car donation or sell a car, what option do you care about?

Donate or sell a car, what option do you care about

Do you want to give your car to a family member or friend? If so, you should know that you have to pay certain taxes to make the transaction, which may be too high to suit you. Find out what's most paid for: donate or sell a car

car donation
car donation 


Whether you will present your car as a gift or if you will sell it, you must perform certain actions: change the owner, pay traffic tax and pay a certain tax. An important aspect is because, depending on the way you choose to move the car, you will pay more or less taxes. We analyze the pros and cons of each case so you can determine what is best for you, whether to donate or sell your car.


What's best for you: donate or sell a car?

The bureaucratic procedures to be implemented in both processes are almost the same:


Signing of the contract or general instrument between the parties.

Change the owner at the opposite traffic headquarters and pay the fee, which in both cases is set at €54.60 for vehicles in general and €27.30 for scooters (2019 figures).

Make sure that the change has been made correctly, which is necessary to request a registration report from the General Administration of Traffic (DGT).

Furthermore, in both cases (donation or sale) a tax must be paid: in the event of a sale, payment must be made in the treasury; This is the main aspect to consider when deciding to donate or sell a car.


Donation: Inheritance tax and gifts

If the owner is changed without a sale between them, inheritance tax and donations must be paid with the tax agency in the independent community from which the car is received.


This tax is assigned to the autonomous regions, so it determines the percentage to be applied and those that determine the exclusive tax benefits of their inhabitants, as regulated by Law 22/2009. The fact generates significant differences in the tax treatment of donations among Spaniards, depending on whether they reside in an independent community or another (you can refer to the tax tables in your community's tax agency).


In some areas, parent-child donations have rewards, and there are even communities where this payment is released if car donation occurs between grandchildren and assets.


Vehicle donation usually occurs between members with framed kinship relationships in the first group (grandchildren and adopters under 21 years of age) or the second group (grandchildren and adopters aged 21 years or older, wife, assets and adopters). If the family relationship falls within another group (brothers, uncles, nephews ...), the amount to be paid must be doubled in 1.5882;


In Madrid, for example, there are rewards for this tax if the family relationships are from the first and second group. Specifically, if the real value of the car is greater than 3850 euros, the donation would be more beneficial than selling.


Sale: Transfer tax

In practice, when someone decides to give up their car, it usually formalizes the transfer by sale rather than donating. Why? Very simple, because with this option, you have to pay a transfer tax, which is usually much lower.


This tax must be provided and paid by the buyer in the autonomous area where he resides.


In most societies - such as Madrid - it corresponds to 4% of the value of the car, but in other societies the tax rate is higher. This is the case of Galicia, which has a current rate of 8 per cent (although it is true that vehicles over 15 years of age with low cylinder capacity pay very low fixed fees).


At the other end, we find other communities where some vehicles are exemptfrom the said payment. In Catalonia, for example, the sale of used cars over 10 years old and a value of no more than 40,000 euros is not taxed.


On the other hand, it must be taken into account that, for tax purposes, there is a minimum value, so if the sale does not reach this amount, the basis of the tax calculation will be that minimum and not the price that is already paid.


In most cases, selling is more beneficial than donating, so many choose to make hidden donations to avoid paying taxes, which the Ministry of Finance knows. For this reason, it is very common for the administration to ask for justification for the payment of the process. In the absence of this, the party concerned can make a supplementary settlement to pay the donation tax, with the corresponding penalty. Hence the importance of drafting a contract for the sale of vehicles between individuals.


What do you do next?


In short, before deciding to donate or sell the car, you should review the percentage applied to each tax according to the autonomous community, in addition to the potential discounts that exist, because in some cases it may be cheaper to make the process by selling and otherwise by donating.


Of course: If you are a buyer or beneficiary, once you have the car in your name, look for MAPFRE car insurance that provides you with all the services and assistance you need and forget about any concerns.