Inheritance, Gifts and Housing in Europe

Why the “tax for living with your parents” in Spain is a myth, and what the real issue actually is

In recent weeks, Spanish social media has been flooded with claims that children who live with their parents are supposedly required to pay gift tax because they are being provided housing free of charge at market value. The wording sounds alarming, but it misrepresents the law and creates a false picture of how the tax system works in Spain and across Europe.

This is not about a tax on living together as a family.
It is about a tax on the transfer of economic benefit.

What Spanish law actually says

Spain applies Law 29/1987, the Inheritance and Gift Tax (ISD). It has been in force for almost forty years and defines the taxable event as the free acquisition of assets or rights between living persons.

That means that when someone receives, for free, an apartment, a share, a right to use property, or any other property right, a potential tax base arises. This is where the concept of donaciones encubiertas — hidden or indirect gifts — comes from: situations where nothing is formally transferred, but in reality someone uses an asset as their own.

The recent surge in discussion is not due to changes in the law, but because the tax authorities have again started to actively apply this doctrine to real-estate situations.

Where the real line is drawn

In Spain, the key question is not whether a child lives with their parents, but whether they have obtained an economic right over a property.

When a child lives with their parents in the main family home, this does not create a taxable gift. The Spanish Civil Code establishes the parents’ duty of support (deber de alimentos), which includes providing housing, food, and basic living conditions, even after the child reaches adulthood if they do not have their own means.

Tax risk appears in a different zone: when it is not the family home, but a second property. If a parent gives an adult child a second apartment or house to live in permanently for free, without a contract and without declaring imputed income in IRPF, the tax authorities may treat this as a transfer of a right of use — in other words, a gift of usufruct.

In such cases, Hacienda may reassess ISD as a gift tax, IRPF as if the property had been rented at market value, or both at the same time. These are the cases now appearing on social media, but they have nothing to do with normal family co-habitation.

Why this matters

Spain is not an exception. It reflects a pan-European model that exists in all EU countries, regardless of rates or thresholds.

Across Europe, what is taxed is not “family life”, but the transfer of economic benefit. The legal logic is the same everywhere: if a person receives an asset or an economic right over it for free, a tax base arises; if they simply live as a member of a family, no tax applies.

How this looks in other European countries

France
If a parent gives a child an apartment to use for free, it is treated as a donation indirecte.
If the child lives in the main family home, it falls under obligation alimentaire and no tax applies.

Germany
Free provision of housing outside the family household is treated as a Schenkung (gift).
Living together as a family does not create a tax base.

Italy
Free use of a second property is a donazione del diritto di godimento.
Living in the main family home is not taxed.

Netherlands
If an asset is used for free by a third party, it is an economic benefit transfer.
A family living in its main home is not covered.

Portugal
Free use of an asset outside the household triggers imposto do selo (gift tax).
Family co-habitation is protected.

Rates and technical rules differ, but the model is the same across Europe.

Why it has become visible now

In the past, tax authorities mostly looked at legal ownership. Today they look at economic reality: who actually lives in the property, who uses it, and who benefits from it.

CRS, automatic information exchange, property registers, and income-tax controls have made these structures transparent. That is why schemes involving free use of “second homes”, corporate wrappers, and family-held assets have moved into focus.

Conclusion

There is no tax on “living with your parents” in Spain or anywhere else in Europe. There is a tax on the transfer of property and economic benefit.

As long as a child lives in the family home as part of the household, this is outside the tax system. When a second asset or the right to use it is effectively transferred, tax logic begins, and it works the same way in Spain, France, Germany, Italy, and across the EU.

This is the new reality of European inheritance and property taxation.

If a family’s ownership and use of property is more complex than simply living together in one home, it is no longer a бытовой issue but a tax structure. In such cases, what matters is which economic rights are actually being transferred between generations and where the tax exposure arises. To check a specific situation, use the button below.