When moving any large amounts of money in Spain, one must always be aware of the declaration laws.
The Spanish taxman is notorious for its eagerness to catch citizens and residents out and issue fines for rule breaking.
When transfering between family members, it should be noted that any transfer considered a monetary gift is subject to the Inheritance and Gift Tax (ISD) and must be declared to the Spanish tax authorities.
Banks play a key role in monitoring financial movements. They are legally required to analyse transactions and report suspicious or significant transfers to the Agencia Tributaria (aka the Hacienda).
This does not mean every transfer is flagged, but there are clear thresholds that trigger scrutiny.
According to Spanish publisher La Informacion, as a general rule, transfers of €10,000 or more must be declared.
In addition, transfers exceeding €6,000 could be reviewed under Spain’s anti-money laundering legislation, even if they do not automatically require a declaration.
What happens if you don’t declare it?
Failing to declare a transfer that qualifies as a gift can result in penalties. These fines start at €600 and can reach up to 50% of the undeclared amount, depending on the circumstances and whether the omission is considered deliberate.
In short, transfers over €6,000 may be investigated, and transfers of €10,000 or more must be formally declared.
Family transfers are not exempt
Because money transfers between relatives are common, many people assume they are tax-free. This is not always the case.
If the transfer is deemed a donation, it must comply with Inheritance and Gift Tax rules.
Although ISD is a state tax, each autonomous community manages and applies it differently, which means the amount payable can vary significantly depending on where the recipient lives.
In Andalucia, there is a reduction of up to €1million, although some rules apply.
Madrid offers a 99% tax relief, provided the donation is formalised before a notary
Castilla-La Mancha offers relief ranging from 80% to 100%, depending on the amount.
In the Balearic Islands, the tax has been abolished entirely for donations between parents and children.
What about non-close relatives or friends?
The situation changes when the transfer is made to extended family members or non-relatives. In those cases, tax relief usually does not apply and the recipient may face tax rates ranging from 7.65% to 34%.
For anyone living in Spain, especially expats regularly transferring money between family members, understanding these thresholds is essential to avoid unexpected fines from the tax office.
