How can I avoid tax disadvantages in a gift?
August 26, 2022 | 40,00 EUR | answered by Robert Lehmann
Dear Tax Lawyer,
I am reaching out to you as I am facing a tax challenge and hope to benefit from your expertise. My name is Erik Hoffmann and I am about to receive a significant sum of money from my parents as a gift. This gift brings me great joy, however, I have concerns about potential tax disadvantages that may come with it.
Current situation: My parents want to gift me a sum of money to financially support me in my future plans. This amount exceeds the gift tax exemption and I am worried that I may have to pay high taxes as a result. I would like to know how I can avoid tax disadvantages with this gift, in order to avoid unexpectedly high taxes.
My concerns lie in the fact that as the recipient of the gift, I may be faced with tax demands that could burden my financial cushion. Since I do not have extensive knowledge in tax law, I rely on your help to find the best possible solution for this tax issue.
Therefore, my question to you is: What options are there to avoid tax disadvantages with a gift? Are there legal strategies or planning options to reduce or completely bypass the tax burden? Thank you in advance for your support and I look forward to your expert advice.
Best regards,
Erik Hoffmann
Dear Mr. Hoffmann,
Thank you for your trust and your inquiry regarding the tax challenges related to a gift. It is understandable that you are concerned, as a gift above the tax-free allowance can have tax consequences. I would be happy to explain to you the options to avoid tax disadvantages when making a gift.
First and foremost, it is important to know that gifts are generally taxable if they exceed the tax-free allowance. The allowance varies depending on the relationship between the donor and the recipient. For example, for gifts from parents to children, the tax-free allowance is currently 400,000 euros every 10 years. If the value of the gift exceeds this amount, gift tax is due.
To avoid tax disadvantages, there are various legal strategies and options that you can consider. One option is to spread the gift over several years to make optimal use of the tax-free allowance. For example, your parents could give smaller amounts over several years to stay below the allowance.
Another option is to use the tax-free allowances that you, as the recipient, are entitled to. For example, if you are married, you can use both spouses' tax-free allowances to make the gift tax-free. Taking into account tax-free allowances for children can also reduce the tax burden.
Furthermore, you can aim for tax-optimized solutions in the design of the gift, for example by granting usufruct rights or agreeing on lifelong usage rights. Giving non-cash assets instead of money can also bring tax advantages.
It is advisable to seek advice from a specialized tax lawyer early on to find the best possible solution for your individual situation. Together, we can analyze your tax situation and take appropriate measures to avoid tax disadvantages.
I hope this information was helpful to you and I am available for further questions. Thank you for your trust and I look forward to supporting you in this tax matter.
Best regards,
Robert Lehmann
