Taxation on gifts from family

108 posts in this topic

3 hours ago, PandaMunich said:

Be very careful, your wife, who is your parents' daughter-in-law is considered under gift&inheritance tax laws as someone who is completely unrelated, i.e. who has only a 20,000€ gift-tax-free allowance. If one of your parents gifted her 400,000€, she would owe 95,000€ in gift tax.

 

What if said daughter in law does not get the money directly - instead, the MIL pays off, say, her mortgage without depositing money in her personal account?

Is directly paying off her debt a Schenkung, too?

 

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Yes, of course.

Any "Bereicherung" is defined in §7 ErbStG as a Schenkung, and having less debt is a Bereicherung: https://www.haufe.de/steuern/steuer-office-premium/guerschingstenger-bewertungsrecht-erbstg-7-schenkung-1-die-bereicherung-des-erwerbers_idesk_PI11940_HI9457712.html

 

Which is why the Kettenschenkung is so popular, i.e. the parent gifts the money to their child, and the child then gifts the money to his/her spouse, thereby using the much higher tax-free-amount of 400,000€ "parent --> son".

The tax-free-amount "spouse 1 --> spouse 2" is 500,000€, so 400,000€ is the bottleneck.

If each parent gifts 400,000€ to their child, the bottleneck is "spouse 1 --> spouse 2", i.e. 500,000€.

Details in: http://www.finanztip.de/kettenschenkung/

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@PandaMunich The level of knowledge you have and the enthusiasm with which you help others is simply inspirational!

 

Just a follow-up question: In case the gift money received is within Tax-free limits we don't need to even declare it in Tax filings, right? if not then which Anlage/section needs to be filled and what all documents need to be sent (German bank statement, Swift copy, Sender's bank statement, declaration?) ?

 

A general idea: As there is so much info in every answer which will eventually get buried within so many pages Is there anywhere we can collect useful rules so everyone can check this wiki page before asking repeated questions. And then all tax related wiki pages can be linked to some page like this: https://www.toytowngermany.com/wiki/ELSTER

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1 hour ago, dbinmunich said:

Just a follow-up question: In case the gift money received is within Tax-free limits we don't need to even declare it in Tax filings, right? if not then which Anlage/section needs to be filled and what all documents need to be sent (German bank statement, Swift copy, Sender's bank statement, declaration?) ?

 

No, but you do have to tell them how much you received from each parent, so that they can start keeping count for the next 10 years, to see whether you will exceed the tax-free limits within the next 10 years, see point 3 in here, and in the following posts:

 

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I was informed by my Bank that for any foreign inward remittance (amount > €12500) we need to register at Bundesbank AMS portal all the details of each such remittance within 1 week as per law: 

 

"als Auftraggeber Ihrer Überweisung ins Ausland beachten Sie bitte, dass die Zahlung gemäß der Außenwirtschaftsverordnung (§§ 67 ff. AWV) meldepflichtig ist. Die Meldung dient der Erstellung der deutschen Zahlungsbilanz und ist elektronisch ab einem Betrag von 12.500 Euro für Kapitaltransaktionen von Gebietsansässigen an Gebietsfremde vorzunehmen.
Hierzu steht Ihnen das allgemeine Meldeportal AMS auf der Internetseite der Deutschen Bundesbank zur Verfügung: www.bundesbank.de/Redaktion/DE/Standardartikel/Service/Meldewesen/allgemeines_meldeportal_statistik "

 

Does anyone has experience doing this, is it really necessary or did someone missed doing this because I think most people don't know about this.

I had many such remittances in Nov/Dec last year and I missed reporting on above site as I was not aware, now it's too late to report so I am little concerned about consequences.

Should I report now OR should I completely forget about this and if asked later I can tell that I was informed late by the Bank and then I didn't report thinking I am already late?

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I am trying to find out if I have to pay tax for the gift money my parents gave me.

The limit is 400K euro per 10 years, right? I definitely got less than that.

 

But do I need to declare it? Or inform Finanzamt that I have received such gift money from my parents? They wired it to my german bank account.

I read somewhere that I have to inform/declare Finanzamt about it within 3 months. Is that true?

Or I don't have to do anything if I got less than 400K?

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Hi Everyone,

 

The contents of this post is very informative. However I have a slightly different situation.

Our parents want to gift us some of their family heirloom in the form of gold and silver jewellery as well as some new jewellery which they bought for their grand kids. For the heirloom , they have no bills but for the new ones they do have. The overall cost of the jewellery might be less than 10,000 euros.

 

What taxes if any do they/we have to pay on such jewellery (gold and silver) when they bring it here?

Do these also come under the gift limits of 400,000 euros?

Do they have to declare it at the Airport customs and pay any tax when it is meant to be a a gift for us?

 

Regards

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Hi everyone (esp @PandaMunich) if you're still around. My partner is in a pickle with a property/gift tax situation. 

Many years ago, her sister sent money to her (€18k) from an o/s account to buy a property on her behalf. The money came via her parents' account. A few years later,  her sister wanted the apartment put into her name and on (very bad) accountant's advice, it was 'gifted' to the sister. (the other option was to 'sell' the apartment to her). There would have been a couple of thousand euros in tax to be paid but that would have been ok to have it properly in her sister's name...however, her sister has just been served up a €9k (!!!!) tax bill as the property was 'gifted' at the 20k threshold amount. the tax dept decided the place is worth €80k and the tax on gifting that to a sibling is €9k.
the sister is no longer resident in germany and is undergoing advanced cancer treatment.

