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Official warning about the problems with gifting cash at Christmas

Any money you give away must be registered with the Tax Agency in Spain

It’s the season of goodwill and giving, but many of us have family members and friends that are impossible to buy for, those people who already seem to have everything.

In this scenario, it’s often simpler to pop some cash in a Christmas card and call it a good job, but in Spain, this holiday tradition could land you in hot water with the Treasury.

The reason is that parting with any money, regardless of how big or small the amount, is generally seen as making a donation, and this practice is subject to tax. This even includes the euro you give to a young nephew or the crumpled fiver your granny slips you on Christmas Day.

The donation of money is considered by the Spanish Tax Agency – the Hacienda – as an act of liberality in which a person offers something for free in favour of another person who accepts it. Therefore, in the eyes of the law, it’s a transfer of money for which Inheritance and Gift Tax must be paid.

So if you give the gift of cash this year, by rights you should provide the Treasury with a tax statement within 30 business days or you could legitimately face a fine.

Now, in reality, giving money as a Christmas present is a tradition as old as time and since the amount to declare tends to be tiny, it’s very difficult to police, and the tax authorities rarely take any action.

However, the law is the law, and oftentimes it’s better to be safe than sorry. Therefore, if you are going to give or receive money as a gift this Yuletide, be sure to declare it to the Treasury to avoid possible problems and financial penalties. Although the amount may be small, it is important to comply and avoid potential problems in the future.

See also: The best cities in Spain to experience the Christmas lights

Image: Pixabay

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