Tax on money received from abroad as gift

[PandaMunich 15,956]

8 minutes ago, Fon said:

My plan is to ask the buyer to transfer the full amount of money to my bank account in Germany. Is that ok?

 

Yes, if the Finanzamt should ever ask about the source of that money, simply give them a copy of the real estate sale contract.

 

8 minutes ago, Fon said:

Is there something I should know (from a tax perspective, or any other) when doing this?

 

All amounts over 12,500€ have to be reported to the German central bank for statistical reasons: 

You also have to look into the double taxation agreement that that country has with Germany, it may well be that the profit you have from that sale is progression income (= unter Progressionsvorbehalt), i.e. you have to mention it in your German income tax return. It will not be taxed again by Germany, but it will raise your German tax rate on your other income.

 

[Fon 1]

13 minutes ago, PandaMunich said:

 

Yes, if the Finanzamt should ever ask about the source of that money, simply give them a copy of the real estate sale contract.

 

 

All amounts over 12,500€ have to be reported to the German central bank for statistical reasons: 

You also have to look into the double taxation agreement that that country has with Germany, it may well be that the profit you have from that sale is progression income (= unter Progressionsvorbehalt), i.e. you have to mention it in your German income tax return. It will not be taxed again by Germany, but it will raise your German tax rate on your other income.

 

 

Thank you.

 

- The other EU country is Spain and the amount is above 12,500 Euros. This property in Spain has been just donated from my father to me and I am selling it next month. Ill be paying taxes in Spain for it since the selling price now is higher than the price my father paid for it when he bought it some years ago.

 

- So do I have to pay taxes again in Germany coz of this "profit" made?

- How do I know if this is a "progression income" case?

- If so, why, how much and for how long the German tax rate will raise on my regular income as a worker in Germany?

- How exactly this would be reported in my income tax return (I have been using the Elster Formular every year so far to do the tax declaration. I am worker with a permanent contract in a private company in Berlin)?

 

Thanks a lot!

[Smaug 5,847]

3 minutes ago, Fon said:

 

Thank you.

 

- The other EU country is Spain and the amount is above 12,500 Euros. This property in Spain has been just donated from my father to me and I am selling it next month. Ill be paying taxes in Spain for it since the selling price now is higher than the price my father paid for it when he bought it some years ago.

 

- So do I have to pay taxes again in Germany coz of this "profit" made?

- How do I know if this is a "progression income" case?

- If so, why, how much and for how long the German tax rate will raise on my regular income as a worker in Germany?

- How exactly this would be reported in my income tax return (I have been using the Elster Formular every year so far to do the tax declaration. I am worker with a permanent contract in a private company in Berlin)?

 

Thanks a lot!

 

Have you looked at the double taxation agreement between Spain and Germany yet, as PandaMunich suggested? Look at articles 6 and 13.

 

 

 

40 minutes ago, PandaMunich said:

You also have to look into the double taxation agreement that that country has with Germany, it may well be that the profit you have from that sale is progression income (= unter Progressionsvorbehalt), i.e. you have to mention it in your German income tax return. It will not be taxed again by Germany, but it will raise your German tax rate on your other income.

1

 

[PandaMunich 15,956]

That would be profit under article 13 (1) of the double taxation agreement between Germany and Spain: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Spanien/2012-01-20-Spanien-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

--> article 22 (2) d) that profit is progression income

 

Fill into Anlage AUS:

line 4: Spanien

line 5: Verkauf Immobilie

line 6: Anlage SO, Zeile 38

line 7: profit you made

 

Fill into Anlage SO:

line 31: Verkauf Immobilie Spanien

line 32: date your father bought it / date you sold it

line 33: mark "zu anderen Zwecken" / date your father bought it / date you sold it

line 34: price in € you sold it for

line 35: price in € your father had bought it for

line 38: profit (= amount in line 34 minus amount in line 35)

line 39: in 1st column "stpfl. Person": again fill in the profit from line 38

 

Attach (with pencilled in German translations of key words):

1. copy of contract with which your father bought
2. copy of act of donation
3. copy of contract with which you sold it

8 minutes ago, Fon said:

If so, why, how much and for how long the German tax rate will raise on my regular income as a worker in Germany?

