Donations and asset contributions are increasingly used in the Canary Islands, particularly in Fuerteventura, both within the family sphere and as part of estate and succession planning. However, although these transactions may appear straightforward at first glance, they involve significant legal and tax implications that should be carefully considered before proceeding.

From a legal perspective, a donation is the gratuitous transfer of an asset or right from one person to another. This may include money, real estate, company shares, vehicles, or other assets. In the Canary Islands, such transactions are governed by both the Spanish Civil Code and regional tax regulations, which introduce relevant differences compared to other regions of Spain.

One of the most notable aspects of the Canary Islands’ tax regime is the Inheritance and Gift Tax (IGT). Thanks to the existing regional tax allowances, donations between close family members—parents, children, and spouses—may benefit from substantial tax reductions. This makes the Canary Islands, and Fuerteventura in particular, an attractive jurisdiction for this type of transaction. Nevertheless, these benefits are subject to strict compliance with formal requirements and legal deadlines.

For example, donations of real estate must be formalised by means of a public deed before a notary and subsequently registered with the Land Registry. In addition, the beneficiary of the donation may be liable for the IGT and, where applicable, municipal capital gains tax, while the donor may incur a capital gain for personal income tax purposes. In the case of cash donations, it is essential to properly justify the origin of the funds and to document the transaction correctly in order to avoid issues with the tax authorities.

Asset contributions, on the other hand, are common in business or family settings, such as contributions of assets to companies, partnerships, or other asset-holding structures. These transactions require an even more detailed analysis, as they may have implications for Corporate Tax, IGIC (Canary Islands General Indirect Tax), or the future liability of the contributors.

In Fuerteventura, where many families combine real estate assets, business activities, and, in some cases, international estates, proper planning of donations and asset contributions not only helps to prevent future disputes but can also result in significant tax savings and greater legal certainty for all parties involved.

For these reasons, before carrying out any donation or asset contribution, it is highly advisable to seek specialised legal advice to ensure that the transaction is carried out correctly, transparently, and in full compliance with current legislation.

If you would like more information or require assistance, please contact Lajares Law Offices at info@lajareslawoffices.com. We will be happy to assist you.