Ask a tax advisor on the topic of Gift tax

Money donation from France to Germany

February 2, 2012 | 40,00 EUR | answered by Dr. Yanqiong Bolik

Hello,

I am a German citizen with my sole residence in Germany, expecting a gift of 30,000 euros from a currently unrelated French citizen. He also has a second residence in Germany. The money is coming from a French bank account. (I will use the money to finance my education)

Up until now, I assumed the following tax-wise. That my tax-free allowance in Germany is 20,000 euros for a non-relative relationship, so I would have to pay taxes on 10,000 euros at 30% according to German law. Therefore, I would owe 3,000 euros to the German state.

Now, the donor informed me that in this case, international gift/inheritance laws would apply, and I wouldn't have to pay anything to Germany, but I would have to pay in France. The tax rate would be around 60%, with a tax-free allowance of about 1,500 euros.

The donor is 79 years old at the time of the gift.

There is a special provision in French gift law: here is a small excerpt from Wikipedia:
In the case of gifts among the living, the tax rate is reduced by a 50% discount applied to this rate for donors under the age of 70. If the donor is between 70 and under 80 years old, the discount is only 30%, and it is completely waived for older donors.

I am now really confused, so my question is: where do I have to pay the gift tax now, whom do I have to inform, in which country? And how much percent do I ultimately have to pay on the 30,000 euros?

I am 29 years old and unmarried and childless at the time of the gift.

The donor is like a father to me and wants to adopt me according to German law, we have already consulted a lawyer about this, regarding adult adoption. So I assume he could also pay me the 30,000 euros as a private interest-free loan and then gift it to me retrospectively once the adoption is finalized in about 5 months. This way, as a son, I would not reach the gift tax threshold in Germany or France and would not have to pay any taxes. Is that correct?

I kindly request clear answers at this point, without lengthy paragraphs or jargon. Thank you very much.

Best regards.

Dr. Yanqiong Bolik

Dear inquirer,

Thank you for your inquiry, which I am happy to answer taking into account your input and the rules of this platform.

Please note that my explanation is based on the facts presented, and that adding, omitting, changing information, or the ambiguity of information can change the tax result.

According to your information, the donor is resident in France. The gift is 30,000 EUR. According to the agreement between the Federal Republic of Germany and the French Republic to avoid double taxation of estates, inheritances, and gifts, the gift is taxed where the movable assets are located at the time of the gift. So, if the money is transferred from a French bank to your account, France has the right to tax. Therefore, the tax exemption rules under German gift tax law do not apply.

For binding information on the amount of gift tax under French tax law and how adopted children are treated in case of a gift, only French tax advisors are allowed to provide information due to professional reasons. This is part of their reserved activity.

I hope I could help you get an overview.

If there are still uncertainties, please feel free to use the follow-up function.

Best regards,

Dr. Yanqiong Bolik
Tax consultant
Bildstöckle 6, 70567 Stuttgart
Tel: +49 (0)711 / 9332 2657
Email: info@zdbz.de
www.steuerberatung.zdbz.de