 

That depends on your income.

Use the official progression calculator: https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Steuerberechnung/Progressionsvorbehalt/

[Hulie 0]

Hi everyone,

 

I have a question regarding a declaration of monetary gifts from abroad.

 

In 2017 I have received an amount of money from my mother transfered to my account in another EU country (below 12,500EUR). It is my first time filing declaration and I am not sure where I should put it - Anlage AUS or in Hauptfordruck or there is something else?

 

There were also different purporses (it was 2 different gifts) - one to buy a kitchen and one general. Would I need to declare them differently?

 

Would I need to provide some proof of previous gifts I received from my mother for calculation of tax free treshold?

 

Thank you!

[PandaMunich 15,956]

On 4/18/2018, 9:33:04, Hulie said:

In 2017 I have received an amount of money from my mother transfered to my account in another EU country (below 12,500EUR). It is my first time filing declaration and I am not sure where I should put it - Anlage AUS or in Hauptfordruck or there is something else?

 

Nowhere.

 

You could declare it to the Finanzamt in a letter, so that they can start keeping a list for you to check whether you will get more than 400,000€ in gifts/inheritance from your mother within the next 10 years. But if that is unlikely, just don't bother.

[Hulie 0]

47 minutes ago, PandaMunich said:

 

Nowhere.

 

You could declare it to the Finanzamt in a letter, so that they can start keeping a list for you to check whether you will get more than 400,000€ in gifts/inheritance from your mother within the next 10 years. But if that is unlikely, just don't bother.

Thanks a lot, that is super helpful!

[Fon 1]

On 14/4/2018 15:43:17, PandaMunich said:

That would be profit under article 13 (1) of the double taxation agreement between Germany and Spain: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Spanien/2012-01-20-Spanien-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

--> article 22 (2) d) that profit is progression income

 

Fill into Anlage AUS:

line 4: Spanien

line 5: Verkauf Immobilie

line 6: Anlage SO, Zeile 38

line 7: profit you made

 

Fill into Anlage SO:

line 31: Verkauf Immobilie Spanien

line 32: date your father bought it / date you sold it

line 33: mark "zu anderen Zwecken" / date your father bought it / date you sold it

line 34: price in € you sold it for

line 35: price in € your father had bought it for

line 38: profit (= amount in line 34 minus amount in line 35)

line 39: in 1st column "stpfl. Person": again fill in the profit from line 38

 

Attach (with pencilled in German translations of key words):

1. copy of contract with which your father bought
2. copy of act of donation
3. copy of contract with which you sold it

 

That depends on your income.

Use the official progression calculator: https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Steuerberechnung/Progressionsvorbehalt/

 

Dear Panda,

 

Thanks a lot for your reply.

 

The donation will be done from my father to both my brother and me actually (50% each). Does it make any difference? Sorry I forgot to mention it before, I assumed this detail is not important.

 

Besides, what if I used this money in buying an apartment in Germany to live in, would it also make a difference, like a tax exemption for example?

 

Last but not least, I still do not quite understand why I would have to pay taxes in Germany (again) for making a profit when selling a real state property in Spain, having in mind that I will be paying taxes in my country for this very same reason. Could you please explain this a bit further?

 

Thank you very much!

 

[PandaMunich 15,956]

27 minutes ago, Fon said:

The donation will be done from my father to both my brother and me actually (50% each). Does it make any difference?

 

No.

 

27 minutes ago, Fon said:

Besides, what if I used this money in buying an apartment in Germany to live in, would it also make a difference, like a tax exemption for example?

 

No.

