tax-free allowances
August 31, 2011 | 30,00 EUR | answered by Michael Herrmann
1. How are tax-free allowances considered in gifts from multiple people? If I receive money as gifts within a year from my mother and from an unrelated person, do I have the right to a tax-free allowance of 400,000 EUR from my mother and a tax-free allowance of 20,000 EUR from my friend at the same time? Or are tax-free allowances somehow added together?
2. If I receive money as gifts within a year from multiple people (my two aunts), is the tax-free allowance of 20,000 euros calculated PER PERSON or can the total tax-free gifted money from all persons within 10 years not exceed 20,000?
Dear inquirer,
First of all, thank you very much for your inquiry, which I would like to answer based on the information provided and in the context of your involvement in an initial consultation. The response is made in accordance with the description of the situation. Missing or incorrect information about the actual circumstances can affect the legal outcome.
Yes. The tax-free allowances are generally person-specific. This means that you can receive tax-free gifts up to the amount of the allowance based on the family relationship from each of the mentioned persons within 10 years.
However, so-called chain gifts are not tax-advantaged. A chain gift occurs when a person makes a gift and specifies that the amount should be gifted to another person, whose own tax-free allowance has already been used up. If your mother has already gifted you 400,000 euros, she cannot make any further gifts to you in order to give you more money from other donors. At the very least, these gifts should be spaced out in time so that no connection can be established. You should expect a review by the tax office of the source of these funds.
I hope that this information has given you a sufficient overview of the situation within the scope of your involvement and this initial consultation, and remain
Yours sincerely,
Michael Herrmann
Graduate Financial Economist (FH)
Tax consultant
