Who benefits from which gift tax allowances?
In principle, gifts are subject to gift tax, which in Germany is regulated in the Inheritance Tax and Gift Tax Act. However, there are numerous personal and material allowances that lead to tax exemption. The personal allowances are based on the family relationship. For example, spouses and registered partners may receive gifts of up to 500,000 euros tax-free. For children, it is up to 400,000 euros per parent and for grandchildren up to 200,000 euros. For all other persons, such as siblings, nieces or friends, the tax-free allowance is only 20,000 euros. The tax-free allowances are granted every ten years.
Tax-free gifts of household effects and movable property
Irrespective of this, there are also material exemptions that can apply to Christmas gifts. Gifts of household goods including linen and clothing between spouses, to children or grandchildren are tax-free up to an amount of 41,000 euros. Household effects usually include home furnishings such as TV sets or furniture. In addition, movable property of up to 12,000 euros can also be gifted tax-free between this group of people. In the case of gifts to siblings or friends, a gift of household goods, linen, clothing and movable items totalling up to 12,000 euros is tax-free. These tax-free allowances are also granted every 10 years.
Jürgen Lindauer
Director, Tax
KPMG AG Wirtschaftsprüfungsgesellschaft
Special tax exemption for occasional gifts
Irrespective of the family relationship, there is a special tax exemption for gifts. For example, customary occasional gifts are tax-free in accordance with section 13 (1) no. 14 of the Inheritance Tax Act. These are gifts that are given in accordance with social custom on a specific occasion. This includes gifts on the occasion of a birthday, a wedding, a christening or even Christmas. In principle, any type of gift - with the exception of property - can fall under the tax exemption, provided that it can still be categorised as customary. This must always be considered from the perspective of the donor, taking into account their personal income and financial circumstances. There is no limitation to an absolute amount. The relationship between the donor and the recipient also plays a role. The closer the relationship, the higher the gift can be. This means that gifts between wealthy people can have a higher value and, unless it is a deliberate reallocation of assets during their lifetime, are then tax-free. There is no obligation to notify the tax office if it is clear and unequivocal that no gift tax is due.