 

27 minutes ago, Fon said:

Last but not least, I still do not quite understand why I would have to pay taxes in Germany (again) for making a profit when selling a real state property in Spain, having in mind that I will be paying taxes in my country for this very same reason. Could you please explain this a bit further?

 

The German tax system works as a social equalizer, with people who have a higher yearly income being being seen as being able to afford to give up a bigger slice of it (= a higher percentage of it) in tax.

So they look at your total worldwide income, and set your German tax rate, that you only pay on your German income, according to your real, high yearly worldwide income.

So just to be clear, the progression effect does not mean that you pay tax again on that Spanish real estate profit, it just means that you will have to pay more German tax on your German employee income.

 

Example:

your German taxable salary income: 50,000€

your Spanish profit (= progression income): 40,000€

--> enter into official progression calculator: https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Steuerberechnung/Progressionsvorbehalt/

 

 

They look up what the German tax rate would be on your total worldwide income, 90,000€, which is 32.42%, and then apply that new, higher tax rate of 32.42% only to your 50,000€ German taxable salary income.

 

--> Without the 40,000€ Spanish progression income, you would have paid 12,342€ in income tax on your German salary, because of it you now pay 16,210€ in income tax on your German salary, i.e. 3,778€ more in income tax.

 

 

 

[Fon 1]

On 14/4/2018 15:43:17, PandaMunich said:

That would be profit under article 13 (1) of the double taxation agreement between Germany and Spain: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Spanien/2012-01-20-Spanien-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

--> article 22 (2) d) that profit is progression income

 

Fill into Anlage AUS:

line 4: Spanien

line 5: Verkauf Immobilie

line 6: Anlage SO, Zeile 38

line 7: profit you made

 

Fill into Anlage SO:

line 31: Verkauf Immobilie Spanien

line 32: date your father bought it / date you sold it

line 33: mark "zu anderen Zwecken" / date your father bought it / date you sold it

line 34: price in € you sold it for

line 35: price in € your father had bought it for

line 38: profit (= amount in line 34 minus amount in line 35)

line 39: in 1st column "stpfl. Person": again fill in the profit from line 38

 

Attach (with pencilled in German translations of key words):

1. copy of contract with which your father bought
2. copy of act of donation
3. copy of contract with which you sold it

 

That depends on your income.

Use the official progression calculator: https://www.finanzamt.bayern.de/Informationen/Steuerinfos/Steuerberechnung/Progressionsvorbehalt/

 

Dear PandaMunich,

 

Thank you a lot again for this helpful reply from last year. I would like to ask you a couple more questions on the same topic now since I am dealing with my tax declaration in the ELSTER website.

 

- The profit I made is actually half of the total profit of selling the apartment since my brother owned 50% of it, so we shared the profit according to this percentage. How can I reflect that in my tax declaration?

 

- Further on my profit (half of the total) I also had to pay a considerable commission to the state agent (Makler) in Spain when we sold the apartment (my brother and I also share this expense at 50%). Can I deduct this expense from my profit? How to reflect that in my tax declaration?

 

 

Thank you so much again!

Fon

[Fon 1]

Dear PandaMunich,

 

Thank you a lot again for this helpful reply from last year. I would like to ask you a couple more questions on the same topic now since I am dealing with my tax declaration in the ELSTER website.

 

- The profit I made is actually half of the total profit of selling the apartment since my brother owned 50% of it, so we shared the profit according to this percentage. How can I reflect that in my tax declaration?

 

- Further on my profit (half of the total) I also had to pay a considerable commission to the state agent (Makler) in Spain when we sold the apartment (my brother and I also share this expense at 50%). Can I deduct this expense from my profit? How to reflect that in my tax declaration?

 

 

Thank you so much again!

Fon

[PandaMunich 15,956]

31 minutes ago, Fon said:

Thank you a lot again for this helpful reply from last year. I would like to ask you a couple more questions on the same topic now since I am dealing with my tax declaration in the ELSTER website.

