Gift tax return
Inheritance and gift tax law has already been put to the test three times by the Federal Constitutional Court. With the Inheritance Tax Reform Act of November 4, 2016, it was most recently adapted to the requirements of the highest court. Although all assets are realistically valued at market value, no tax is generally payable on the transfer of average assets within the immediate family circle because the personal allowances are relatively high and the family home being transferred is exempt. Extensive tax relief instruments are available for business succession.
The gift tax covers assets that accrue to citizens without any action on their part and increase their ability to pay. The tax is intended to contribute to a fairer distribution of wealth. Gift tax supplements inheritance tax. It is necessary to prevent people from parting with parts of their assets during their lifetime, e.g. by making gifts to their children, and thus avoiding inheritance tax for future inheritance. The same rules therefore largely apply to the taxation of inheritances and gifts.
Gifts between living persons are subject to taxation. These are, for example
- free gifts inter vivos,
- Compensation for a waiver of inheritance,
- gifts for early settlement of an inheritance,
- gifts from the previous heir to the subsequent heir before the subsequent inheritance takes effect.
Personal tax liability arises for the entire accrual of assets if the donor or the acquirer is a resident of Germany at the time the tax arises (domicile or habitual residence in Germany). In other cases, the so-called domestic assets can be taxed (limited tax liability).
The basis of assessment for the tax is the taxable acquisition. The taxable acquisition is the enrichment of the acquirer, unless it is tax-free. Consequently, only the net value of an acquisition is subject to gift tax, which results after deducting the liabilities from the value of the transferred assets. Both these assets and the liabilities are valued and recognized in accordance with tax principles.
The valuation of real estate is of particular importance. Property values are determined by the tax offices in a separate procedure in the event of inheritance or gift. The valuation standard is the fair market value of the land. The respective tax office may ask you to submit a declaration on the determination of the required value.
According to § 151 para. 1 sentence 1 nos. 2 to 4 BewG, the value of domestic business assets is also to be taken into account for gift tax purposes.
- of the domestic business assets
- of the share in domestic business assets
- of unlisted shares in corporations with their registered office or management in Germany
- of shares in other assets and liabilities
in a separate procedure. The corresponding annexes to the declaration of assessment must also be submitted to the relevant tax office. There are special local responsibilities for the assessment procedure.
Once the required value has been determined, you will receive a notice of assessment. At the same time, the inheritance and gift tax office will receive information about the determined value. This will be taken into account in your gift tax assessment.
The amount of tax is determined by which of the three tax classes the transferee belongs to. The closer the donor is related to the transferee, the less tax is payable. It falls under the:
Tax class I
the spouse, civil partner, children, grandchildren, parents and grandparents if they inherit their descendants.
Tax class II
Parents and grandparents in the case of gifts, siblings, nieces and nephews, stepparents, children-in-law, parents-in-law, divorced spouse, partner in a dissolved civil partnership.
Tax class III
all other acquirers and so-called special-purpose beneficiaries.
The amount of tax is further influenced by the personal allowances to which each acquirer is entitled depending on the tax class and which are deducted from the value of the net acquisition. The allowances can only be utilized every ten years because several acquisitions by the same person within ten years are added together. The allowances amount to:
- 500,000 euros for acquisitions by the spouse and civil partner,
- 400,000 euros for the inheritance of children and grandchildren who inherit instead of a predeceased parent,
- 200,000 euros for the inheritance of other grandchildren,
- 100,000 euros for the inheritance of other persons in tax class I (parents and previous parents in the event of inheritance),
- 20,000 euros for acquisitions by persons in tax class II (e.g. parents in the event of a gift, siblings, nephews, nieces, divorced spouse, partner in a dissolved civil partnership),
- 20,000 euros for acquisitions by persons in tax class III (e.g. distant relatives or in-laws, cohabiting partners).
In the case of limited tax liability, these allowances are reduced proportionately because only the so-called domestic assets are subject to taxation.
The amount of tax also depends on whether material tax exemptions are to be taken into account.
The gift of a family home to a spouse or partner during their lifetime is tax-free without any limit on the amount or obligation to retain it.
The "taxable acquisition" determined taking into account the tax exemptions and allowances is subject to gift tax at the following tax rates, which are graduated according to the amount of the acquisition and the tax bracket:
| Value of the taxable acquisition up to and including ... Euro | Of the percentage rate in tax class | ||
|---|---|---|---|
| I | II | III | |
| 75.000 | 7 | 15 | 30 |
| 300.000 | 11 | 20 | 30 |
| 600.000 | 15 | 25 | 30 |
| 6.000.000 | 19 | 30 | 30 |
| 13.000.000 | 23 | 35 | 50 |
| 26.000.000 | 27 | 40 | 50 |
| over 26,000,000 | 30 | 43 | 50 |
Gift tax arises at the time the gift is made. The prerequisite for the initiation of a gift tax assessment is notification by the donor or the donee themselves. This can be done in an informal letter. The notification must be sent to the relevant tax office within three months, stating the identity of the parties involved, the legal basis for the acquisition and its object and value.
