Donations from parents to children in the Balearic Islands: requirements, deadlines and real cost

Since July 2025, giving a child money or property in the Balearic Islands can result in no Inheritance and Gift Tax to pay. That does not mean the transaction costs nothing: there are formal requirements to meet, a self-assessment to file even when nothing is due and, if a property is donated, the donor’s Personal Income Tax (IRPF). This guide explains step by step how a donation from parents to children is made and where the costs tend to appear.

What has changed and what it means in practice

Law 6/2025 of 23 July on the general budget of the Autonomous Region of the Balearic Islands for 2025 (published in the Spanish Official State Gazette (BOE) on 1 November 2025) amended, in its second final provision, Legislative Decree 1/2014 (the consolidated text of the regional legal provisions on ceded taxes) and gave a new wording to its Article 54. It was published in the extraordinary issue no. 98 of the Balearic Official Gazette (BOIB) on 24 July 2025, and the amendments made by that second final provision take effect from the following day, 25 July 2025 (twenty-first final provision).

For donations between family members, Article 54 establishes a deduction from the net tax liability of Inheritance and Gift Tax:

• 100% for groups I and II.
• 60% for second- or third-degree blood relatives in the collateral line in group III, and 35% for the rest of group III.

The kinship groups are those defined in Law 29/1987 (Article 20.2.a), to which Article 21 of the Legislative Decree itself refers: group I comprises descendants and adopted children under 21; group II, descendants and adopted children aged 21 or over, spouses, and ascendants and adopters. A child, whether a minor or an adult, therefore falls within the 100%.

The term matters: it is a deduction, not an exemption. The tax is calculated and then deducted, which is why the law maintains the obligation to file the self-assessment even if the final amount is zero (Article 54, paragraph 5). If you want the full context of the reform, we explain it in our analysis of the reform of Inheritance and Gift Tax in the Balearic Islands.

Requirements for the deduction to apply

Article 54 distinguishes according to what is donated:

Donation of a property. The value stated in the public deed cannot exceed the reference value plus 20%. If there is no reference value that the Land Registry (Catastro) can certify, the market value applies. If that limit is exceeded, groups I and II do not lose the whole deduction, but it is calculated differently: the tax due becomes 7% of the taxable base (paragraph 3: deduction = net tax liability − taxable base × 0.07), that is, 7% of the total value donated. In practice, the prudent course is to state in the deed a value that respects the limit.

Donation of money. Where money (or funds, accounts or deposits) is acquired, the deduction applies only if the origin of the funds is duly justified and this is stated in the public deed (paragraph 4). A transfer between accounts is not enough: the origin must be capable of being proven and be recorded in the document.

Form. Beyond the tax aspects, the Civil Code generally requires a public deed for the donation of a property to be valid (Article 633); the donation of movable property may be made orally or in writing (Article 632). For money, Balearic tax law requires the origin to be stated in the deed, so in practice it is also formalised before a notary.

Which autonomous region is competent

For the donation of a property, the tax revenue goes to the region where it is located. For all other assets and rights, such as money, it goes to the region where the donee is habitually resident on the date the tax becomes due (Article 32.2.b and c of Law 22/2009; habitual residence is determined under Article 28.1.1.º.b of that law). If the child lives outside the Balearic Islands and is given money, the Balearic deduction would not apply and the rules of their own region would have to be checked.

The cost that does not appear in Inheritance and Gift Tax

The donor’s IRPF. A donation inter vivos of a property gives rise to a capital gain for the donor (Article 33.1 of Personal Income Tax Law 35/2006); losses on gratuitous transfers inter vivos are not counted (Article 33.5.c). The rules of Inheritance and Gift Tax are used to calculate it: the transfer value is the one resulting from that tax, without exceeding the market value (Article 36). If the property has risen greatly in value since it was bought, that gain, which goes into the savings base, can be greater than the saving obtained in Gift Tax. There is one important exception: the gain on the transfer of the main residence by people aged over 65, or by people in a situation of severe dependency or great dependency, is exempt (Article 33.4.b); the concept of main residence is defined in Article 41 bis of the IRPF Regulations.

