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About ByTheLake

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  • Location Berlin
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  1. Donations and Disclosure Duty: Doubts

    Hello, I just registered on this forum although I have read many threads over the months and they were extremely useful. I would like to ask a tax question and it’d be great if somebody with German tax knowledge could tell me what they think.   I am currently living in Germany. Last year I started working as a self-employed person and I am slowly building my client base. I have been registered as a “Gewerbe” since the beginning of 2020 and I also received a tax number from the local Finanzamt.    Because 2020 was my first year as self-employed person and the income flow for the following months was very uncertain and possibly very low (even more so once the Coronavirus pandemic started) my parents sent me a sizeable contribution at the beginning of 2020 to cover my essential needs for 2020 and possibly the first half of 2021 (housing, private health insurance etc). Months ago a tax advisor had told me that each parent can send you up to 400.000€ over a period of 10 years and that under that threshold you don’t need to worry so I didn’t even think about contacting the Finanzamt.    Today I panicked because I read that any gift, no matter what size, must be notified to the Finanzamt within 3 months, and then they will let you know if you have to pay taxes on it or not. But shortly after I read that this “disclosure obligation” (Anzeigepflicht) does not apply to some situations, including those donations whose MOTIVE is certainly tax-free, like “donations for reasonable maintenance and study/training” (Zuwendungen zum Zwecke des angemessenen Unterhalts oder zur Ausbildung des Bedachten).   So, if I understood correctly, this disclosure duty applies to all gifts that WOULD BE TAXABLE ONCE THE THRESHOLD IS REACHED (for example, if I already have a stable income and my father decides to send me 10.000 euros anyway) but not to those donations that would not be taxable under any circumstance. Did I get this right?   Also, would the Finanzamt become suspicious if the money I made in the 2020 is not sufficient to cover living expenses or do they just assume I have personal resources and avoid digging deeper unless they have other valid reason to? In other words, is not reporting enough money for a somebody to mantain himself/herself for that tax year typically a sufficient reason for a tax audit or not?    Thanks in advance for the reply.