Transferring large sum of money from U.S

32 posts in this topic

Has anyone here had experience with transferring a large sum of money from the U.S to Germany? I am looking to transfer around 50,000 for a down payment on a house and don't really know how this works. Do I get taxed in Germany and in America and at what amount? I know I will incur fees for the transfer and have read that doing it through a bank is not always the best way. I'm a bit in the dark on how to go about it.

 

Anyone out there that can shed some light on the process?

 

Thanks in advance!

0

Share this post


Link to post
Share on other sites

I would suggest using a Forex company like USForex or similar to get the best exchange rate and reduce fees.  You shouldn't have to pay tax on it as you should have paid taxes on it in the US already and on any capital gains you received in interest.  But it will be reported to the Bundesbank and the US Treasury because it is more than 10k. This is assuming that the money is yours and not a gift from someone not your parents or grandparents. 

2

Share this post


Link to post
Share on other sites

It would actually be classified as a gift from my parents. We would treat it as a loan but I doubt the government would treat it that way as its not coming from an official financial institution.

0

Share this post


Link to post
Share on other sites

All good then, they can give you up to 400k in Euros tax free as a gift.  I'm not sure about how you declare the gift but it's always wise to include the fact that is a gift in the transfer comments.

2

Share this post


Link to post
Share on other sites

Wow, really? It would be tax free on both sides? I didn't expect that at all. Then theoretically I only would need to worry about the transfer fees?

0

Share this post


Link to post
Share on other sites
1 hour ago, HeyFrito500 said:

Wow, really? It would be tax free on both sides? I didn't expect that at all. Then theoretically I only would need to worry about the transfer fees?

 

If you're a resident of Germany, then gifts from your parents are taxable in Germany even if they come from the US.

 

Independently of that, if you're sending money from Germany to the US or vice versa, I would strongly suggest using accounts in your name at both ends. Then the cross-border transfer itself doesn't trigger any tax liability.

0

Share this post


Link to post
Share on other sites
9 hours ago, lapsus alumni said:

 

If you're a resident of Germany, then gifts from your parents are taxable in Germany even if they come from the US.

 

Independently of that, if you're sending money from Germany to the US or vice versa, I would strongly suggest using accounts in your name at both ends. Then the cross-border transfer itself doesn't trigger any tax liability.

It's tax-free up to 400k for parents/grandparents and 500k from a spouse.  

2

Share this post


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

It's tax-free up to 400k for parents/grandparents and 500k from a spouse.  

 

Correct. But the OP needs to keep proof of all that.  Which is easier if the OP splits the whole thing into two:

  • the (potentially) taxable part, where the money changes hands, is carried out within the same country and in the same currency.
  • the tax-neutral part: the transfer of the funds to Germany.

This way it will be  easier to prove, if ever needed, the amount and origin (the parents) of the gift. That's the first transaction.

The second transaction, which involves a large transfer from the same person to the same person is less likely to set off alarms at the Finanzamt compared to a large transfer between different people, which could  be suspected of being a taxable source of income for  the recipient (this is what happened to some other people here on TT, can't find the thread right now).

0

Share this post


Link to post
Share on other sites

I have no tax knowledge but I use UKForex for transfers because I live in Europe. There is no fee for transfers over $5k but there is a $25 fee when the money is transferred from my Morgan Stanley  account to their account at Mellon Bank in NY. Their exchange rates are good. Their service is excellent when you have any questions.

1

Share this post


Link to post
Share on other sites

I'm in a similar boat, we will sell our house in the US and move to germany for my husbands work. Its a permanent move. We will probably have about $200,000 for a down payment. Since we are not going to buy a house in the US, will we have to pay capital gains? OR since we are transferring it to invest elsewhere is it tax free? My husband is an EU citizen and US citizen (if that is relevant). Should we keep somethings in my name because i am only a US Citizen?

0

Share this post


Link to post
Share on other sites

If you're asking about German taxation, the Finanzamt will only care about that money after you have bought a house/flat (they get an automatic heads up after every sale), and as soon as you tell them it's money from selling your old house in the US, they will lose interest.

 

They are after previously hidden money (the interest on which also not having been taxed in the past), not after money from legitimate sources like yours.

1

Share this post


Link to post
Share on other sites

Hi I have been studying all the related threads but still have some questions... I have been living in Germany for few years and will get married with my fiance in 2019.. We're considering to buy a flat together in Berlin.
My father (from Hong Kong) would like to support me for the down payment. So it's like a "gift" from parents and for sure it's below 400k. From what I understand it's tax-free up to 400k. My questions are:

 

- should my father transfer the money to my Hong Kong bank account which is under my name first, and then I transfer this money from my own Hong Kong account to my German account? So it's like under the same name (my name) when the money is being transferred from non-EU to EU.  Or should my father transfer the money to my German account directly so it looks more like a gift from parents?

