Taxation on gifts from family

108 posts in this topic

If you receive more than the reporting threshold amount of €12,500, you need to fill in a form: https://www.bundesbank.de/resource/blob/613460/5a9e9e7068b77e30701655e957f74c6c/mL/z4-z8-z10-data.pdf

 

As description you can use e.g. financial gift from parents. This is not strange. In the Netherlands it's the same and is about transparency and fight against money laundering. The alternative is an envelop ?.

0

Share this post


Link to post
Share on other sites
 
 
 
 
34 minutes ago, branddds said:

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 )

 

Why strange? There's nothing strange about it. 

 

Banks have a legal duty to ask questions about unusual, large transactions. That's nothing to worry about. Sometimes the transaction is put on hold until the questions are answered, sometimes the transaction goes through and the questions go later (even months later). You don't have anything to worry about unless the money is not legit.

 

 
 
 
 
37 minutes ago, branddds said:

I prefer not to use N26 for this amount of money, hope that makes sense!) 

 

No, it doesn't make sense. What's wrong with N26 for any amount of money?

 

 
 
 
 
37 minutes ago, branddds said:

Does anybody recommend a serious German Bank that speaks English? 

 

I don't think there's such thing as a German bank that's not serious.

 

 
 
 
 
38 minutes ago, branddds said:

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? 

 

I have no experience with the German branch of ING. I've occasionally made large international transfers involving comdirect, N26, and Transferwise. These transactions involved moving savings to Germany to buy a property, receiving a loan from my parents, receiving a loan from my better half, or similar. Sometimes the the transaction gets flagged. It's not big deal. You tell the bank what they want to know via email or phone and that's it. You are overthinking this.

 

 
 
 
 
42 minutes ago, branddds said:

Should my parents add a reference note in the transfer?
 

 

They don't have to but it's better if they write what the transaction is about so the bank already knows that and doesn't have to ask.

 

If the transfer doesn't come for "a dodgy country", your parents share your last name, and the transaction reference explains what it is, the bank might not even give it a second thought.

0

Share this post


Link to post
Share on other sites
36 minutes ago, LukeSkywalker said:

If you receive more than the reporting threshold amount of €12,500, you need to fill in a form: https://www.bundesbank.de/resource/blob/613460/5a9e9e7068b77e30701655e957f74c6c/mL/z4-z8-z10-data.pdf

 

 

You do not have to report if you are just transferring money from a savings account you have abroad.

 

36 minutes ago, LukeSkywalker said:

As description you can use e.g. financial gift from parents. This is not strange. In the Netherlands it's the same and is about transparency and fight against money laundering. The alternative is an envelop ?.

 

The Bundesbank reporting is for more mundane reasons, for calculating balance of payments stuff for the FRG.  

 

I guess your parents have covered all the bases regarding French gift and inheritance tax.   The tax free thresholds are lower in France.

1

Share this post


Link to post
Share on other sites
1 hour ago, snowingagain said:

You do not have to report if you are just transferring money from a savings account you have abroad.

Good to know.

 

1 hour ago, snowingagain said:

I guess your parents have covered all the bases regarding French gift and inheritance tax.   The tax free thresholds are lower in France.

In the Netherlands it's €5400 per year. If the child is buying a house (€102,000) or doing an expensive study (€54,000), then the amounts are higher.

0

Share this post


Link to post
Share on other sites

Hi

does anybody know whether or not I can transfer ownership of my flat in Berlin to my father in the uk and how to go about it. 
thanks for any help

0

Share this post


Link to post
Share on other sites

Hi everyone,

I have a quite specific question about gift tax in Germany. I am in the process of purchasing an apartment. My parents have gifted me some money, which falls well under the €400k threshold for not being covered by gift tax within 10 years. 

My girlfriend's parents are also contributing some money, but my girlfriend will not be on the mortgage as she is a freelancer, does not have much income, and her parents would rather she does not have the financial liability, plus including her may damage our chances of getting approved for the mortgage. 

So her parents need to transfer the money to me so I can prove to the bank that I have the funds for the Eigenkapital/deposit. Her parents live in Switzerland and want to contribute 50.000 CHF - around €46200. This would be way under the threshold for taxation if they were transferring to her daughter, but way above the €20k threshold if they transfer it to me. However, technically the funds will be coming from both her parents - i.e. from a joint account. 

I, firstly, want to know whether that alone increases the threshold to €40k (i.e. 2x€20k)? Then perhaps they can initially contribute €40k and pay the remaining funds to my girlfriend, who can contribute directly to the fees, etc. when we purchase the property. The €40k would mean I have sufficient funds in my bank account to prove the capital to the mortgage provider and would remain under the tax limit, on the proviso that it is ok that it comes in one transfer from a joint account.