 

I have good news, if your father had bought that property more than 10 years before you sold it (they go by the dates of the purchase and sale contracts), you do not have to declare that profit at all in your German income tax return, so it will not affect your German income tax at all.

Since he donated the property to you, he also "donated" the old purchase date to you.

 

Details in here:

However, you do have to tell the Finanzamt about the gift, so that they can start keeping a list, and as soon as your father has donated more than 400,000€ worth of assets to you within a 10 year window, you will have to submit a German gift tax return and pay German gift tax.

[Fon 1]

13 minutes ago, PandaMunich said:

 

I have good news, if your father had bought that property more than 10 years before you sold it (they go by the date of he purchase or sale contract), you do not have to declare that profit in your German income tax return, so it will not affect your German income tax at all.

Since he donated the property to you, he also "donated" the old purchase date to you.

 

Details in here:

However, you do have to tell the Finanzamt about the gift, so that they can start keeping a list, and as soon as your father has donated more than 400,000€ worth of assets to you within a 10 year window, you will have to submit a German gift tax return and pay German gift tax.

 

Thanks a lot! Wow, that's really good news! 

 

May I ask if this is a new rule?

 

Also about the German gift tax return, I read that this should be submitted within 3 months from the date I received the money, which I received last year actually. Is this a problem?

 

 

Thanks again,

Fon

 

[PandaMunich 15,956]

4 minutes ago, Fon said:

May I ask if this is a new rule?

 

No, I just didn't know about it, see here:

 

4 minutes ago, Fon said:

Also about the German gift tax return, I read that this should be submitted within 3 months from the date I received the money, which I received last year actually. Is this a problem?

 

Was your 50% part of the property plus any other gifts you got from your father within the last 10 years worth over 400,000€?

If not, you don't have to submit a gift tax return, you just have to write the Finanzamt a letter telling them about the gift, so that they can start keeping a list for you.

Yes, that letter was also due within 3 months of the gift, but they won't bite your head off because it's late.

[Fon 1]

14 minutes ago, PandaMunich said:

 

No, I just didn't know about it, see here:

 

 

Was your 50% part of the property plus any other gifts you got from your father within the last 10 years worth over 400,000€?

If not, you don't have to submit a gift tax return, you just have to write the Finanzamt a letter telling them about the gift, so that they can start keeping a list for you.

Yes, that letter was also due within 3 months of the gift, but they won't bite your head off because it's late.

 

Thank you!!

 

[NikkyG 1]

Reviving this topic (as well).

 

A a German resident , but not German citizen, if I receive monetary gifts or inheritance from my mother, am I then taxed above 400k€ (based on the German law) or based on the country of origin ? (said like that it sounds a like yes, I am receiving money in Germany, then the German law applies), however, if I explain it that way: is the tax-free allowance based on the country of origin (say France, being 100k€ per parent, per child, every 15 years) or in the country of reception ? (then I
m not so sure anymore).

 

Thanks.

[Shanks008 4]

 

How much money can you gift a friend or a cousin in Germany per year? What is the limit? Is it 10,000 euros per person in a given year? I am not able to find this information.   In the U.S, it is $ 14K per person in a calendar year.

[Metall 14,293]

(Link is in German, but the limit is 20 k.)

https://www.testsieger-konto.de/depotkonto/steuern/schenkungssteuer/

[El Jeffo 41,853]

2 minutes ago, Metall said:

(Link is in German, but the limit is 20 k.)

https://www.testsieger-konto.de/depotkonto/steuern/schenkungssteuer/

 

The crucial point is that the limit is every 10 years (meaning the total amount over a 10-year period).

[Shanks008 4]

Thanks Metall & El Jeffo. Very helpful indeed. That means max 20 k per person for 10 years. Anything more than that will be taxed depending on my Steuerklasse.