Taxation on gifts from family

108 posts in this topic

14 hours ago, Laurieston said:

CORRECTION.

Verwendungszweck from Paternal Grandfather should read:

 

           "Geschenk von Opa John Smith an Enkelin Jessie Smith"

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On 19/03/2015, 18:48:10, PandaMunich said:

Yes, simply tell the grandparent to write as the subject of the wire transfer (the alternatives below are for a present from grandma/grandpa to granddaughter/grandson):

 


  • Geschenk von Oma/Opa <insert name of grandparent> an Enkelin/Enkel <insert name of granddaughter/grandson>

 

This solution was offered as a means of confirming the source of the gift, and seems very logical, but can anyone explain how and/or where this message was actually recorded in the transfer information.  UK banks seem to offer only 18 digits as Verwendungszweck and the OFX service I usually use would not guarantee this message would actually appear in the receiving bank through their system - thus defeating the point of the message in the first place. Any ideas or experiences to share?

 

Thank you.

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7 hours ago, Laurieston said:

This solution was offered as a means of confirming the source of the gift, and seems very logical, but can anyone explain how and/or where this message was actually recorded in the transfer information.  UK banks seem to offer only 18 digits as Verwendungszweck and the OFX service I usually use would not guarantee this message would actually appear in the receiving bank through their system - thus defeating the point of the message in the first place. Any ideas or experiences to share?

 

Thank you.

If it is restricted I would just use  Geschenk von Oma (Opa) so that its clear its a gift. If any more clarification is needed then you can explain. Most transfers do have the name of the sender, so that would be shown, just not in the  Verwendungszweck

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Hello,

I have read that you can gift your child tax free up to 400000 Euro. Does he have to be a resident of Germany?. My son is on 2 years visa in USA and Australian citizen. My husband and I bought an apartment for over 7 years and plan to leave Germany very soon. I prefer to transfer the title deed to that of my son. Would he have to pay gift tax if that is the case. Thank you in anticipation.

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1 hour ago, Pnguyen said:

My husband and I bought an apartment for over 7 years

 

Where is the apartment located?

 

When you leave Germany do you plan to abandon your tax residence?

 

If so, what will be your new country of residence?

 

When your son's visa ends, where will he go?

 

 

 

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I wonder if somebody might be able to advise. My wife and I own our house that we live in in Germany. We have owned it for 5 years. I need to go back to live in the UK next year but my wife and children must stay in the German house for one more year after I leave (schooling reasons). My wife would then sell the German house before joining me in the UK. I have been told that if I don't live in the house when it is sold then my half of the profits would be subject to speculation tax. To avoid this I could gift my wife my half and change her to sole owner in the Grundbuch at a cost of around 3000€. Can somebody confirm this would be our best course of action, if it is certain to work (no issues with selling only one year after the change of ownership etc) and if there are any options that avoid the need to change the Grundbuch and avoid 3000€ cost.

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Wouldn't that tax be due even if your wife sold it in 2 years time? AFAIK you need to keep it for 10 years to avoid that.

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2 hours ago, jeba said:

Wouldn't that tax be due even if your wife sold it in 2 years time? AFAIK you need to keep it for 10 years to avoid that.

 

jeba, please read §23 (1) Nr. 1 Satz 3 EStG: https://www.gesetze-im-internet.de/estg/__23.html

  • 3Ausgenommen sind Wirtschaftsgüter, die im Zeitraum zwischen Anschaffung oder Fertigstellung und Veräußerung ausschließlich zu eigenen Wohnzwecken oder im Jahr der Veräußerung und in den beiden vorangegangenen Jahren zu eigenen Wohnzwecken genutzt wurden
  • ³Excepted are assets that were used exclusively for own residential purposes in the period between acquisition or completion and disposal or for own residential purposes in the year of disposal and in the two preceding years
4 hours ago, Nobbler said:

I need to go back to live in the UK next year but my wife and children must stay in the German house for one more year after I leave (schooling reasons). My wife would then sell the German house before joining me in the UK. I have been told that if I don't live in the house when it is sold then my half of the profits would be subject to speculation tax. To avoid this I could gift my wife my half and change her to sole owner in the Grundbuch at a cost of around 3000€. Can somebody confirm this would be our best course of action, if it is certain to work (no issues with selling only one year after the change of ownership etc) and if there are any options that avoid the need to change the Grundbuch and avoid 3000€ cost.