Any advice is very helpful. 

 

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I'm sorry to hear about this sad situation. 

 

Are you two living in the apartment or renting it out?

 

Someone will be along who knows a lot more than me.

 

Best of.

 

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11 hours ago, fraufruit said:

I'm sorry to hear about this sad situation. 

 

Are you two living in the apartment or renting it out?

 

Someone will be along who knows a lot more than me.

 

Best of.

 

 

Hi @fraufruit. Thanks for replying.  We don't live in the apartment. It is rented. 

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What if a gift (within tax-free limit, so allowance is not reached) happened a couple of years ago but a person who received the gift did not notify Finanzamt (because did not know about this rule)? There was not any payment due anyway and it is just the F-mt was not notified. Does it make sense for the person to send the notification now? And what could be the consequences?

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Hey all, just to be clear, a donation coming from your parents is tax free up to 400k for a period of ten years. But can it be 800k (400k from parent A and 400k from parent B?) Both my parents who are alive, wish to donate  money so I can buy a flat. I just find the info confusing.


I belong to Tax class 1 but why do, in this text,  https://www.gesetze-im-internet.de/erbstg_1974/__16.html

"der Kinder im Sinne der Steuerklasse I Nr. 2 und der Kinder verstorbener Kinder im Sinne der Steuerklasse I Nr. 2 in Höhe von 400 000 Euro"
They talk about "Nr.2" and deceased parents?

Because here https://www.steuertipps.de/steuererklaerung-finanzamt/themen/freibetraege-bei-der-erbschaftssteuer-und-schenkungssteuer , the allowance seems to be 20k 

It is quite confusing.  is it possible to have an official confirmation from the finanzamt?

Thank you!

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Because these are Steuerklassen under gift/inheritance tax law, not the Steuerklassen you know from being an employee under income tax law.

As a "child" of your parents, you're gift tax gift-Steuerklasse "I Nr. 2":

(1) Nach dem persönlichen Verhältnis des Erwerbers zum Erblasser oder Schenker werden die folgenden drei Steuerklassen unterschieden: 
Steuerklasse I:

1.
der Ehegatte und der Lebenspartner,
2.
die Kinder und Stiefkinder = children and step-children

 

1 hour ago, branddds said:

But can it be 800k (400k from parent A and 400k from parent B?)

 

Yes, if we're talking €.

 

Please also read this:

 

1 hour ago, branddds said:

 

Yep, that is misleading:

5d5b24c0af2d0_Screenshot2019-08-20at00.3

 

They should have written it more clearly, e.g.:

  • für Kinder / für Enkelkinder, deren Eltern verstorben sind / sowie für Stief- und Adoptivkinder

 

1 hour ago, branddds said:

https://www.gesetze-im-internet.de/erbstg_1974/__16.html

"der Kinder im Sinne der Steuerklasse I Nr. 2 und der Kinder verstorbener Kinder im Sinne der Steuerklasse I Nr. 2 in Höhe von 400 000 Euro"
They talk about "Nr.2" and deceased parents?

 

No.

They talk about "children" that are tax class "I Nr. 2", i.e. biological/adopted children and step-children.

And then they talk of children of the above children. For example, if you had had a child and you had died, your child would be allowed to get 400,000€ from each of your parents (= his/her grandparents) tax-free every 10 years.

 

As long as you live, your child can only get 200,000€ from each of your parents (= his/her grandparents) tax-free every 10 years:

  • 3. der Kinder der Kinder im Sinne der Steuerklasse I Nr. 2 in Höhe von 200 000 Euro;
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Hi All,

 

i read the source mentioned by Panda and maybe i translated in a wrong way but it seems that the 400k allowance is only in case of deceased parents (then hineritage). From the discussioni in this thread it seems that actually this allowance is valid also if the parents are alive.

Can you please clarify me this point ?  

 

thanks  alot

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2 hours ago, Frantic said:

maybe i translated in a wrong way

 

You did.

The problem is this:

On 8/20/2019, 12:43:09, PandaMunich said:

Yep, that is misleading:

5d5b24c0af2d0_Screenshot2019-08-20at00.3

 

They should have written it more clearly, e.g.:

  • für Kinder
  • für Enkelkinder, deren Eltern verstorben sind
  • sowie für Stief- und Adoptivkinder

 

The tax-free amount is 400,000€ for gifts or inheritances made within the last 10 years, if:

  • you're the biological child, or
  • adopted child, or
  • step-child (your mum/dad married the person giving you the gift or leaving you the inheritance), or
  • you're the grandchild and your parent (who was the biological/adopted/step child of the grandparent giving/leaving you the assets) is already dead

This tax-free amount resets every 10 years.

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Hello all. Its me again.

Both my parents wish to transfer me a sum of money (within the 400 k limit) but I am scared if the banks will delay it or block my account. I have asked them and they said that normally they would not and I should declare the money to the Bundesbank (I find that a tiny bit strange )

I have ING Diba and DKB, and N26 (but I prefer not to use N26 for this amount of money, hope that makes sense!) the problem is that my German is quite limited.
Does anybody recommend a serious German Bank that speaks English? I wouldn't mind using ING Diba to receive the donation, but does anybody have advice or past experiences? What bank did you use? Should my parents add a reference note in the transfer?

Any insights is much appreciated 

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