts, although smaller transfers are often not applied as rigorously by the tax authorities.
The importance of inheritance and gift taxes
Inheritance and gift taxes It is regulated differently in each autonomous communitywhich causes the percentage to be paid to vary considerably. For donations between parents and children, the regulations provide that the beneficiary must file the tax return within a maximum of 30 working days from the moment of donation. Although some communities apply discounts and incentives for donations between immediate family members, failure to follow the corresponding procedures can lead to undesirable consequences.
On the other hand, It is important to emphasize that in certain cases, failure to declare a transfer or donation may lead the Treasury to consider that there is an “unjustified increase in assets”.. When this happens, the Treasury may require us to pay personal income tax (IRPF) for the total donation, which could result in a tax rate of up to up to 56% in some communities. This, combined with additional penalties, can represent a significant financial impact for the taxpayer.
The consequences of not declaring a donation
Failure to declare a gift or transfer may be classified as a serious offense by the tax administration. According to current standards, Omission of this declaration results in a minimum penalty of 600 euros, which can reach up to 50% of the value of the means of payment used.. Even when the donation is not in cash, but through the delivery of assets such as shares, investment funds or real estate, the Treasury requires that the origin of the funds be justified and that the corresponding tax is settled.
Additionally, financial institutions are required to identify and record any suspicious movements. For this reason, any transaction that is not properly reported may end up being recorded in a database used to identify patterns of behavior indicating irregular behavior or possible tax violations.
With what has been explained, if we want to avoid tax problems, It is essential that taxpayers are clear about their obligations regarding transfers and gifts between family members. Making a money transfer or donating goods must meet certain requirements, such as formalizing the agreement in a public document justifying the origin of the funds and submitting the tax declaration within the specified deadlines. Compliance with these steps not only allows you to access possible bonuses, but also avoids sanctions and conflicts with the tax authorities.