 

Option 1: happily married

I assume you will regularly come back to Germany to visit your family, this means that you will continue to have a "Wohnsitz" (= residence) in Germany.

You will then have a  "doppelte Haushaltsführung", i.e. your first home would remain Germany and the UK flat/house would be your second home.

In that case, you don't need to gift your wife half the house, i.e. you get to save 3,000€, see Randziffer 22 in here: https://esth.bundesfinanzministerium.de/esth/2016/C-Anhaenge/Anhang-26/inhalt.html

  • 5.3 Nutzung zu eigenen Wohnzwecken
    22
    Der Steuerpflichtige muss das Wirtschaftsgut zu eigenen Wohnzwecken genutzt haben. Diese Voraussetzung ist erfüllt, wenn er das Wirtschaftsgut allein, mit seinen Familienangehörigen oder gemeinsam mit einem Dritten bewohnt hat. Unschädlich ist, wenn der Steuerpflichtige Teile des Wirtschaftsguts einem Dritten unentgeltlich zu Wohnzwecken überlassen hat. Die dem Steuerpflichtigen zu eigenen Wohnzwecken verbleibenden Räume müssen jedoch noch den Wohnungsbegriff erfüllen und ihm die Führung eines selbständigen Haushalts ermöglichen. Ein Wirtschaftsgut wird auch dann zu eigenen Wohnzwecken genutzt, wenn es vom Steuerpflichtigen nur zeitweise bewohnt wird, in der übrigen Zeit ihm jedoch als Wohnung zur Verfügung steht (z. B. Wohnung im Rahmen einer doppelten Haushaltsführung, nicht zur Vermietung bestimmte Ferienwohnung; auf die Belegenheit der Wohnung in einem Sondergebiet für Ferien oder Wochenendhäuser kommt es nicht an).
  • 5.3 Use for own residential purposes
    22
    The taxpayer must have used the asset for his own residential purposes. This requirement is met if the taxpayer has occupied the asset alone, with members of his family or jointly with a third party. It is irrelevant if the taxpayer has left parts of the asset to a third party free of charge for residential purposes. However, the rooms remaining for the taxpayer's own residential purposes must still fulfil the definition of a dwelling and enable him to run an independent household. An asset is also used for the taxpayer's own residential purposes if the taxpayer only occupies it temporarily, but the rest of the time it is available to the taxpayer as a dwelling (e.g. dwelling in the context of a double household, holiday dwelling not intended for letting; the location of the dwelling in a special area for holidays or weekend houses is irrelevant).

On the downside, this will mean that you will need to stay registered at the German address, which means that you will need German health insurance (no German health insurance will let you out of its clutches as long as you're registered in Germany).

You will also have unlimited tax liability through your "Wohnsitz" in Germany and because your "centre of vital interests" is deemed to be where your wife and children stay, you will also be tax-resident according to article 4 of the double taxation agreement between Germany and the UK: https://www.bundesfinanzministerium.de/Content/DE/Standardartikel/Themen/Steuern/Internationales_Steuerrecht/Staatenbezogene_Informationen/Laender_A_Z/Grossbritannien/2010-11-23-Grossbritannien-Abkommen-DBA-Gesetz.pdf?__blob=publicationFile&v=3

 

And this would mean that you would have to tax your worldwide income in your country of tax-residency, i.e. in Germany, despite living (part of the time) in the UK.

 

**************************************************************************

 

Option 2: getting separated

If on the other hand this is a separation and whenever you will come back to visit your children you will be staying at a hotel, then your "centre of vital interest" will move to the UK and you will be tax-resident there.

You will also de-register from your German address when moving to the UK, since you are separating and will not come back to live in that house.

In this case, if you do not want the 50% of the profit from selling the house to be taxed, you should, yes - before moving away - gift your wife your half of the house and pay those 3,000€.

Please also read these examples: https://www.mainz-kwasniok.de/gemeinsames-haus/spekulationssteuer-falle/

 

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