Foreign private foundations — Liechtenstein Stiftung, Panamanian foundation, Austrian Privatstiftung, Curaçao Stichting and similar vehicles — are common tools for multi-generational wealth planning when family members are tax-resident in Spain. The Spanish tax analysis turns first on whether the foundation has its place of effective management in Spain (in which case it itself becomes Spanish tax-resident, taxed on worldwide income) and second on whether the foundation’s income should be attributed to the Spanish-resident founder or beneficiary.
DGT doctrine has consolidated a functional approach: when the foundation is purely discretionary and beneficiaries have no enforceable right, income is not attributed until effective distribution, which is then taxed as a gift. When a Spanish-resident founder retains effective control — revocation rights, dominant protector committee, binding instructions — the foundation is treated as transparent and income is attributed to the founder. Where there is a fixed beneficiary with vested rights, attribution mirrors the treatment of irrevocable trusts with a fixed beneficiary.
Reporting: Form 720 applies if the resident’s positions exceed thresholds; analysis of Spanish CFC rules (Art. 100 CIT Act) is required where the foundation is corporate in nature or has material passive income.
This section covers DGT rulings, TEAC decisions and case law on foreign foundations with a Spanish connection.