It is common for parents to transfer money to their children to help with expenses, be they large or small, such as buying a home. However, many overlook a crucial step – declaring the transaction and paying the corresponding gift tax.
Here are the legal limits that banks and other institutions handling these transfers must follow.
How much can parents give children tax-free?
The short answer is: none. Any transfer of money from one person to another, free of charge, counts as a donation and must be declared. In practice, this is often overlooked for small amounts.
It is therefore crucial to remember the legal limits: banks are required to report transactions or cash deposits that exceed certain thresholds to the Tax Office.
How much money can I transfer without the bank having to inform the tax authorities?
Law 7/2012, of 27 October, aimed at intensifying measures to prevent and combat fraud, sets out limits for transactions that banks must report to fight money laundering.
This applies to banking operations exceeding €10,000, including money transfers. Additionally, as ING explains, there are other legal thresholds:
- Transactions involving €500 banknotes, regardless of the total amount.
- Payments and receipts over €3,000 when made in cash.
- Loans and credits exceeding €6,000.
- Looking ahead to 2026, the €3,000 threshold that previously limited reporting obligations for card payments will be removed to ensure no relevant information is lost.
Do the Spanish tax authorities monitor small transfers?
Since 1 January 2026, a key change has come into effect in the Spanish tax authorities' control of electronic payments, including Bizum, transfers and card transactions.
The Spanish Tax Agency no longer focuses solely on large sums – it now also monitors repeated small transactions. Banks are no longer required to report only income over €3,000; any payment that follows a recurring pattern may be scrutinised, even if the amounts are small.
A common example is parents helping a child with rent or mortgage payments. If they deposit a fixed amount each month and it is not repaid, the transaction can be treated as a recurring donation.