The donation of money does not generate a capital gain for the donor.

Municipal capital gains tax (plusvalía municipal). In gratuitous transfers, the taxpayer of the municipal tax on the increase in value of urban land is the person who acquires the land, that is, the child who receives the property (Article 106.1.a of the consolidated text of the Local Finance Law, Royal Legislative Decree 2/2004). The optional relief that the law allows to be applied to descendants refers to transfers on death (Article 108.4), not to donations.

Notary and registry. The deed and the registration of the donation have their own cost, which depends on the value and the assets donated.

Later sale. If the child later sells the property, its acquisition value will be the one resulting from the donation under Inheritance and Gift Tax (Article 36 of the IRPF Law). That is why the value stated in the deed matters.

Donation versus inheritance

In an inheritance, the IRPF law provides that no capital gains or losses are counted in gratuitous transfers on the death of the taxpayer (Article 33.3.b). In other words, a donor who transfers a property that has risen greatly in value during their lifetime bears a gain that would not exist if the property passed by inheritance. The counterpart is that in an inheritance neither the timing nor the division is decided. Which is better depends on the type of asset, its appreciation and the family’s objective; Balearic civil law also offers other arrangements, such as succession agreements (pactos sucesorios), that should be analysed case by case.

Deadline for filing the self-assessment

In the Balearic Islands, the deadline for filing the self-assessment for a donation is one month from the date on which the act or contract takes place, extended to one month and ten calendar days if filing and payment are made electronically (Article 90.2 of Legislative Decree 1/2014). The State regulations on the tax, which set thirty working days (Article 67.1.b of Royal Decree 1629/1991), apply only as a supplement. The Balearic Tax Agency (Agència Tributària de les Illes Balears, ATIB) administers the tax and allows it to be filed through its electronic office; for donations, form 651 is used. Always check the deadline in force at the time the donation is formalised.

Common mistakes

• Donating money without justifying its origin or without recording it in the deed.
• Stating a value in the deed for a property above the reference value plus 20%.
• Not filing the self-assessment because the tax due is zero.
• Forgetting the donor’s IRPF when donating a property that has gained a lot of value.
• Forgiving a family loan to avoid a donation: forgiveness made with the intention of making a gift is in itself a gratuitous transaction subject to the tax and, if the loan was not genuine, the tax authorities could recharacterise it as an earlier donation. We cover this in our analysis of the reform.
• Not planning the later sale of the donated property.

Frequently asked questions

Is tax paid on a donation from parents to children in the Balearic Islands? Children belong to groups I or II, for which Article 54 of Legislative Decree 1/2014 provides for a 100% deduction from the net tax liability, provided the formal requirements are met. Even so, the self-assessment must be filed.

Do I need to go to a notary if I donate money? The origin of the funds must be justified and stated in the public deed, under paragraph 4 of Article 54. That is why, for the purposes of the deduction, the donation is formalised in a deed.

What happens with IRPF when I donate a property? The donor may have a capital gain, which is taxed in the savings base, unless it is exempt, as in the case of the main residence of a person over 65 or in a situation of severe dependency or great dependency.

And if my child does not live in the Balearic Islands? If a property located in the Balearic Islands is donated, the revenue goes to the Balearic Islands. If money is donated, it goes to the region where the donee resides, and the Balearic deduction might not apply.

How we work at Vicens Advisors

At Vicens Advisors we study each donation before it is signed: what is donated, to whom, at what value and what happens in the donor’s IRPF and on a possible later sale. The aim is for the deduction to apply without surprises and for the total cost of the transaction to be the one expected.

LEGAL NOTICE

This content is provided for information purposes and does not constitute tax or legal advice. It is based on the legislation and the criteria cited, in force at the date of publication. Regional legislation may change some of the requirements described. Each family situation requires a specific analysis.

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