Gift tax: How to avoid pitfalls when giving

Giving is one of the most beautiful human gestures. And you might think that it is a pure private matter. As long as the gift is not worth more than 20,000 euros, that’s right. If it is more valuable, the wonderful nicity is generally subject to gift tax – which will certainly make this tax one of the most unpopular. Maybe that’s why there are a number of exceptional regulations. And the Gift Can even help to save taxes.

German tax law sees a kind of early inheritance in valuable donations, more precisely an “free donation among living”. Therefore, the rules of inheritance tax apply to donations. If the participants of a gift are related, allowances apply. The closer, the higher. The following table shows the tax -free limits and the gift tax class. This depends on the degree of kinship and is not identical to the income tax class of the recipient.

An example: If a well -off manager gives his favorite native a chic car worth 25,000 euros, the niece beyond her allowance, i.e. 5000 euros, has to pay gift tax to the tax office. How much this is can be read from the following table.

For the great car of the donation uncle, the recipient niece has to pay 15 percent gift tax on the 5000 euros beyond its allowance, i.e. pay 750 euros to your tax office. And if the trigger manager had given a friend’s car without a legal degree of kinship, a gift tax of 1500 euros was incurred for them. A transfer of the purchase price also does not freed from the gift tax. Even in the event of a joint account of Schenker and a recipient – then on half the amount above the exemption limit – gift tax. Both Schenker and recipient are liable for tax liability in Germany.

What sounds shocking does not seem that bad in everyday life. Because there is hardly any tax law without exceptional regulations. For example, so -called “usual occasional gifts” are tax -free. If the car were given for a high school diploma or a birthday in the example above, there was no gift tax – only one of tens of regulations that are noted in.

Another example: A single, childless woman inherited her brother as her sole legal heir her savings of 340,000 euros. In relation to his allowance, he has to pay 25 percent taxes for 320,000 euros, i.e. happy 80,000 euros.

It is therefore not surprising that donations also serve to avoid tax when the asset is transferred. This is due to a period. The allowances listed above apply for ten years. The same allowance is then available again. Practical application: Anyone who gives away their domestic property with a current market value of 600,000 euros to their child does not trigger tax liability due to applicable allowances. After ten years, a donation (or the inheritance) of the remaining half of the real estate would also be tax -free for the child, according to the current law even with a “buffer” of 100,000 euros.

Experts advise a notarial gift contract when giving away such values. Not least as proof, because for recipients (and heirs) there is generally an obligation to report to your tax office. After all, the costs for knowledgeable help from tax advisors, specialist lawyers and notaries can be asserted for tax purposes.