What is the gift tax?

What is the gift tax?

Gift tax is a tax that is levied on gifts. But what exactly is behind it? Who is obliged to pay this tax and what is the tax rate? What allowances apply and how can you save on gift tax? There are also exceptions that you should be aware of with regard to gift tax. This blog post provides comprehensive answers to these questions and presents you with all the important information about gift tax. So let’s gain a better understanding of this topic together.

What is the gift tax?

What is gift tax?

Gift tax is a tax in Germany that is levied on gifts. A gift is a present in which one person transfers a certain amount of money, property or assets to another person without expecting anything in return. Gift tax is levied by the tax office and is based on the value of the gifted items or money.

In order to pay gift tax, certain conditions must be met. Firstly, it must be a gift where nothing is expected in return. Secondly, both the donor and the recipient must be resident in Germany. Gifts between persons resident outside Germany are not subject to German gift tax.

The amount of gift tax depends on various factors, including the value of the gift and the relationship between the donor and the donee. The higher the value of the gift and the more distant the relationship, the higher the tax rate.

Who has to pay gift tax?

Gift tax is a tax that is levied in Germany when assets are given away. It is due when someone receives a gift, be it in the form of money, real estate, securities or other assets. Gift tax is a form of inheritance and gift tax and is subject to the provisions of German tax law.

Who has to pay the gift tax now? In principle, the donee is obliged to pay the gift tax. It is important to note that the donor does not pay the tax directly, but the donee is responsible for paying the tax. The amount of tax depends on the degree of relationship between the donor and the donee as well as the value of the gift.

Lower allowances apply to close relatives than to more distant relatives or non-relatives. This means that gifts between spouses or registered partners have higher allowances than gifts between siblings or other relatives. The tax-free amounts are regularly adjusted for inflation.

Degree of relationship Allowance
Spouses, registered civil partnerships 500,000 euros
Children and stepchildren 400,000 euros
Grandchildren 200,000 euros

If the value of the gift exceeds the respective tax-free amount, the excess amount is taxed at the corresponding tax rate. The tax rate varies depending on the value of the gift and the relationship between the donor and the donee. The more distant the relationship, the higher the tax rate usually is.

However, there are some exceptions where gifts are tax-free. This includes, for example, donations to charitable organizations or certain beneficiary purposes, such as the promotion of science, research, education and art. Gifts below the tax-free amount are also exempt from gift tax.

How high is the tax rate for gifts?

The tax rate for gifts is an important aspect that is relevant for both the donor and the donee. Gifts are voluntary transfers of assets without expecting anything in return. These may be cash, real estate, securities or other assets. But how high is the actual tax rate levied on these gifts?

The tax rate for gifts depends on the amount of the assets given away and the relationship between the donor and the recipient. In principle, the higher the value of the gift, the higher the tax rate. However, there are also allowances up to which no gift tax has to be paid.

There are different tax brackets for calculating the tax rate for gifts:

Tax class Relationship to the donor Allowance Tax rate
I Spouse, registered partner, children, stepchildren, grandchildren, parents 400,000 euros 7% – 50%
II Siblings, nephews/nieces, parents-in-law, children-in-law 20,000 euros 15% – 43%
III All other persons 20,000 euros 30% – 50%

The tax rate can therefore be between 7% and 50%, depending on the amount of the gift and the family relationship. It is important to note that these figures are only guidelines and the exact calculation of gift tax can be complex. It is advisable to seek advice from a tax consultant in advance in order to take advantage of possible tax benefits or reductions.

What allowances apply for gift tax?

Gift tax is a tax that is levied when assets are given away or transferred. It is important to know that gift tax is levied in Germany and that certain allowances apply. These allowances determine how much wealth can be transferred tax-free. In the following, we will take a closer look at the gift tax allowances.

The first and most important gift tax allowance applies to spouses and registered partners. If assets are gifted between spouses or registered partners, there is no tax-free allowance. This means that assets such as money, real estate or securities can be transferred without restriction and without paying tax.

There are also gift tax allowances for children and grandchildren. Currently, the tax-free amount for children is 400,000 euros and 200,000 euros for grandchildren. This means that parents can give their children up to 400,000 euros tax-free without incurring gift tax. The allowance for grandchildren is 200,000 euros. If the value of the gift exceeds the respective tax-free amount, gift tax is levied on the excess amount.

In addition to spouses, registered partners, children and grandchildren, there are also allowances for other relatives and non-relatives. For relatives in a direct line such as parents, grandparents and great-grandchildren, the tax-free amount is 100,000 euros. For siblings, the tax-free amount is 20,000 euros and for all other persons, such as friends or partners, the tax-free amount is 20,000 euros.

