Frequently Asked Questions about Gift Tax
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Which transactions are subject to gift tax?
Any donations among the living are subject to gift tax.
This includes, among other things
- Any free gift,
- The enrichment which a spouse experiences when the joint property is agreed upon,
- Any compensation for a renunciation of inheritance,
- Anything a heir transfers to the successor with regard to the arranged inheritance before its entry.
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What is the gift tax rate?
Whether and to what extent gift tax is to be paid depends on the value of the gift and the relationship between the recipient and the donor.
The enrichment of the recipient is regarded as a taxable acquisition. This is the net value of the assets acquired less the allowances. Valuation is generally based on the fair market value.
Value of the taxable acquisition up to and including Tax rate in the tax class I II III 75,000 euros 7% 15% 30% 300,000 euros 11% 20% 30% 600,000 euros 15% 25% 30% 6,000,000 euros 19% 30% 30% 13,000,000 euros 23% 35% 50% 26,000,000 euros 27% 40% 50% over 26,000,000 euros 30% 43% 50% -
Which tax class applies to whom?
Inheritance tax and gift tax are levied according to three tax classes. The respective tax category depends on the ratio of the purchaser to the testator or donor:
Tax class I
It applies to the spouse, partner, children (marital and illegitimate children, adopted children, stepchildren, but not foster children), grandchildren and great-grandchildren, as well as parents and grandparents in the event of death.
Tax class II
It applies to parents and parents - insofar as they are not members of tax class I -, siblings, siblings, siblings, step-parents, in-laws, children-in-law, divorced spouses and the life partners of a suspended civil partnership.
Tax class III
It applies to all other purchasers
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What is the tax-free allowance for gifts?
Personal allowances apply depending on the family relationship:
- For the spouse 500.000 Euro
- For the partner 500.000 Euro
- For children and stepchildren 400.000 Euro each
- For children of deceased children and stepchildren 400.000 Euro each
- For grandchildren 200.000 Euro each and
- For the other persons of tax class I: 100.000 Euro each
- For persons of tax class II: 20.000 Euro each
- For persons of tax class III: 20.000 Euro each
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Are there other tax exemptions?
In addition to these exemptions, there are a number of exemptions from taxation, in particular for the purchase of household effects, etc.
Every person in tax class I can acquire household effects up to a value of 41000 Euros and other movable tangible objects such as art objects and collections, cars, jewellery up to a value of 12.000 Euros tax-free.
Every person in tax classes II and III receives a sum of 12.000 Euro for household effects and other movable property. However, the exemption does not apply to means of payment, securities, coins, precious metals, precious stones and pearls.
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Who is obliged to submit a donation tax declaration and when?
Natural persons who have their domicile or habitual residence in the Federal Republic of Germany are obliged to submit a gift tax declaration regardless of their nationality. The tax liability arises, among other things, in the case of donations among living persons.
What deadlines must be observed? Any acquisition subject to gift tax must be reported by the purchaser to the competent tax office within three months of the acquirer's knowledge. In the case of donations, the giver is also obliged to notify the donor.
No notification is required if a donation has been certified by a court or notary public.