I want to check the best way of receiving these funds, minimizing tax exposure but of course, remaining compliant.

Would really appreciate some help! 

0

Share this post


Link to post
Share on other sites

The parents should transfer the money (entire amount) to their daughter and then she to you. 

Or set up a joint account. Then she can transfer the money from her account to the joint account after she has received it.

0

Share this post


Link to post
Share on other sites

Of course they are, and turning this into a chain of gifts (German: Kettenschenkung) or using a joint account doesn't change a thing here.

Luna here is merely suggesting a sneaky way around the tax free limit of gifts between unmarried persons, something that certainly will not convince the tax office/Finanzamt!

Please consult a proper German tax advisor about this, and don't believe strangers on the Internet about critical stuff like this.

Yes, that will cost a fee, but don't be penny wise and pound foolish here.

 

3

Share this post


Link to post
Share on other sites

Haha ok. Thank you. I have contacted some tax advisors also, but throughout this thread, useful official resources have been posted to back up the advice that people have given. It's not a case of blindly believing "strangers on the Internet", but searching out the best official resources that I can.

1

Share this post


Link to post
Share on other sites

For example, it does seem that with Kettenschenkung, if the first acquirer of the gift is not obliged to transfer the entire amount instantly, then previous judgments have seen this to be legitimate. In this case, if my girlfriend's parents transferred me €20k and my girlfriend €26.2k, she would be free (if she wanted to) to contribute €20k towards to property purchase (transferring it to me, remaining under the €20k threshold for unmarried couples), and use the remainder for payments towards the house, again if she chose to do so.

1

Share this post


Link to post
Share on other sites

The big problem I see here is the house being only in your name. It doesn't need to be a fifty-fifty split; she can have for example 25% ownership and that way the problem is solved, and it won't  cause even more misery in case it doesn't work out and you split up, or ( a nasty but possible event) if you die and she ends up with nothing because she can't inherit, even though she helped pay for the property.

0

Share this post


Link to post
Share on other sites

The plan is actually to have a 65/35 split on the land registry, just I’ll be the sole signatory of the mortgage. That’s great if that solves the problem?

0

Share this post


Link to post
Share on other sites
49 minutes ago, NathanCPFCD said:

The plan is actually to have a 65/35 split on the land registry, just I’ll be the sole signatory of the mortgage. That’s great if that solves the problem?

 

She can use her money to pay her share and neither the Finanzamt, the bank or you for that matter have anything to do with it. Whether it 100% solves the problem or not depends of the amounts in question. My concrete example: Me and my wife bought or first property still unmarried. We had a 50/50 split. She had around twice as much capital as I did, together it covered 50% of the purchase price. The mortgage for the remaining 50% was in both our names but I paid around a third more per month than she did. We never had problems. I kept an up to date register of who paid what and when, just in case. A few years later we did get married and that took care of any possible issues.

 

However: the question is complex and you ought to ask an expert.

2

Share this post


Link to post
Share on other sites

Hm. So the problem is really that the money will go towards 40% of our ‘Eigenkapital’ and with the mortgage solely in my name, the bank needs proof of the funds in my account, even though of course the money will go toward the notary fee, land transfer tax, and initial instalments of the purchase (it is a new construction so not the entire purchase price is due immediately). 

0

Share this post


Link to post
Share on other sites

Now I’m wondering whether it is even possible to put someone on the land registry who isn’t on the mortgage. It seems logical that that wouldn’t be allowed, as the bank wouldn’t be able to take the property in the event of a default.

0

Share this post


Link to post
Share on other sites
2 hours ago, NathanCPFCD said:

Now I’m wondering whether it is even possible to put someone on the land registry who isn’t on the mortgage. It seems logical that that wouldn’t be allowed, as the bank wouldn’t be able to take the property in the event of a default.

It might depend on what proportion of the sale price is going to be a mortgage.

In Germany the mortgage is generally worked out including fees which can make things more complex.

It's not like that in some other countries. 

My sister has a mortgage in the UK for example and this only concerned a part of the sale price. All of the fees were paid separately. 

I had the same situation with a mortgage in Switzerland. Fees paid separately. Mortgage was 80% of the sale price only. 

The mortgage on our first property here in Germany only concerned a part (45%) of the sale price. We paid a 55% cash deposit and all the fees ourselves. But it's not always like that. 

You need to make enquiries on this.

0

Share this post


Link to post
Share on other sites
35 minutes ago, fraufruit said:

Why couldn't the bank take the property if the mortgage isn't paid?

If it is part owned by someone else, could that stop the bank from taking it?

0

Share this post


Link to post
Share on other sites

Create an account or sign in to comment

You need to be a member in order to leave a comment

Create an account

Sign up for a new account in our community. It's easy!


Register a new account

Sign in

Already have an account? Sign in here.


Sign In Now