Just as in Spain, the United States has a tax on gifts, known as the Gift Tax.
What Is the Gift Tax in the United States?
The Gift Tax is a federal tax that applies to the gift of money or any other asset owned by the donor.
There is an annual exemption of 19,000 dollars. This means that if gifts are made for an amount lower than 19,000 dollars, the tax does not accrue.
If the gift is made by a married couple, the exemption reaches 38,000 dollars.
Gift Tax Exemptions
Gifts made between spouses are exempt.
Gifts made for medical or educational purposes are also exempt. In other words, medical or educational expenses paid directly by the donor are exempt from the tax.
Gifts made to charitable institutions are also exempt.
Who Is Required to Pay the Gift Tax?
The Gift Tax must be paid by the person making the gift, through Form 709.
The applicable tax rates are progressive, ranging from 18% to 40%.
Gift Tax for Non-Residents in the United States
It may happen that a non-resident person, or someone who does not have U.S. citizenship, gives away an asset located in the United States.
In this case, if the gift consists of money held in a bank outside the United States, or in an account located in the United States, the tax would not accrue.
However, if the gift consists of real estate located in the United States, the donor would have to pay the tax.
The donor would not have to pay the tax if the gifted property is located outside the United States.
Reporting Foreign Gifts Received in the United States
Although a gift of money to a U.S. resident does not generate any tax, there is an obligation to report the gift through Form 3520, provided that the gifts exceed 100,000 dollars.
Gifts from U.S. Residents to Non-Residents
It may also happen that a U.S. resident gives money to a person who is not a resident of the United States.
In this case, the Gift Tax would not have to be paid.
Example: Gift from a U.S. Citizen to a Child Living in Madrid
This raises an interesting question: what would happen if a U.S. citizen made a gift to a child living in Madrid?
In this case, the tax impact would be minimal, since the gift would not be taxed in the United States and the 99% tax relief in Madrid would apply.
Therefore, it may be an interesting option for Americans residing in the Community of Madrid.