Do I have to pay gift tax for cash gifts as well?
September 16, 2022 | 55,00 EUR | answered by Lina Walter
Dear tax consultant,
my name is Zofia Schillinger and I am looking for information on gift tax. My uncle recently gifted me a larger sum of money and I am wondering if I have to pay gift tax on it.
The background is that my uncle wanted to make a generous gesture and help me out financially. The amount is substantial and I am unsure if I have to pay taxes on it.
My understanding so far is that gift tax is due when assets are gifted within the family. Since my uncle's money gift is a financial contribution, I am wondering if it is also subject to gift tax.
I am worried that I may have to pay taxes and would like some clarification. Are there specific tax-free allowances that apply to money gifts? Are there ways to avoid or minimize gift tax?
I would greatly appreciate a detailed explanation and advice on this matter in order to better assess my situation.
Thank you in advance.
Best regards,
Zofia Schillinger
Dear Mrs. Schillinger,
Thank you for your inquiry regarding gift tax. It is understandable that you are concerned about possible tax payments, especially when it comes to larger monetary gifts from family members like your uncle. I will be happy to explain to you in detail how gift tax works and whether you need to pay taxes in your case.
Gift tax is a tax imposed on gifts of assets, including both tangible assets and monetary gifts. In Germany, there are tax-free allowances up to which gifts remain tax-free. For gifts between direct relatives (such as parents and children, grandparents and grandchildren), the current tax-free allowance is 400,000 euros. For gifts between siblings or other relatives, the tax-free allowance is 20,000 euros.
In your case, where your uncle has given you a larger sum of money, it is crucial to determine your relationship to your uncle. If he is your uncle on your father's or mother's side, the tax-free allowance of 400,000 euros would apply, and you would not have to pay gift tax as long as the amount is below this threshold.
However, if the amount exceeds the tax-free allowance, you would have to pay gift tax. The tax rates for gift tax are graduated and can vary depending on the amount given. There are also ways to avoid or minimize gift tax, such as through clever tax planning or utilizing tax-free allowances.
It is advisable to seek advice from a tax advisor in such cases to assess your individual situation and find tax-efficient solutions if necessary. I am also available for a personal consultation to clarify your questions regarding gift tax.
I hope this information has been helpful to you and I am available to answer any further questions you may have.
Kind regards,
Lina Walter
Tax advisor
