Can I also claim tax deductions for donations made abroad?
February 24, 2023 | 50,00 EUR | answered by Fred Wittik
Dear tax advisor,
My name is Jenny Busch and I have a question regarding gift tax. I recently received a large sum of money as a gift from my grandfather. However, he lives abroad and the money was transferred from his account there to my account in Germany.
Now I am wondering if I can also claim this gift for tax purposes and if I have to pay gift tax. I am unsure because it is a gift from abroad and I am not sure about the legal regulations in this case.
My concern is that I may have to pay unexpectedly high taxes, even though I received the money as a gift. Is there possibly a way to avoid or minimize gift tax when it comes from abroad? I would like to ensure that I do not have to pay taxes that I could possibly avoid.
Could you please help me and explain to me what the tax regulations are for gifts from abroad in Germany? Are there specific forms or documents that I need to submit to recognize the gift for tax purposes? Thank you in advance for your support and advice.
Sincerely,
Jenny Busch
Dear Mrs. Busch,
Thank you for your question regarding gift tax in relation to a gift from abroad. I understand that you may feel uncertain and would like to provide you with all the information you need.
In general, gifts from abroad are also subject to gift tax in Germany. It is important that the gift is properly documented and declared to avoid any tax consequences. In your case, where you have received a sum of money as a gift from your grandfather, it is important to have all relevant information and documents ready.
First, you should check if there is a double taxation agreement between Germany and the country where the gift originates from. This agreement governs how gifts are treated for tax purposes when they come from abroad. If such an agreement exists, it is usually stipulated that gift tax must only be paid in one of the two countries.
If there is no double taxation agreement, then you must also declare the gift in Germany and potentially pay gift tax. The amount of tax depends on the value of the gift and the relationship between you and the donor.
There are various ways to minimize gift tax. One of them is that gifts between close relatives, such as between grandparents and grandchildren, are tax-free up to a certain exemption amount. Therefore, you should check if you can benefit from this exemption.
Regarding the documentation and registration of the gift, you should contact the relevant tax office and submit all required forms. It is important to disclose all relevant information to avoid any potential tax consequences.
I hope that this information has been helpful to you. If you have any further questions or require more detailed advice, I am happy to assist.
Yours sincerely,
Fred Wittik
