I want to give a second-hand car to a family member. What is more interesting, do it as a donation or as a purchase?.
The answer to this question is no other than “depends.”
When we are going to give or donate a vehicle, who receives it, for tax purposes the grantee, has the obligation to pay a tax that goes according to the net value of the gift, or what is the same, the real value discounting for the charges and debts legally deductible.
This is the inheritance and donations tax (ISD), and we will have to pay it, have the value of the vehicle.
Although by law this is so, in practice, when someone gives a vehicle to a family member, choose to make a purchase instead of a donation. This liquidates the patrimonial transmissions tax (ITP), instead of the inheritance and donations tax (ISD). On the one hand it is usually cheaper, especially for low-value vehicles. On the other hand, making the ITP’s autoliquidation is easier and more economical in case of making the process of change of ownership through a management.
The following chart shows the difference in payment between the inheritance and donations tax (ISD) and the patrimonial transmissions tax (ITP) when transmitting a second-hand car, depending on the real value of the car.
In the amounts to be paid for the patrimonial transmissions tax (ITP) We have counted on a rate of 4% lien on the real value of the car. This percentage is applied in the majority of autonomous communities, among them the community of Madrid. However, in some autonomy the tax rate is higher. A good example of this would be galicia with a current rate of 8%. While it is fair to say that in this community vehicles with more than 15 years and little displacement pay a small fixed fee.
Some communities, on the other hand, for vehicles that meet certain requirements, charge less or even exempt from the payment of the ITP. In Catalonia, for example, the purchase of used cars with 10 or more years of age and value less than €40,000 is not taxed by ITP. See “Type of tax assessment of the patrimonial transmissions according to the autonomous community for the purchase of a second-hand car”.
The amounts payable for inheritance tax and donations have been obtained by applying the types of assessment of the tables published for the purpose by the Ministry of Economy and Finance. It is advisable to take into account that each autonomous community can modify the sections and types contained in these tables, since the inheritance and donations tax and the patrimonial transfer tax were ceded by the State to the Autonomous Communities.
We have also considered that the donation of the vehicle is carried out between members with kinship relationships framed in group I (descendants and adopted under twenty-one years) or group II (descendants and adopted of twenty-one or more years, spouse, Ascendants and adopters), and that the grantee’s pre-existing patrimony is less than €403,000. In addition, the grantee would not have received other donations from the same donor in the 3 years preceding the date the vehicle was donated.
If the relationship of kinship was framed in another group (brother, uncle, nephew, brother cousin, stepfather,…) The amount to be paid would have to be multiplied by 1.5882. In the case of more distant relatives or friends or third parties without relationship of kinship, the amount to pay would be double.
In some communities, such as Catalonia, if the relationship between donor and grantee is within group I or II, and the actual value of the car does not exceed €200,000, the rate of assessment of the ISD is equal to that of the ITP (5%), as long as we donate the median You public deed. In any other case the type of tax to present the ISD would be higher.
In the community of Madrid, the ISD is subsidized for the partentesco relations of group I and II. In particular, if the real value of the car is higher than €3,850, it would be more interested in the donation than the sale. Even though we have to go through the notary to formalize the donation in a deed.
As we see in the following chart, in the community of Madrid, from the value mentioned and as this value increases, the fee payable by ISD is progressively lower than that of the ITP. For example, in the community of Madrid, for a car with real value of €18,000, liquidating the ISD instead of the ITP would save €500.
Although the amount payable by ISD in the community of Madrid represents only 1% of the real value of the car, as on the tax quota is 99% subsidized, to benefit from this bonus we will have to formalize the donation in writing Public, with the consequent added cost. Something similar happens in Castilla la Mancha, where the bonus would be 95%, provided that the real value of the car is less than €120,000.
By the public deed of donation, the notary will charge us about €150 for a car of declared value of €6,000, and above this value €4.5 more for each €1,000 of increase in the real value.
In any case, if we are donating or giving away a car, in order to calculate the fee to be paid, we will have to consult the assessment type tables, reductions, multiplier coefficients, and bonuses in force in our autonomous community for the ISD.
The ISD self-liquidating form is the 651 model and can be downloaded or completed online on the official website of the Ministry of Finance of each Autonomous community.