TEAC reiterates that the FIFO method applies to gifts of homogeneous securities: an identification rule, not a valuation rule

In a resolution of 19 February 2026 (RG 1535/2024), the Spanish Central Economic-Administrative Court (TEAC) reiterates that the FIFO method in article 37.2 of the Personal Income Tax Act also applies to gifts of homogeneous securities, even though paragraph 1 of the same article refers only to transfers for consideration. FIFO (first in, first out) means that, where the taxpayer holds identical securities acquired at different times, the oldest are deemed to be transferred first.

The TEAC is not breaking new ground: it confirms the criterion it already laid down in its resolution of 25 February 2025 (RG 3001/2022), in line with Directorate General of Taxes rulings V3222-20 and V1953-23. The reiteration nonetheless matters in practice, because it affects the planning of gifts of portfolios and business shareholdings acquired at different times.

The regulatory framework

Article 37 of Law 35/2006 of 28 November on Personal Income Tax (LIRPF) contains special rules for valuing capital gains. Paragraph 2 provides:

“For the purposes of letters a), b) and c) of the previous paragraph, where there are homogeneous securities, those transferred by the taxpayer shall be deemed to be those acquired first.”

Paragraph 1 of the same article, for its part, governs the transfer value in transfers for consideration of listed securities, unlisted securities and units in collective investment undertakings.

This is where the interpretive doubt arises. If paragraph 2 refers to letters a), b) and c) of paragraph 1, and these concern transfers for consideration, one might think FIFO only applies to transactions with a price. Gifts, in which the transfer value is set under the Inheritance and Gift Tax rules (article 36 LIRPF), would fall outside it. That was the taxpayer’s argument.

The case

In 2017 the taxpayer gifted shares in a company that she had acquired at different times and, in reporting the capital gain in her Personal Income Tax return, applied FIFO. The result was a gain of EUR 4,920,142.92.

She later sought rectification of her self-assessment in order to use the acquisition value of the specific shares identified in the deed (EUR 8,409,602 instead of EUR 3,489,459.08), which reduced the gain to zero. She argued that article 37.2 LIRPF does not apply to gratuitous transfers and that, unlike the Basque foral tax authorities, the State legislature had not expressly extended it to them.

The AEAT refused the rectification and the TEAC, at single instance, upholds that position. The amount at stake in the claim was EUR 1,131,632.88.

The TEAC’s reasoning

The TEAC distinguishes between the two paragraphs of article 37. Paragraph 1 governs the transfer value and therefore refers to transfers for consideration: in a gift, that value makes no sense as a price, because there is none, and it is set by article 36 LIRPF.

Paragraph 2, by contrast, contains a rule identifying the securities transferred, which must apply to both types of transfer, “since there is no reason whatsoever to justify a difference in treatment”. The reference in paragraph 2 to paragraph 1 must therefore be read as covering both transfers for consideration and gratuitous transfers.

The TEAC also rejects the other arguments. The fact that the law has not been amended to state this expressly does not prevent its application, and the reform of the Basque foral rules is, in its view, an additional reason to hold that FIFO also governs gratuitous transfers.

It therefore dismisses the claim and confirms that FIFO applies to the gift.

Editor’s view

In our opinion, the conclusion is technically correct: a gift of homogeneous securities requires, just like a sale, identifying which securities are transferred in order to know their acquisition value. Two points that the resolution does not address, because they were not part of the claim, are nonetheless worth highlighting.

The first is the real scope for planning. The donor cannot choose which specific securities are transferred: FIFO deems the oldest to be gifted, usually those with the lowest acquisition value and therefore the highest gain. The only variables open to planning are the number of securities gifted and the timing of the gift. The case itself illustrates this: identifying the shares in the deed did not displace the rule.

The second is the interaction with the family-business regime. Where the gift benefits from the 95% Inheritance and Gift Tax reduction (article 20.6 LISD) and, for the donor, from the rule excluding the capital gain from Personal Income Tax (article 33.3.c) LIRPF), FIFO is neutral for the donor, since the gain is not taxed. It remains relevant, however, for the donee, who takes over the acquisition value and date of the securities gifted. Identifying those securities determines the gain that will arise when the donee transfers them in the future.

Practical consequences

For anyone preparing a gift of homogeneous securities acquired at different times, the TEAC doctrine has three implications.

First, the donor cannot designate in the deed which securities are gifted in order to reduce the Personal Income Tax gain. FIFO applies regardless, as the rejection of the identification made in the deed in this case confirms.

Second, if the gift qualifies for the 95% reduction with the gain excluded for the donor, planning should focus on the donee, who receives the securities with the acquisition value and date of those first acquired by the donor.

Third, where there are blocks of shares acquired at different times with significant differences in value —common among founders who have subscribed successive capital increases or investors who came in at different rounds—, FIFO can produce counter-intuitive results. The calculation should be run before the deed is signed.

In conclusion, what this TEAC resolution makes clear is that the administrative position on FIFO in gifts is settled, and that the only planning available lies in deciding how many securities to gift and when, not which ones.