What is the tax-free allowance for gift tax and how is it calculated?
July 13, 2022 | 50,00 EUR | answered by Bernd Schreiber
Dear tax advisor,
my name is Gerald Schmitt and I am reaching out to you because I have questions regarding gift tax. My grandmother is planning to gift me a larger sum of money and I would like to know what the tax-free allowance is for gift tax and how it is calculated.
Currently, my grandmother is in good health and wants to gift assets to me during her lifetime. However, since I am not well-versed in tax matters, I am concerned that I may have to pay high taxes and be financially burdened as a result.
I have already tried to find information on gift tax on the internet, but the information is often very complicated and hard to understand. Therefore, I would greatly appreciate it if you could explain to me how the tax-free allowance for gift tax is determined and how it is calculated. Are there ways to increase the tax-free allowance or avoid taxes?
Thank you in advance for your help.
Sincerely,
Gerald Schmitt
Dear Mr. Schmitt,
Thank you for your inquiry regarding gift tax. I understand your concerns and will do my best to explain this complex issue in an easily understandable way.
The tax-free allowance for gift tax varies depending on the relationship between the donor and the recipient. For direct relatives, such as grandparents and grandchildren, the tax-free allowance is currently €200,000. This means that your grandmother can gift you money up to this amount without incurring any tax. If the gift exceeds this amount, gift tax is applicable, which is staggered depending on the amount gifted.
Gift tax is calculated using a tax table listing the respective tax rates for different gift amounts. Therefore, it is important to know the exact amount your grandmother intends to gift you in order to calculate the tax correctly.
There are various ways to increase the tax-free allowance or avoid taxes. One option is to split the gift over several years to fully utilize the tax-free allowance. Additionally, your grandmother can take advantage of certain tax planning opportunities, such as using exemptions for gifts within a certain timeframe or setting up tax-optimized transfer structures.
It is advisable to seek advice from a tax advisor to avoid tax pitfalls and optimize the gift. I am also available for further questions in my online consultation hours and can assist you with all tax matters related to gift tax.
I hope my explanations have been helpful and I am available for any further questions.
Best regards,
Bernd Schreiber
