“Typical occasional gifts”: What you need to bear in mind for tax purposes at Easter, Christmas and other occasions

Usual occasional gifts are exempt from gift tax. This refers to gifts that are customary on certain occasions, such as birthdays, weddings, christenings, Christmas or even Easter. However, there is no legal definition of what ‘customary’ means. 

The Rhineland-Palatinate Finance Court recently had to consider precisely this question in relation to an Easter gift of 20,000 euros from a father to his son. The father had assumed that the gift was within the bounds of his considerable financial circumstances; no specific absolute or relative limits were laid down either in the law or in case law. It had also frequently been argued in legal literature that the appropriateness of a gift could be determined largely by the donor’s financial means.

However, the court expressly rejected this view. In its judgement of 4 December 2025 (4 K 1564/24), it concluded that a gift of 20,000 euros on the occasion of a general, annually recurring event such as Easter can no longer be regarded as a customary occasional gift and is therefore subject to gift tax. It is noteworthy that the court – contrary to previous legal scholarship and established practice – does not base its assessment on the donor’s personal circumstances. Instead, it focuses on what broad sections of the population typically give as gifts, regardless of whether the donor has substantial means or not. The judges justify this view on the basis of the principle of equality: if more generous standards were applied to wealthy individuals, they would be able to transfer far higher amounts tax-free than those of lesser means, which would lead to an erosion of the tax-free allowances that runs counter to the system.

In order to further narrow the scope of what is socially customary, the court referred to the small-amount threshold set out in Section 22 of the Inheritance Tax Act. According to this provision, gift tax is not levied if the tax amount does not exceed 50 euros. Taking into account the tax rate of 7 per cent in tax class I and the statutory rounding down of the taxable gain to the nearest 100 euros, it follows that a gift remains tax-free if its value is less than 800 euros.

Although this is not a rigid threshold for assessing what is customary, the court regards this value as a  point of reference for what is still socially acceptable. However, even if a gift no longer falls within the tax exemption for customary occasional gifts, this does not automatically lead to an actual tax payment. This is because the personal allowances – 500,000 euros for spouses and civil partners, 400,000 euros per parent for children, €200,000 for grandchildren and €20,000 for more distant relatives and friends – remain unaffected by this and are valid for a period of ten years in each case. Gift tax is only payable once these allowances are exceeded.

Although the Finance Court granted leave to appeal, no appeal was lodged, meaning that the judgement is now final. In future, substantial gifts given on general occasions that are not particularly noteworthy must be assessed with considerably greater caution and should not be hastily classified as ‘customary occasional gifts’.