Degree of relationship Allowance in Euro
Spouse/registered partner No allowance
Children 400,000 euros
Grandchildren 200,000 euros
Parents, grandparents, great-grandchildren 100,000 euros
Siblings 20,000 euros
Other persons 20,000 euros

It is important to note that these allowances can be claimed again every 10 years. This means that parents can give their children up to 400,000 euros tax-free every 10 years, for example. This can be a way of saving gift tax and passing on assets within the family.

How can you save on gift tax?

Gift tax is a tax that is payable when assets are given away. It is levied to ensure that inheritances and gifts are taxed fairly. While it is important to pay the taxes, there are also ways to minimize or even save on gift tax.

There are several strategies for saving gift tax. One option is to use the tax-free allowance that can be claimed by people who give away assets. The tax-free amount is the amount up to which no gift tax is levied. In Germany, the tax-free amount is currently 20,000 euros per person.

Another way to save on gift tax is to give away assets gradually over a longer period of time. This makes it possible to utilize the tax-free amount each year and reduce the tax burden. However, such a strategy requires careful planning and expert advice.

  • Avoidance of gifts that are subject to gift tax
  • Use of allowances
  • Gradual gifting over a longer period of time
  • Use of tax structuring options
Procedure Advantages
Avoidance of gifts that are subject to gift tax No payment of gift tax required
Use of allowances Reducing the tax burden
Gradual gifting over a longer period of time Optimal use of allowances
Use of tax structuring options Further tax savings possible

What are the exceptions to gift tax?

Gift tax is a tax that may be payable on the transfer of assets for no consideration. This is a type of inheritance tax, but it applies to gifts and not to inheritances. Various exemptions from gift tax are explained in more detail below.

One of the most common exemptions from gift tax is the tax-free amount. Every taxpayer has the right to give away a certain amount within a certain period of time without having to pay tax. The exact tax-free amount varies depending on the degree of relationship between the donor and the recipient. For example, a higher allowance applies to close relatives such as children or spouses than to more distant relatives or non-relatives.

Another important point is the exception for owner-occupied residential property. If a taxpayer makes a gift of owner-occupied property to a relative, this may be exempt from gift tax. However, there are certain conditions that must be met in order to benefit from this exemption. Among other things, the recipient must live in the property for a certain period of time and may not sell it on.

  • Some other exemptions from gift tax relate to charitable purposes. If someone donates their assets to a charitable organization or foundation, this may be tax-privileged. There are certain conditions that must be met for the gift to be recognized as charitable and exempt from gift tax.
Exception Conditions
Beneficiary organizations The organization must be recognized as a non-profit organization and meet certain criteria.
Foundations The foundation must also be recognized as a non-profit organization and meet certain requirements.

It is important to note that the exact conditions and exemptions from gift tax may vary from country to country. It is therefore advisable to consult a tax advisor before making a gift of larger assets in order to find out the current regulations and benefit from possible tax advantages.

Frequently asked questions

What is gift tax?

Gift tax is a tax that is payable on the receipt of gifts. It is calculated on the value of the gift.

Who has to pay gift tax?

In principle, the donee is responsible for paying the gift tax. However, there are also cases in which the donor can pay the tax.

What is the tax rate for gifts?

The tax rate for gifts varies between 7% and 50% depending on the degree of relationship. Different allowances apply.

What allowances apply for gift tax?

The allowances for gift tax depend on the family relationship. For example, the tax-free amount for spouses is 500,000 euros.

How can you save on gift tax?

There are various ways to save gift tax. One option is to use tax-free allowances or to spread the gift over several years.

What are the exceptions to gift tax?

There are certain exceptions where no gift tax is payable. For example, gifts between spouses are generally tax-free.

How can gifts be claimed for tax purposes?

In order to claim gifts for tax purposes, they must be declared in the tax return. It is advisable to consult a tax advisor.

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Herzlich willkommen auf gesetzblog.com! Ich bin Ali, der Autor hinter diesem Blog. Mit einer Leidenschaft für deutsches Recht teile ich hier aktuelle Entwicklungen, Analysen und Einblicke in die juristische Welt. Als bringe ich mein Fachwissen ein, um komplexe rechtliche Themen verständlich zu erklären und Diskussionen anzuregen. Vielen Dank, dass Sie vorbeischauen, und ich freue mich darauf, gemeinsam mit Ihnen die faszinierende Welt des deutschen Rechts zu erkunden.

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