 

- do I have to prove that the sender is my father? if yes, how? I have a birth certificate with my father's name on it. It's an old yellowish piece of paper... I can provide a copy but don't know if it's enough.
 

- Is there anything my father has to do to prove that it's a "gift" apart from writing "gift" in the "Remarks" blank during the transfer?


- are there other documents my father or I have to provide to the Finanzamt?

 

Thank you very much for your help in advance!

 

0

Share this post


Link to post
Share on other sites

Best would be to wait for fantastic advice from Toytown´s PandaMunich - no one comes close to her on Finanzamt-related stuff.

I am a professional independent insurance broker and authorised advertiser. Contact me.
1

Share this post


Link to post
Share on other sites
On 12/10/2018, 7:59:08, Dorirsita said:

Hi I have been studying all the related threads but still have some questions... I have been living in Germany for few years and will get married with my fiance in 2019.. We're considering to buy a flat together in Berlin.
My father (from Hong Kong) would like to support me for the down payment. So it's like a "gift" from parents and for sure it's below 400k. From what I understand it's tax-free up to 400k. My questions are:

 

- should my father transfer the money to my Hong Kong bank account which is under my name first, and then I transfer this money from my own Hong Kong account to my German account? So it's like under the same name (my name) when the money is being transferred from non-EU to EU.  Or should my father transfer the money to my German account directly so it looks more like a gift from parents?

 

- do I have to prove that the sender is my father? if yes, how? I have a birth certificate with my father's name on it. It's an old yellowish piece of paper... I can provide a copy but don't know if it's enough.
 

- Is there anything my father has to do to prove that it's a "gift" apart from writing "gift" in the "Remarks" blank during the transfer?


- are there other documents my father or I have to provide to the Finanzamt?

 

Thank you very much for your help in advance!


 

 

Hellooo, I'd be super thankful if someone could give me advice... meanwhile happy weekend to everyone

 

 

 

 

0

Share this post


Link to post
Share on other sites

How you do it doesn't matter.

 

The birth certificate is enough, simply attach a copy of it to your gift tax return (which you have to submit within 3 months of the gift,  even if the gift was below the 400,000€ tax-free amount for a gift you received from a parent).

3

Share this post


Link to post
Share on other sites
On 12/14/2018, 5:27:29, PandaMunich said:

How you do it doesn't matter.

 

The birth certificate is enough, simply attach a copy of it to your gift tax return (which you have to submit within 3 months of the gift,  even if the gift was below the 400,000€ tax-free amount for a gift you received from a parent).


Thank you very much @PandaMunich, you are a star. Will study these.

 

0

Share this post


Link to post
Share on other sites

I am planning on transferring a large sum of money (several hundred thousand USD) from the US to Germany as down payment for a property.  Until now I have been sharing my bank account with my spouse (not a joint account; I have Vollmacht), so I also would like to open up an account here in my name. I have read through relevant threads but still have a few questions:

 

1.  Most of the online banks that I have read about (N26, DKB, ing-diba) are insured for only €100,000 (Einlagensicherungsgesetz).  I read on this site that there are some cases when the insured amount can be higher, for example when transferring larger sums for a down payment on a home, but I could not find any further details about this online.   Does anyone have any information about this?

 

2.  I was planning to use a service such as TransferWise, but do not have experience with any of them. I have read the many good reviews, but again have also read that they are insured for only €85,000. Is this action per transaction?  If they banks are only insured for up to  €100,000, I was thinking that it might be best then to split the transfer among several banks with €100,000 at each of them. However, Transferwise gives a better rate if all of the money is transferred in one transaction. Any insights?

 

3. Given the economic repercussions due to the coronavirus, is there any increased risk with using services such as Transferwise or even the online banks?  Many of the responses to the virus have been unprecedented (for example Italy on total lockdown), so I’m just wondering what else might be in store.

 

Thanks!

 

0

Share this post


Link to post
Share on other sites

For such an amount of money, why don't you just transfer it to your wife's account and buy your property? I haven't heard of any risks involving money transfers because of the virus so far. 

 

Too bad you didn't move in around Feb. 20 when a Euro cost around $1.08. I moved a little then. I know, not helpful.

 

I use OFX for transfers. It used to be Forex UK. Good rates and no problems. No fees over $5k.

0

Share this post


Link to post
Share on other sites

Thanks, fraufruit.  After my post earlier, I heard from our lender that even bricks and mortar banks here insure deposits for only €100,000, so it seems that the safest route might be to make several separate deposits. Unfortunately, it’s a little bit more expensive to do it that way.  Meanwhile, I have also read on some other websites that in certain circumstances deposits can be insured for up to €500,000. Purchasing real estate for use as one’s own residence is listed as a reason, but I’m still a bit concerned about transferring so much into one account in an online bank. I’m wondering whether anyone has had experience transferring amounts over €100,000.

 

Yes, hindsight is 20/20. A $.06 difference Is substantial when transferring large sums of money.

 

 

 

 

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