In addition, the tax office receives a large number of other notifications from third parties about tax-relevant acquisitions, e.g. notifications from registry offices, banks, insurance companies, courts and notaries. If, after evaluating these notifications, a tax is likely to be assessed, the tax office will request a gift tax return with various attachments; the return is accompanied by comprehensive instructions to make it easier to complete. As a rule, the tax return must be submitted within one month.
The legal basis for levying the tax is the Inheritance Tax and Gift Tax Act (ErbStG)
The question of whether and to what extent gift tax is payable depends on the value of the acquisition and the relationship to the donor. Gifts inter vivos (e.g. any free gift inter vivos) are subject to taxation.
This is a tax payment; further costs generally only arise in the event of a breach of duty (e.g. late payment penalties, etc.).
Gift tax arises at the time the gift is made. Both the donor and the donee are generally obliged to notify the tax office responsible for administering gift tax of the acquisition in writing within a period of 3 months. The notification must contain details of the persons involved, the legal basis for the acquisition and its object and value.
In addition, the tax office receives a large number of other notifications from third parties about tax-significant acquisitions, e.g. notifications from registry offices, banks, insurance companies, courts and notaries. If a tax assessment is to be expected after evaluating these notifications, the tax office will request a tax return with various attachments. As a rule, the tax return must be submitted within one month.
The declaration must also be submitted if you are of the opinion that gift tax is not to be levied. It is up to the tax office to decide what is taxable and what is not taxable. If you subsequently realize that the tax return is incorrect or incomplete, you are obliged to report this immediately.
If you have to pay gift tax, you will receive a gift tax assessment from the tax office. The assessed tax is due within one month of notification of the assessment.
Every acquisition that is subject to gift tax must be reported by the acquirer to the tax office responsible for gift taxation within three months of becoming aware of the transfer of assets. In the case of gifts, the donor is also obliged to notify the tax office.
Appeal against the gift tax assessment with a one-month deadline
The following forms are available:
Tax office Kusel-Landstuhl
The text was automatically translated based on the German content.
Gift tax arises at the time the gift is made. The prerequisite for the initiation of a gift tax assessment is notification by the donor or the donee themselves. This can be done in an informal letter. The notification must be sent to the relevant tax office within three months, stating the identity of the parties involved, the legal basis for the acquisition and its object and value.
In addition, the tax office receives a large number of other notifications from third parties about tax-relevant acquisitions, e.g. notifications from registry offices, banks, insurance companies, courts and notaries. If, after evaluating these notifications, a tax is likely to be assessed, the tax office will request a gift tax return with various attachments; the return is accompanied by comprehensive instructions to make it easier to complete. As a rule, the tax return must be submitted within one month.
The legal basis for levying the tax is the Inheritance Tax and Gift Tax Act (ErbStG)
The question of whether and to what extent gift tax is payable depends on the value of the acquisition and the relationship to the donor. Gifts inter vivos (e.g. any free gift inter vivos) are subject to taxation.
This is a tax payment; further costs generally only arise in the event of a breach of duty (e.g. late payment penalties, etc.).
Gift tax arises at the time the gift is made. Both the donor and the donee are generally obliged to notify the tax office responsible for administering gift tax of the acquisition in writing within a period of 3 months. The notification must contain details of the persons involved, the legal basis for the acquisition and its object and value.
In addition, the tax office receives a large number of other notifications from third parties about tax-significant acquisitions, e.g. notifications from registry offices, banks, insurance companies, courts and notaries. If a tax assessment is to be expected after evaluating these notifications, the tax office will request a tax return with various attachments. As a rule, the tax return must be submitted within one month.
The declaration must also be submitted if you are of the opinion that gift tax is not to be levied. It is up to the tax office to decide what is taxable and what is not taxable. If you subsequently realize that the tax return is incorrect or incomplete, you are obliged to report this immediately.
If you have to pay gift tax, you will receive a gift tax assessment from the tax office. The assessed tax is due within one month of notification of the assessment.
Every acquisition that is subject to gift tax must be reported by the acquirer to the tax office responsible for gift taxation within three months of becoming aware of the transfer of assets. In the case of gifts, the donor is also obliged to notify the tax office.
Appeal against the gift tax assessment with a one-month deadline
The following forms are available:
Tax office Kusel-Landstuhl
The text was automatically translated based on the German content.